10 frequently asked questions about Forex trading in India

Forex trading can be an effective method of generating quick profits. However, the risk of loss is also higher in forex trading as compared to other investment markets.

As far as forex trading in India is concerned, traders always seem confused concerning the scope of currency trading in India. In this piece, we cover the top 10 frequently asked questions about forex trading in India.

1) Is forex trading legal in India?

Yes, forex trading is legal in India. However, currency trading is subject to strict regulatory restrictions in India. Traders are only allowed to trade through exchange-regulated brokers in India.

2) What types of currency markets are available in India?

There are two types of currency markets in the world, including India. i-e Spot and Futures markets

The spot market is sometimes also referred to as the cash market. Comparing the two currency markets, traders in India prefer to trade the futures markets.

3) Who regulates forex trading in India?

The Reserve Bank of India (RBI) and Securities Exchange Board of India (SEBI) jointly regulate forex trading in India under the FEMA Act 1999.

4) What are the basics of currency trading in India?

The basics of currency trading in India are the same as in the rest of the world. Traders have to trade currencies in pairs. The base currency in a pair always comes before the quote currency. However, the exception is that traders can only trade currencies as a form of currency derivatives in India.

5) How to start forex trading in India?

You need to open an account with a SEBI-regulated broker to start forex trading in India. Because the forex market can only be accessed online, you also need a computer, laptop, or mobile phone with access to the internet. After funding your trading account, you are all set to start placing trades using a trading platform usually offered by your broker. ForexToStocks has written an article in greater details outlining the steps needed for starting your trading journey.

5) What currency pairs I can trade in India?

Traders are allowed to trade all those currency pairs involving the Indian Rupees as a base or quote currency. You can also trade three cross currency pairs in India, including USDJPY, GBPUSD, and EURUSD.

6) Is CFD trading allowed in India?

No, CFD trading is strictly forbidden in India. Neither a trader nor a broker is allowed to get involved in CFD trading in India.

7) What makes forex trading illegal in India?

Although forex trading is not illegal in India. However, signing up with an unauthorized broker is a non-bailable criminal offense in India.

8) What are the legal consequences of illegal forex trading in India?

Anyone found guilty of being involved in illegal forex trading in India can be sentenced to jail or penalized with excessive financial charges.

9) What do RBI and SEBI stand for?

The RBI stands for the Reserve Bank of India. SEBI is used as an abbreviation for the Securities and Exchange Board of India.

10) What Is FEMA Act -1999?

It is the foreign exchange management act that was introduced by the central government of India in 1999. The RBI regulates forex trading in India under the FEMA Act.

 

Story by James Knightley