10 Frequently Asked Questions About Forex Trading in India
Forex trading can be an effective method to generate quick profits. However, the risk of loss is also higher in forex trading compared to other investment markets.
When it comes to currency trading in India, traders always seem confused about the scope of currency trading in India. In this article, 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 brokers regulated by stock exchanges in India.
2) What types of currency markets are available in India?
There are two types of currency markets in the world, one of which is India. i.e. spot and futures markets
The spot market is sometimes also referred to as the spot market. When 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 the Securities Exchange Board of India (SEBI) jointly regulate foreign exchange transactions in India under the FEMA Act of 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 should trade currencies in pairs. The base currency of a pair always comes before the quote currency. However, the exception is that traders can only trade currencies in the 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. Since the forex market is only accessible online, you also need a computer, laptop or mobile phone with internet access. After funding your trading account, you are ready to start trading using a trading platform typically offered by your broker. ForexToStocks wrote a item in more detail, outlining the steps required to start your trading journey.
5) What currency pairs can I trade in India?
Traders are allowed to trade all such currency pairs involving Indian Rupees as the 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 prohibited in India. Neither a trader nor a broker are 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, registering with an unauthorized broker is a non-bailable criminal offense in India.
8) What are the legal consequences of illegal currency trading in India?
Anyone found guilty of being involved in illegal currency trading in India can face a jail term or excessive financial charges.
9) What do RBI and SEBI mean?
RBI stands for Reserve Bank of India. SEBI is used as an abbreviation for the Securities and Exchange Board of India.
10) What is the FEMA -1999 law?
This is the Foreign Exchange Management Act which was introduced by the Central Government of India in 1999. The RBI regulates foreign exchange trading in India under the FEMA Act.
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