Forex Trading in India

Wondering which forex broker in India will get you the best results?

What about details surrounding India’s trading environment during COVID-19? Is forex trading in India even legal?

First off, yes—forex trading in India is legal—with some restrictions, of course. If done through a registered broker, traders can access and trade almost all currency pairs.

In terms of the ongoing COVID-19 pandemic, the State Bank of India has reported that India has dealt with cases better than expected.

Additionally, India has experienced an accelerated economy, as of September. At the same time, a Biden presidency is predicted to create a positive environment for businesses with corporate profitability and international supply chains.

This sets up a positive outlook for the forex trading environment in India. So, next things next—finding a regulated and safe forex broker to protect you from scams and fraud.

In this review, we take you through the leading, registered forex brokers in India. Once you have an idea of the most suitable broker for you, just read on to discover the two simple steps to take to start forex trading, along with some key terms and strategies to help you hit the ground running. 🏃💨

Ready to conquer the forex market? Let’s get started!

Best Forex Brokers in India 🇮🇳

1. FOREX.com: Best Overall

With a combination of competitive spreads, a wide range of investment offerings, and top-of-the-line research tools and educational materials, FOREX.com deserves the attention of any trader – novice or veteran.

Traders in India will have access to 91+ currency pairs with competitive spreads across various account types – with an average spread of just 1.4 pips. The website is easy to navigate and transparent about all its fees and services. 

The broker offers a variety of platforms, including MetaTrader 4, MetaTrader 5, and its own proprietary desktop and web-based platforms – along with a user-friendly mobile app. 

All of the platforms support quite advanced charting tools and offer access to numerous technical indicators – with the proprietary desktop platform standing out with over 100 indicators at your disposal.

FOREX.com’s research section is handled by its in-house team of experts that provide well-written and actionable market analyses. The broker’s webpage also hosts a variety of high-quality written content, while their trading platform also supports an economic calendar and integrated headlines from Reuters.

As far as education goes, FOREX.com has a weekly webinar – Foundations of Forex Trading, which will help novice traders find their feet. On top of that, the brokerage also offers over 100 educational articles, as well as a variety of educational videos and platform tutorials.

Globally, FOREX.com’s full offering includes an extensive range of assets, from CFDs to futures. On top of forex, which we will get to next, forex.com offers ETFs, commodities, stocks, indices, gold and silver, and cryptocurrencies, making it suitable for a range of investors.

Interested in opening an account with FOREX.com? The broker has a low initial minimum deposit of 100 of the selected base currency. Though it recommends that a deposit of 2,500 is made so that clients have more flexibility in their trading.

Furthermore, FOREX.com provides dealer execution and does not rely on third parties to initiate trades. Forex.com offers higher quality trades for this reason.

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2. Pepperstone: Best for Fees

Pepperstone is an Australian forex broker offering a collection of CFDs too. Beyond India, Pepperstone is one of the top forex brokers in the world. Clients of the Australian company will gain access to competitive commissions from $3.50, low average spreads, and no fees on deposits or withdrawals, not to forget an award-winning customer support team.

Professional traders in India will gain access to a leverage of 1:500, while retail can access leverage at 1:200. However, it is strongly advised to carefully consider a leverage that is suitable for your needs and goals, as trading on leverage is dangerous. In total, Pepperstone offers a strong range of over 100 instruments, including both CFDs and cryptocurrencies.

Pepperstone offers a vast forex selection, and a standard selection of CFDs, and some cryptocurrencies including, Bitcoin, Ethereum, Litecoin, and Dash against the USD. A range of 70 currency pairs are offered, but leverage levels cannot be altered which is a drawback.

While it is common for traders to be hit with those dreaded and unexpected hidden fees, Pepperstone’s fees are laid out quite clearly. In short, the broker charges no inactivity fees or withdrawal fees. Further, Pepperstone does charge forex and non-trading fees, but these are low in comparison to competitive brokers in India.

Traders should watch out for its potentially high CFD financing rates. When it comes to accounts, the two most popular accounts are the Razor and the Standard. The Razor account offers spreads starting from 0.0 pips, but, overall, the spreads and commissions charged will all depend on the account you go for.

Pepperstone provides a responsive and effective customer support team 24 hours a day. Think Pepperstone could be the broker for you? To sign up with Pepperstone traders based in India will need to pay a minimum deposit of AU$200 (about ₹ 10700).

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3. AvaTrade: Best for FX Innovation

Founded in 2006 and based in Ireland, AvaTrade is a CFD broker offering low spreads on over 785 financial instruments. AvaTrade is regulated across five continents.

AvaTrade offers five account types with spreads and fees varying depending on the account. The AvaTrade Account (BVI) provides access to 55 currency pairs with fixed spreads, plus CFDs on cryptocurrency, indices, stocks, bonds and commodities. AvaTrade does accept MetaTrader EAs, apart from ones that focus on arbitrage.

Spreads with this account start at 0.9 pips for the EUR/USD, and $0 commission per lot. There is a leverage provided with this account of 1:400.

