Forex Trading in the India - A Full Beginner’s Guide
Forex trading is becoming more popular in India, and more Indians are looking to get into it. But many of them don't know where to start or don't have access to the right tools and information required. In this guide, we give all the information you really want to know to start Forex trading in India.
Do you want to start trading Forex? Open an account on eToro!
What is Forex Trading?
Forex is the foreign exchange rate and the process of trading currencies for profit. It is an extremely large market, with an estimated turnover of over 5 trillion US dollars per day.
The forex market is open 24/5, from Monday 2:30 am IST to Saturday 2:30 am IST. A forex trader buys and sells different currencies to make a profit from the difference between the selling and buying prices of various currencies.
Forex is an over-the-counter market, and its participants include foreign exchange dealers, international banks, multinational corporations, investment banks, hedge funds, and retail Forex traders.
Trying to understand forex trading can be a little intimidating at first because of all the terminology and new concepts. With the ease of online trading, it has become quite easy to trade Forex and make strong profits. In order to help you get started, here is a video that also provides a basic introduction to forex trading and how it works.
Is Forex Trading Legal in India?
The Indian government has always kept a close eye on forex trading in India, and it is legal in India. It is overseen by RBI (Reserve Bank of India) and SEBI (Securities Exchange Board of India ().
Currency Exchanges in India are regulated by SEBI. SEBI regulates currency exchanges by checking if they have secured a trading permit from RBI.
However, most local brokers aren't regulated by SEBI. So, it is advisable that you do not trade with unregulated local brokers if you are a resident of India. SEBI is also continuously monitoring currency exchanges operating internationally. However, it's always better to play safe and use only reputed brokers from tier countries such as the UK, Australia, and the EU.
Best Forex signals in India - top 5 providersHow Much Money Do I Need To Begin?
You can start forex trading in India with as little as $ 50. The minimum deposit varies from one broker to another. However, to start trading Forex with a low deposit, you need to use high leverage. Leverage allows you to control much larger capital than you have. Leverage can be used to both increases your profits and your losses. So, there is a high possibility to blow an account if beginners use high leverage.
The starting amount is recommended around $ 200 – $ 500. This will allow you to gain experience and check how easily you can earn from this business and how well your financial resources are enough for successful trading.
You must remember that there is no guaranty of profit or a successful investment, so you may lose all your funds if something goes wrong. So, it is advisable not to use too much money as an initial investment.
Comparison Indian Forex Brokers Minimum Deposit Amount
| eToro | IC Markets | Interactive Brokers | |
|---|---|---|---|
Minimum Deposit |
$50 |
$200 |
$0 |
How to Begin to Trade Forex in India? A Step by Step Guide
Forex trading can be a tricky business, and when you are new to the game, it is difficult to know where to start. Here are step by step guides on how to begin Forex trading in India:
Step 1. Choose A Reputable Forex Broker
There are many online forex brokers, but not all of them are as reliable. It is important to choose a broker that has been licensed in India or another reputable country. When it comes to trading forex, regulations can help protect you against unfair practices and dishonest business practices by the broker.
It is also worth paying attention to the size of commissions or fees, which will help you avoid high costs when trading. If you trade on a large scale, a small fee can add up to a huge sum. If you wish to earn passive income through scalping or automatic trading, it is worth considering whether your broker offers commission rebates.
Step 2. Start Forex Trading with Demo
If you use a demo account first and practise Forex trading for some time, then it will help in avoiding mistakes and help get your investment off on the right foot.
You can get started in forex trading without risking your own money with demo accounts. It provides you with a realistic simulation of live trading conditions but without any risk involved. Basically, with a demo account, you learn how to use the trading platform.
Taking advantage of these demo accounts is an important part of forex trading, as they allow you to learn from mistakes and experiment with different approaches without risking your own capital.
Once you feel comfortable and ready, then you can begin trading for real by putting your own money on the line. Start small and move up from there when you feel more confident in your abilities.
Step 3. Learn Basic Trading Strategies
There are many different trading strategies and methods that you can try to make money. Some strategies work in certain circumstances over others. However, trading is not a get-rich-quick scheme, and it takes time, knowledge, and experience to be successful.
The strategy depends on your own circumstance and experience. If you are new to trading, you should use low-risk, low-activity trend strategies that do not involve the use of large leverage or a large number of trades. For beginners, we suggest taking the following steps:
Pick a trading strategy that suits your personality and schedule.
Learn how to practise the strategy with a demo account so you can figure out what works for you.
Start trading with small sums of money in order to get some experience under your belt before using larger sums of money.
Continue practicing until you're consistently profitable, then start trading for real.
The main skill for trading is risk management. It's very important to manage your trade size and minimize your loss. When choosing a trade, you should always remember about stop-loss.
