Forex trading in India
Know the top Forex and Binary options brokers in India for 2021, their trading conditions and bonus offers
In the last two decades Forex trading in the world has became very popular and today trillions of people across the globe trade Forex with a view to earn profits from this highly potential market. In the last decade Forex trading in India has also witnessed a huge growth and now people in India are becoming more and more aware of this Trillion Dollars market. Here we will focus on two very important topics
1. Is Forex trading in India legal or illegal?
2. Top Forex and binary option brokers offering local bank deposits and withdrawals in India.
Is Forex trading in India legal or illegal?
Well we will not elaborate on the subject and keep it concise as far as possible and to the point. At the same time we will try to be as clear as possible in clarifying our Indian traders as to whether Forex trading is legal or illegal in India. Further we will not go into topics like what is Forex, what is a currency pair and all, we expect our readers are well acquainted with the Forex trading basics.
Forex presents a good opportunity to earn money to skilled and disciplined traders. But whether Indians can participate in the powerful Multi Trillion Dollar currency market to make profits or not, is the main question. However we want to clarify that Forex isn't the place where anyone can make money easily, only those who have actually gathered the trading skills and have discipline can earn in Forex.
Many people simply say that Forex trading is illegal in India but that's not true. We will put it best this way, " Forex trading in India is not illegal but it’s not that straightforward either". RBI doesn't hold Forex trading as entirely illegal rather it allows Forex trading but there are certain limitations which all the citizens of India are expected to follow. So to simply put it, Forex trading is legal in India when one does it
1. Through SEBI registered and approved brokers that allow access to Exchanges based in India such as the NSE, BSE, MCX-SX.
2. In Forex pairs with base currency as INR I.E. EURINR, GBPINR, JPYINR, and USDINR. The Reserve Bank of India further, from 10th December 2015 onwards allowed exchanges to offer cross-currency futures contracts and exchange-traded currency options in three more currency pairs namely, EUR-USD, GBP-USD, and USD-JPY. So the following currency pairs can be traded in India -
1. USDINR - Rupee-dollar
2. GBPINR - Rupee-pound
3. JPYINR - Rupee-yen
4. EURINR - Rupee-euro
5. EURUSD - Euro-dollar
6. GBPUSD - Pound-dolla
7. USDJPY - Yen-dollar
1. Trading in Forex market with international brokers, not approved by RBI is illegal.
2. An Indian citizen cannot send directly or indirectly fund outside India to Overseas forex Brokers. for trading in Forex or binary options. Debit and credit cards, bank wire remittances to/from a Foreign bank to make deposits and withdrawals with a Forex broker is not legal.
3. It should be noted that under the Foreign Exchange Management Act (FEMA), 1999 or FEMA Act, one can face imprisonment or be imposed with a fine for Forex trading done illegally in India. However, there is no restrictions for NRI's to do Forex trading in India.
4. Forex is a powerful de-centralized market and a good opportunity for earning money, at least for those equipped with good trading skills and discipline. So we hope RBI further get more liberal in allowing and facilitating Forex trading in India.
Why RBI doesn't allow Forex trading in India.
RBI claims that the logic behind the restrictions it imposed on Forex trading in India is to prevent Indians from severe losses. It's a known fact that majority of Forex traders lose money and if traders in India loses money trading with a non approved Forex broker, then that money goes out of India. This is also the reason why RBI strictly cracks down on bank and debit/credit remittances made outside India with a view of trading in Forex.
Forex brokers offering local bank deposits and withdrawals in India are a better option
Due to Indian laws regarding Forex trading it is advisable to avoid using debit and credit cards, bank wire remittances to/from a Foreign bank to make deposits and withdrawals with a Forex broker. So the other methods available for Indian traders to make deposits or withdrawals are the Ecurrency wallets like Skrill, Webmoney, perfectmoney etc or to chose a Forex broker that offers deposits and withdrawals via local banks in India. The costs of using the Ecurrency wallets like Skrill, Webmoney, perfectmoney etc can be high and these highs costs can have a negative impact on your profitability. So choosing Forex brokers offering local bank deposits and withdrawals in India can be more economical and convenient for Indian traders.
Calculate your costs of making deposits and withdrawals
Usually the charges levied by a Forex broker for making deposits and withdrawals are not so high, but for Indian traders the costs of deposits and withdrawals become much high, want to know how? Please read on...
1. Suppose you want to deposit $500 to a Forex broker using Skrill. As already said bank wire remittances to/from a Foreign bank, using debit or credit cards for making deposits or withdrawals for margin trading in Forex market is not advisable in India. So to deposit $500 to a Forex broker using skrill, first of all you need to buy $500 in your skrill from an Indian exchanger and the charges of these exchangers are quite high. Suppose if 1USD = Rs 70, then the exchanger charges his fees and suppose if the exchanger charges Rs 73 per dollar. To buy $500 you need to pay 500*73 which is Rs 36500.
2. Now you pay Rs 36500, buy skrill and deposit it and start trading. You make a profit of $200 and so now your balance is $700 which you decide to withdraw. Usually you can only withdraw your money to the same payment system which you used for making the deposit. So you withdraw your $700 to your skrill ac.
3. Obviously you either need the money in your bank or in your hands so that you can use the money, you cannot use Skrill much in India. So you again approach an exchanger which again charges its fees for converting the Skrill Dollars into Indian rupees. Suppose the exchanger Pays Rs 67 per Dollar, then the amount you get for $700 will be Rs 46900.
4. So from the above example, though you make a profit of $200, the actual profits that you get into your hand or bank will be Rs 46900 - Rs 36500, that is Rs 10400 instead of Rs 14000. You can see that Rs 3600, a massive 25.7% of your profits is devoured by the Exchangers for doing the conversions, which we call Conversion charges. Further we have not taken into account the charges levied by the Skrill and the Forex broker which also impacts your actual profitability. Some Exchangers in India are charging even more than that considered in the above example.
How local bank deposits and withdrawals help you to cut down your costs?
Some reputed Forex broker (listed below), that offer local bank deposits and withdrawals in India, helps you to cut down your conversion charges or totally get rid of it. Usually these Forex brokers have an arrangement where you can make a deposit by transferring funds to an Indian bank account from your own bank account. When you make a withdrawal, funds are transferred again from an Indian bank account to your own bank account. What I am trying to say is that, neither for deposits nor for withdrawal, your funds move into a Foreign bank account or come from a Foreign bank account.