This broker offers standard trading and non-trading fees. There is no withdrawal fee but there is a high inactivity fee of $50 after three months of no account activity, and an administration fee of $100 is charged after one year of inactivity. Avatrade offers no guaranteed stop losses or volume discounts.

Furthermore, there is a minimum deposit amount of $100, and clients can withdraw 200% of the amount deposited via a credit or debit card. An AvaTrade account can be opened quite quickly and easily, and the customer support team provides helpful advice over phone, email or live chat, in several languages.

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4. OctaFx: Fixed Spread Accounts

OctaFX offers the standard MetaTrader and cTrader, and a range of tradable instruments but it does lack regulation beyond its European license in Cyprus, which does place it at a disadvantage when compared with the other forex brokers mentioned in this review.

OctaFx offers 50 tradable instruments including 28 currency pairs, spot trading, 17 CFDs, social trading, but no cryptocurrency. 

The commission charged by OctaFx varies depending on the account type chosen: MT4 Micro, MT5 Pro, or the cTrader ECN account.

Spreads are the lowest on the MetaTrader account, where traders can access 59 tradable instruments; typical spreads for the EUR/USD is 0.7 pips, whereas traders can access 45 tradeable products through the MT5 Pro account, with slightly higher spreads at 1.1 pips.

The cTrader account offers 28 forex pairs and two metals. It uses a $3 standard low ($6 per round-turn) commission-based fee structure, which is piled on top of its typical spreads of 0.4 pips. This brings the total costs to around 1 pip.

OctaFx offers traders in India a mobile trading app with copy-trading features, a library of educational material, with 19 primary articles, and a standard selection of research tools. Overall, OctaFx is suitable for beginners looking to educate themselves, traders on the go, and those looking for fixed spreads.

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Guide to Forex Trading in India 📚

Is it Legal to Trade Forex in India?

Yes, forex trading is legal in India. It is not legal to undertake forex trading through any electronic or online forex trading under any circumstances on Indian Territory, as guided by SEBI and regulated by RBI in order to minimize risk incumbent in the forex market.

In 2013, the RBI’s circular prohibited forex trading through electronic or internet trading. However, forex trading is legal when it is done through specified foreign exchange trading platforms with Indian Rupee as the base currency.

In other words, the Indian Government limits trading for Indian residents to only trade currency pairs that are bench-marked against Indian Rupee. 

Therefore, Indian residents can trade so long as they do so through a specified Indian brokerage that provides access to exchanges based in India such as the BSE, NSE, MCX-SX, in addition to currency derivatives, forex trading is completely legal.

Pre December 2015, Indian residents could only legally trade USD-INR, GBP-INR, EUR-INR, JPY-INR. Post December 2015, exchanges can offer cross-currency futures and exchange traded currency options in three or more currency pairs, such as USD-JPY, GBP-USD, EUR-USD.

At this point, it must be highlighted that under the Foreign Exchange Management Act (FEMA) 1999, traders could be fined or even end up in prison if illegal forex trading takes place in India. However, it should also be noted that there is absolutely no prohibition for NRIs to forex trade in India.

India Handled COVID-19 Better Than Expected

India has dealt with confirmed COVID-19 cases better than originally predicted, a report by the State Bank of India (SBI) Ecowrap found. Another SBI report referencing the economy stated that it began accelerating in September.

The report added that the state-wide number and economic performance does vary across states like Karnataka, Maharashtra, Kerala, Andhra, Delhi, West Bengal, Chhattisgarh, and Tamil nadu which are not doing so well in terms of managing COVID-19.

It goes on to state that Bihar, Attar Pradesh, and Jharkhand, along with some others, have managed the situation well with model cases estimated to be higher than actual cases.

Currently, the central bankers in India are being challenged with how to maintain monetary policy independence while allowing a steady stream of foreign capital and holding a stable currency.

The recent inflation spike in India resulted in the RBI holding back from lowering interest rates, despite the economic forecast predicting a shrinking economy. The RBI has essentially let the rupee appreciate to appease investors on the hunt for riskier assets, adding a headwind for its declining export sector.

At the same time, with the U.S. elections now behind us, a Biden presidency will likely create a more predictable trade backdrop, which is positive for businesses with corporate profitability and international supply chains. 

How Do You Trade Forex in India? 🔎

As we just noted, forex trading is legal in India, but you can only trade currency pairs that include the Indian Rupee. A key reason behind this limitation is because the Indian Rupee is weak against the USD. If traders in India want to buy the USD they must do so from the Central Bank of India.

Traders based in India can trade forex on the National Stock Exchange (NSE), the Metropolitan Stock Exchange (MSE), or the Bombay Stock Exchange (BSE). In 1992, the Securities and Exchange Board of India (SEBI) was established to monitor and regulate the forex market in India.

SEBI is the concerned authority in India that protects forex traders, securities issuers, and forex-regulated agencies. Forex brokers offering their services to India residents, therefore, must be regulated by SEBI.