If you consistently apply the right risk management skill, your profit will grow significantly and faster than using other trading strategies.
Step 4. Explore Passive Income Options
Forex can be complex and intimidating. Even the experts get confused when things start to go wrong. However, there are also several passive income opportunities in the forex market, like copy trading and PAMM accounts.
Copy trading is a perfect passive income option for the newbie forex trader. It allows you to start earning money while learning and building up your trading skills. Copy trading is a strategy where you copy trades of the professionals in real-time. You simply earn money from the same trades that they are making.
PAMM accounts are designed for investors who want to trade currencies without the need to learn complicated trading strategies or software. It allows investors to choose a model trader and then match their account with the trader's PAMM account. The investors can earn a percentage of the profits made on their chosen model trader account.
Copy Trading in India 2024 - Top 6 PlatformsStep 5. Learn, Learn, Learn
Forex is a multi-billion-dollar market. Trading involves money and, therefore, can be very risky with a high potential for loss. A successful trader needs to have strong knowledge and experience to be able to properly analyze the market and make wise decisions.
No one wants to lose money when they start investing in the Forex market, but it's likely to happen at first. Your best bet as a beginner would be to start out with smaller trades until you feel more comfortable with the process of trading currency pairs.
Truly, Forex is not that difficult of a process if you know what you are doing. Learn how the market works, and gain skills and expertise with your practice.
If you choose Forex trading, you need to understand that Forex is not something that can be learned overnight. It involves a lot of practice, research required, and a lot of patience because the results can be achieved only after a long period of time.
Best Time to Trade Forex In India
Learn about best Forex trading time in IndiaTrading at the best time of the day is a crucial aspect to know. Depending on one's personal schedule, it is possible to trade during off-peak hours and find a more favourable market for oneself. During non-business hours, there are fewer traders in general, as well as less news affecting the market. It is also easier to catch a trend during these times because there are not as many other traders interfering with the price movements.
Trying to predict the best times for trading forex in India can be hard, as these times change constantly. Currency volatility can change dramatically over time, depending on various events in the world. You can't truly predict what will happen tomorrow or next week. However, according to the Traders Union analysis, you can find the most liquid and volatile time for trading in Forex:
| Trading sessions | Time zone | Most traded currency pairs |
|---|---|---|
Asia (Tokyo) |
3:30 am to 12:30 pm (IST) |
NZD/USD, AUD/USD, and other currency pairs containing NZD and AUD (New Zealand and Australian Dollars) |
Pacific region (Sydney) |
4:30 am to 2:30 pm (IST) |
Japanese yen (JPY), such as USD/JPY, EUR/JPY, GBP/JPY, and others. |
Europe (London) |
1:30 PM to 10:30 PM (IST) |
EUR/USD, GBP/USD, EUR/GBP, USD/CHF |
America (New York) |
6:30 pm to 3:30 am (IST) |
Pairs containing US dollars, like EUR/USD, USD/JPY, GBP/USD, etc. |
| Overlapping trading sessions | Time zone | Most traded currency pairs |
|---|---|---|
Sydney and Tokyo |
4:30 am to 12:30 pm (IST) |
AUD/USD, AUD/JPY, AUD/NZD, USD/JPY, NZD/JPY and NZD/USD, etc. |
Tokyo and London |
1:30 PM to 2:30 PM (IST) |
EUR and JPY (EUR/JPY, GBP/JPY, etc.) |
London and New York |
6:30 PM to 10:30 PM (IST) |
EUR/USD and GBP/USD |
Best Indian Forex Brokers For Beginners
Forex trading isn’t banned in India. You can trade with a local or international broker. However, SEBI is in charge of regulating the local broker and closely monitoring international broker. If they find any irregulates, they blacklist the broker and notify the investor through their website.
There are hundreds of brokers that accept clients from India. However, not every one of them can give a truly optimal experience. Here are the 3 best forex trading platforms in India for beginners.
eToro
With the growth in popularity of online trading platforms, many new companies have appeared on the market over the years. It has attracted many investors with its low minimum deposit requirement - only $50. The fact that eToro has been around since 2006 also speaks highly of its reliability.
Tutorials, education, video and webinars are available to beginners who are interested in learning more about the various financial instruments.
IC Markets
An Indian forex broker that is regulated by Sebi, IC markets offers its traders extremely low spreads and a broad range of trading instruments, including Forex, indices, stocks, commodities, etc. The company offers a wide range of educational tools as well as its free online platform for trading practice.
The Forex brokers have made it much easier for the newbies to start trading with minimum risk and capital loss.
Interactive Brokers
This is an advanced broker for traders who are looking for an extensive range of services and advanced functionality. Interactive Brokers provides opportunities for scalping as well as for high-volume automated trading through various software applications. In addition to this, IB has some of the most competitive margin rates available for the retail trader offering high leverage at low margins.
