In today’s date Currency trading in India is getting more famous. Earlier investors was limited only by FD, Shares and mutual funds but now investors and trader are also moving their interest for current trading also. In this blog you will know about the how currency trading works, rules, benefits, legality and other terms also.
What Is Currency Trading?
Currency trading also known as Forex Trading, Forex words is the combination of the two words foreign and exchange. Starting 3 and 2 latters has been taken from the both words For + ex = Forex. In which traders buy or sell pairs of the currency.
Currency market runs 24 hours of the day by Mon – Fri.
In India, the most actively traded currency pairs are:
- USD/INR
- EUR/INR
- GBP/INR
- JPY/INR
Is Currency Trading Legal in India?
Yes, Currency trading is legal in India if place trade from the regulated exchanges like NSE, BSE and MCX. If you opt any other platform like Octa Currency, BOT ALPHA etc then this can be trouble for you by the government.
Traders should know that two body regulates the currency trading in India.
1 – Reserve Bank of India (RBI) – Primary Regulator
2 – Securities and Exchange Board of India (SEBI) – Secondary Regulator
These regulatory body ensures that market operation runs smoothly without any fraudulent activity.
Some Points should be known to traders
- In India, only INR pair-based trading allowed.
- Traders should place the order by recognised exchange like NSE, BSE or MCX.
- You can’t hold the currency in a portfolio as equity more than 3 months.
How to Start Currency Trading in India
To start the currency trading you need to active trading account. In India there are many brokers who provide the free trading account.
Most beginners lose time and money to find the the “right” broker. Personally, I will recommend the Upstox and Motilal Oswal Trading account for the same.
Brokers For Beginners-
Key features of the currency Market
- High Liquidity – Traders can take easily entry position.
- Volatility – currency prices fluctuates very much due to Interest rate changes, GDP data,
Inflation, Global conflicts, Central bank announcements. - Leverage – Indian exchanges allows upto 20x times margin in currency trading where you can start
from the small amount its depending on the broker to broker. However, higher leverage also increase the losses if
your trade goes wrong.
Why Currency Trading Is Growing in India
There are serval reasons to grow the currency market
- Limited Instruments – In India there are four regulated currency pairs where you can trade so you
don’t need to add more currencies in your watchlist nor you have to analysis more then four instruments. - Low Capital Required – in currency market stock brokers provide the high margin upto 20x times.
So you can also trade from 5k to 10k. - Controlled Risk – INR Based pair are less risky as compared then unpaired currency.
What are risk involve in Currency Trading
- High Volatility – Currency movements are influenced by global news, making predictions difficult.
- Leverage Risk – Leverage works like a double-edged sword. When used with discipline, it can
significantly boost returns even with small capital. But a single wrong move or emotional trade can amplify
losses just as fast. That’s why beginners must handle leverage with strict risk management and proper planning.