How to Start Forex Trading in India 🏁

Forex trading should only be attempted after educating yourself about forex. Once you have a strong idea of the key terms and strategies, there are just two more steps to follow to get started forex trading in India. We have outlined these steps below:

Step 1: Select Your Device for Forex Trading

When forex trading, you can choose to use a laptop, tablet, mobile phone, or your standard desktop. If you like to trade on the go, choosing a broker with a quality forex trading app will be important. With the price of currency pairs frequently changing, having a device (or two) that will allow you to place trades quickly will be crucial to the success of your forex trading.

Step 2: Find an Online Forex Broker

There are several online forex brokers available to forex traders based in India, offering a variety of tools, services and fees. The broker you choose should benefit your trading style, trading level, budget, and trading needs, such as a good selection of educational material to help expand your forex trading knowledge. Most importantly, make sure the broker you choose allows clients to trade Indian Rupee.

Furthermore, make sure to determine who the broker is regulated by; brokers offering services to traders in India should be regulated by the Reserve bank of India (RBI), the regulatory authority over forex brokers in India.

Forex Trading Strategies in India 📈

To become a successful forex trader, you will need to have some forex trading strategies under your belt. The amount of strategies out there can become overwhelming though, so we suggest starting by familiarizing yourself with the most successful forex trading strategies first and foremost to help you stay focused.

Scalping

Scaping is a strategy used by some forex traders to make a lot of smaller trades over and over. You can set the entry and exit positions with smaller movements in the currencies to ensure low margins.

To be good at scalping, traders need to make precise executions. These trades are short-term, lasting anywhere from around one minute to one hour. Staying on top of currency trends will be crucial to the successful implementation of scalping.

Day Trading

The process of day trading is in the name: it involves traders opening and closing a trade within the same day. These trades can last from a couple of minutes to a few hours. This ensures that traders are less likely to be hit with unprecedented losses as a result of overnight volatility.

If you’re just starting out forex trading, day trading is a clear cut and straight strategy to begin earning a profit. Day trading is a good way to limit risk and increase your odds of profitability.

Swing Trading

Swing trading is another popular strategy that investors turn to and it involves trading forex currencies throughout the day or week. With this strategy, traders have enough time to deflect the frequent ups and downs of currency pairs. You can jump past the unnecessary stop losses on your path to success with this medium-term forex trading strategy.

Position Trading

Position trading is another key forex trading strategy in India where traders hold positions open long-term. With this strategy, trades can last from about a week to a few months, or even several years. Traders can benefit from larger movements in the price of currency pairs without the need to focus on smaller market changes.

Additionally, entry and exit positions can be set for longer periods with position trading. Overall, this trading strategy involves keeping on top of socio-economic policies, and current events that have a global impact. Signing into your account casually once or twice a week is enough for position trading.

Range Trading

And now for ranging trading – the last in our list of key trading strategies in India. This strategy involves analyzing the historical data of currency pairs to identify trends in the market.

Based on the financial data, you can set a wider entry and exit position to capitalize on previous price trends. With the calculated risks involved, it is a safer alternative to day trading.

Example of Forex Trading in India ⭐️

At this stage you are probably wondering what exactly forex trading in India looks like, right? Let’s take a look below.

Let’s consider the USD/INR is trading at 74.6350. If you think the value of USD will rise within the next couple of hours, you could buy 100,000 units of USD. In this instance, you will need to deposit 7,463,500 INR into your account to make the trade.

Within 2 hours, the USD rises in value to 75.0000 against the Indian Rupee. Right away, you can sell the $100,000 you purchased and earn a profit of 36,500 INR within just one day.

Is Forex Taxed in India? 💸

In July 2017, Prime Minister Narenda Modi launched GST. This stated that the tax imposed on forex transactions is between 5% to 18%, similarly to business transactions.

Since then, the government of India has mandated the payment of a fixed tax when traders partake in one or more of the following:

• Currency exchange and conversion
• International money transfer
• Buying a forex card – this is a select type of prepaid card that functions as an alternative to currency conversion processes.

What Currency Pairs Can Be Traded in India? 💱

In 2015, corporates and investors were given more flexibility to hedge offshore currency exposures following the decision by the Reserve Bank of India to incorporate three more cross currencies into the exchange traded derivatives market including futures options.

In addition to the four currency pairs traded in the futures market – Rupee-dollar, rupee-euro, rupee-pound, and rupee-yen stock exchanges have been permitted cross-currency futures contracts and exchange traded option contracts in the currency pairs of EUR/USD, GBP/USD, and USD/JPY to be traded.

These currency pairs can be traded in the Indian currency market under the National Stock Exchange, but traders can trade almost all currency pairs using a forex broker.

Can I Trade Forex Internationally from India?

Yes, you can trade forex in India through a regulated, local forex broker. However, international retail forex trading in India is not permitted.

What’s the Best Forex Broker for Trading in India?

Our research suggests the best forex broker for trading in India is Pepperstone. Pepperstone is a forex broker based in Australia, with competitive features everywhere you look.