How To Forex Trade In India: A Guide For Novices

India is widely recognized for trading, especially forex trading. Forex trading has always been a controversial subject, and many novices and expert traders debate whether or not it is legal in India. India, one of the major continents of Asia with a population of 1.417 billion, showcases a diversity of cultures, ideologies, and languages. The land is known for many incredible things, like being the largest democracy in the world,
Want to know how to do forex trading in India legally? Continue following this article as we shed light on the topic. 

Is Forex Trading Legal In India?
Using foreign exchange platforms or performing direct trading in the foreign exchange market is completely banned in India. However, trading is still possible through currency exchange in the stock market, like NSE (National Stock Exchange), BSE (Bombay Stock Exchange), MSE (Metropolitan Stock Exchange), and MCX-SX (Multi-commodity Exchange). Although, you need to ensure that other currencies should include Indian Rupee (INR). 
Now that you know the legitimate way of doing forex trading. Let us walk you through certain aspects you must take into consideration before investing in forex. 
Forex Trading In India: 6 Things You Must Know Before You Start 

The legal provision of forex trading is controlled and managed by the Securities and Exchange Board of India (SEBI). Whereas, the Reserve Bank of India (RBI) handles forex transactions. All in all, it is jointly regulated by SEBI and RBI.
4.Do Traders Need A Demat Account For Forex Trading?

It is not necessary to have a Demat Account for forex trading as all of the transactions are carried through a non-deliverable forward (NDF) (Also means cash-settled). Demat Account is usually required when you perform Stock Parking, but if you just execute NDF transactions, all you need to do is create a trading account and link your bank account with the same to transfer funds.
5.Which Currency Pairs Function For Trading In India?

Below are the currencies that involve Indian Rupee (INR):

★ USD (United State Dollar) and INR

★ EUR (Euro) and INR

★ JPY (Japanese Yen) and INR

★ GBP (British Pound Sterling) and INR
6.Is There A Difference Between Forex And Currency Trading?

No, both forex and currency trading are the same. Forex trading is commonly referred to as currency trading, where traders buy and sell national currencies to earn profits or evade exchange rate fluctuations. 
If you are new to the forex trading world, you must learn a few basic terms to enhance your knowledge. 
Main Types Of Currency Trading Strategies
☆Scalping
This type of trading style comprises traders buying currencies at small price fluctuations and reselling them at better value to make bigger profits. Although it is crucial for a trader to have a well-defined exit strategy to ensure there are no big losses.

This type of trading style comprises traders buying currencies at small price fluctuations and reselling them at better value to make bigger profits. Although it is crucial for a trader to have a well-defined exit strategy to ensure there are no big losses.
☆Swing Trading

• 
  This trading strategy includes acquiring short to medium profits in a limited timeframe (a few days or weeks). A swing trader generally utilizes technical analysis (an approach where a trader evaluates and anticipates the variation in price by past market data) to seek profitable trades. 
  ☆ Position Trading
  This strategy involves a trader making an investment or purchasing a currency by anticipating that the purchased currency will gain 2x or 3X value in the foreseeable future. Compared to a day trader, a position trader is more concerned with the long-term position of the currency rather than getting involved in short-term fluctuations.
  ☆Price-Action Trading

Simply explained, the trader utilizes this systematic trading technique to understand the market and make profitable trading decisions based on the variations in the price of a currency. Unlike following only the technical indicators, this strategy gives you real-time insights into price movements of recent and past times. 
☆ Day Trading

Day trading involves a trader purchasing and selling currency in a day or even within seconds. Here, a trader keeps a continuous eye on the market to buy and sell the stocks at an instant price shift to gain better profits.

1. Why Currency Pairs That Do Not Include Indian Currency Are Illegal To Trade In India?
   Many traders wonder why forex trading in India is not legal. And why Indian traders can only exchange in their native currency pairs. One significant reason is that the Indian Rupee is not a strong currency compared to other currencies. 
   Another reason is that the government, economists, and banks do not want to jeopardize their forex reserves. It could lead to a deferred outflow of assets, causing a record shortfall in the trading account. Plus, trading in non-Indian pairs has a potential risk of personal data losses of citizens. This is why forex trading is limited in India. 
   2.What Are The Legal Consequences Of Illegal Forex Trading In India ?
2. Under the Foreign Exchange Management Act (FEMA) 1999, traders who commit a regulatory violation by illegal trading on unauthorized trading platforms or in an unknown area are liable to receive punishment. They are fined a sum of 10,000 rupees for each day they trade. Moreover, illegal traders will likely be imprisoned for up to 5 years under Section 13(1C).
3. 
   3.Who Regulates Forex Trading In India?

The legal provision of forex trading is controlled and managed by the Securities and Exchange Board of India (SEBI). Whereas, the Reserve Bank of India (RBI) handles forex transactions. All in all, it is jointly regulated by SEBI and RBI.
4.Do Traders Need A Demat Account For Forex Trading?

It is not necessary to have a Demat Account for forex trading as all of the transactions are carried through a non-deliverable forward (NDF) (Also means cash-settled). Demat Account is usually required when you perform Stock Parking, but if you just execute NDF transactions, all you need to do is create a trading account and link your bank account with the same to transfer funds.
5.Which Currency Pairs Function For Trading In India?

Below are the currencies that involve Indian Rupee (INR):

★ USD (United State Dollar) and INR

★ EUR (Euro) and INR

★ JPY (Japanese Yen) and INR

★ GBP (British Pound Sterling) and INR
6.Is There A Difference Between Forex And Currency Trading?

No, both forex and currency trading are the same. Forex trading is commonly referred to as currency trading, where traders buy and sell national currencies to earn profits or evade exchange rate fluctuations. 
If you are new to the forex trading world, you must learn a few basic terms to enhance your knowledge. 
Main Types Of Currency Trading Strategies
☆Scalping
This type of trading style comprises traders buying currencies at small price fluctuations and reselling them at better value to make bigger profits. Although it is crucial for a trader to have a well-defined exit strategy to ensure there are no big losses.

This type of trading style comprises traders buying currencies at small price fluctuations and reselling them at better value to make bigger profits. Although it is crucial for a trader to have a well-defined exit strategy to ensure there are no big losses.
☆Swing Trading

• 
  This trading strategy includes acquiring short to medium profits in a limited timeframe (a few days or weeks). A swing trader generally utilizes technical analysis (an approach where a trader evaluates and anticipates the variation in price by past market data) to seek profitable trades. 
  ☆ Position Trading
  This strategy involves a trader making an investment or purchasing a currency by anticipating that the purchased currency will gain 2x or 3X value in the foreseeable future. Compared to a day trader, a position trader is more concerned with the long-term position of the currency rather than getting involved in short-term fluctuations.
  ☆Price-Action Trading

Simply explained, the trader utilizes this systematic trading technique to understand the market and make profitable trading decisions based on the variations in the price of a currency. Unlike following only the technical indicators, this strategy gives you real-time insights into price movements of recent and past times. 
☆ Day Trading

Day trading involves a trader purchasing and selling currency in a day or even within seconds. Here, a trader keeps a continuous eye on the market to buy and sell the stocks at an instant price shift to gain better profits.