IB's customer support is highly rated by numerous online forums. They offer the best support for newbies as all their educational material is free and available online.
| eToro | IC Markets | Interactive Brokers | |
|---|---|---|---|
Minimum deposit |
$50 |
$200 |
$0 |
Accounts for beginners |
Demo, Standard |
Demo, Mini |
Demo, Standard |
Opportunities for passive earnings |
Social Trading / Copy-Trading, Affiliate program |
PAMM, Affiliate program |
None |
Education resources |
Webinars, Beginner Trading Videos, Support, FAQ section, Tutorials etc. |
Webinars, Investor Dictionary (Glossary), Support etc. |
Webinars, Beginner Trading Videos, Investor Dictionary, Tutorials etc. |
Regulation: Tier-1 Licenses |
2 |
1 |
6 |
Account fee |
No |
No |
No |
Inactivity fee |
Yes |
No |
No |
Deposit fee |
$0 |
No |
No |
Withdrawal fee |
$5 |
No |
No |
Best suitable feature for beginner |
Best copy trading platform |
Extra-low fees for active trading |
Best for professionals |
Do I Pay Forex Taxes in India?
There is no tax liability for individuals who make less than Rs 2.5 lakhs per year from their trades. If your trading profits meet or exceed the minimum taxable levels, then you must pay taxes on your gains.
Tax on Foreign Currency trading:
-
0 – Rs.250,000: 0% – Nil
-
250,000 – Rs.500,000: 5%
-
500,000 – Rs.1,000,000: 20%
How Much Can I Earn?
How Much Can You Make Trading in Forex in 2024?When you trade Forex, you can either lose or earn. It all depends on your actions. Suppose you need to make a small amount of profit, that is ok. But if you want to make a high profit, then you should be ready to take a lot of risks. There are many examples of successful Forex traders like George Soros making hundreds of millions, even billions, over the years. But there are also plenty of examples of people losing a lot, even their entire savings, when they start trading Forex.
There are many things to consider before starting Forex trading, the amount of capital that you have, the amount of risk that you are willing to take and research about the market.
FAQs
What Are The Financial Advantages Of Forex Trading India For Beginners?
To build a steady income, trading forex can give you financial freedom of life. Forex trading is suitable for almost everyone who has an Internet connection and enough free time to learn. Forex trading offers a greater potential for profits than other asset classes.
Are All Forex Traders Successful?
Generally, at least 50% of forex traders fail in the first few months, and forex trading is one of the riskiest investment methods. However, it is not impossible to become a profitable trader as long as you follow a systematic approach towards becoming one.
Why Trade Forex?
Forex Trading is the most exciting journey in the currency market, which opens doors to a lot of opportunities. It is not just about money. It gives you plenty of reasons to look forward to every day and, at the same time, gather enough courage to take required decisions under tremendous pressure.
While trading forex may seem a bit overwhelming at first, once you familiarize yourself with what it encompasses and how it operates, it can be an exhilarating and profitable experience for those who are attracted to it.
What Are The Risks Of Trading Forex?
The Forex market is famous for the fact that you can lose money in a blink of an eye – even experienced traders say so. The risk of loss increases when you are new to Forex, and if you are excessively taking risks, then it can be dangerous.
By not understanding how to manage your risk levels and the market, you may find yourself jumping into a massive black hole of debt that is hard to crawl out of.
Team that worked on the article
Dwight specializes in risk, corporate finance, alternatives, fintech, general business trends, and financial markets, and he has broad experience managing complex projects. Dwight is an author for the Traders Union website.
Dwight was a financial columnist for The Wall Street Journal and The New York Times during the Great Financial Crisis. He has served as Editor-in-Chief of Worth, a personal finance magazine for the wealthy, and as Editor of Risk, the premiere global publication about derivatives, risk management, and quantitative finance, based in London.
He has also served as Managing Editor at The Economist Group and ran the Americas operations of two British trade publications.
For the last 12 years, Dwight has worked as a freelance writer and editorial project manager, serving clients in the financial technology, banking, broker/dealer, consulting, asset management, and corporate sectors. This has given him considerable experience in idea generation and project management, working collaboratively to help clients meet their goals with little or no supervision.
Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.
The topics he covers include trading signals, cryptocurrencies, Forex brokers, stock brokers, expert advisors, binary options. He has also worked on the ratings of brokers and many other materials.
Dr. BJ Johnson’s motto: It always seems impossible until it’s done. You can do it.
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO). Mirjan is a cryptocurrency and stock trader. This deep understanding of the finance sector allows her to create informative and engaging content that helps readers easily navigate the complexities of the crypto world.