Forex Trading in India: Currency Trading Basics and Best Forex Brokers

Simply put, Forex trading is about buying and selling currencies. You buy/sell particular currency on the exchange against some other currency. In this post, we explore answers to various queries regarding forex trading like whether forex trading is legal in India and best forex brokers to start currency trading online. We will also explore different forex trading platforms and leverage offered by some of these forex brokers.

What is Forex Trading?

So you might have heard some of your friends making a fortune doing forex trading. So what is this Forex trading all about and how do these people make money with forex trading. The word forex is a short form of Foreign Exchange. Forex trading is nothing but buying/selling of currencies on a platform offered by an exchange. Just like stocks, if you expect a price of a certain currency to go up with regards to some other currency, you buy that currency and if you expect the price of a certain currency to go down, you sell/short that particular currency.

Forex trading is very much rampant in day to day activities as well. As an example, let’s say that you want to go abroad for some travel in a country, you will need the currency of that country or USD(that’s another story though). You go to a guy who offers currency exchange, give INR to them and get the currency of your choice. Similarly, forex finds requirements in many other day to day use cases as well so it is one of the biggest markets in the world.

Forex Brokers in India

Coming to the point, how can you trade in Forex in India. The first step towards starting trading in Forex derivatives is to get a Trading account opened with one of the SEBI registered brokers in India. Checkout the List of best trading accounts in India.Once you have setup a trading account with a broker, you can now trade in currency derivatives i.e future and options. You can trade in currency pairs : USD/INR, JPY/INR, EUR/INR and GBP/INR with most of the brokers offering forex trading with currency derivatives. Here we look at the top forex trading brokers(SEBI registered) alongside their margin offered and fees charged.

Best Forex Trading Platforms in India offering trading in Currency Derivatives:

1. Zerodha

Zerodha is one of the best discount brokers and it offers trading currency derivatives as well. You just need to specify in the account opening form that you will be trading in currency derivatives and the segment will be opened for you. Just like trading equities/commodities, Zerodha’s currency trading platform is top notch and offers one of the best discount brokerage rates.

Key features of Zerodha’s currency Segment :

• Min Account Deposit: Null
• Trading Charges : 0.01% or Rs 20 per trade whichever is lower.
• Currency Futures Margin : Futures is inherently a leveraged product. NRML margin is provided by the exchange itself. Zerodha offers MIS margin as well which is 50% of NRML margin with square off at 430P.
• Currency Options Margin : Zerodha doesn’t offer offer margin on currency options, the premium on the option must be paid in full.

Apply Here for Zerodha Account

For a detailed review, you can refer : Zerodha Review, Account Opening, Brokerage & Margin of Trading

2. 5paisa

5paisa is another discount broker with the backing of IIFL group. The brokerage house works on philosophy of straight 10 Rs per trade commission and hence taking the market by storm.

Key features of 5paisa’s Currency Segment :

• Min Account Deposit: Null
• Trading Charges : Flat Rs 10 per trade.
• Currency Futures Margin : NRML Margins are offered by 5Paisa and that must be paid before entering into the Futures Contract.
• Currency Options Margin : The premium for the option is as per the exchange specified premium.

3. Trade Smart Online

Trade Smart Online is an online discount broker platform by VNS Finance and capital services limited. Just like other best discount brokers, Trade Smart Online provides brokerage plans at very low cost. Alongside equity trading, they offer commodities and currency derivative trading as well.

Key features of  its Currency Segment :

• Min Account Deposit: Null
• Trading Charges : Flat Rs 15 per trade or 0.007% per trade.
• Currency Futures Margin : NRML Margins are offered by TradSmartOnline. MIS margins are also offered on currency trading and the amount required in cash in MIS is traditionally much lesser than the NRML order.
• Currency Options Margin : The premium for the option is as per the exchange specified premium.

Global Platforms for Forex Trading :

Above listed all the platforms are SEBI registered brokers in India and trade in currency derivatives having INR as counter currency (though NSE is mulling to introduce cross currencies which don’t have INR as counter currency).

If you are however willing to invest in the global currency pairs like USD/EUR or likes, then you must have an account with a global forex platform, however make sure that you understand the legality, taxation aspect and that you are not protected by any law if your platform decides to run away with your money. 

Here are some of the popular global platforms for Forex Trading…

1. HotForex

Hotforex is one of the leading platforms for forex trading offering many currency pairs including cryptocurrencies. Here are some salient features of HotForex :

• Leverage: upto 1 : 1000
• Account: $5 per month – $500 per month.
• Crypto Currencies : Yes

2. eToro

eToro is another global platform for forex trading offering many currency pairs including crypto currencies. Here are some salient features of eToro :

• Leverage: upto 1:400
• Minimum Deposit: $50
• Crypto Currencies : Yes

Is Forex Trading Legal In India?

Now, this brings us to the question that many people are confused with. Is forex trading legal in India ? The answer is yes, forex trading is legal and well regulated in India if you carry out trading with SEBI registered broker offering the currency pairs that are approved by SEBI. Just like every other trade (equities, derivatives, commodities), forex trading is also regulated by SEBI.

Remember, the forex traders in India cannot indulge in any currency pairs which don’t have INR as the base or quote currency. It is illegal for Indian citizens to trade in other currencies or cross currency pairs in India.

Please note that, you can also trade from SEBI unregulated brokers, pay the speculation tax but then you will not be protected by SEBI against your money.

We hope you liked our comprehensive post on Forex trading. Feel free to comment, if you have been doing Forex Trading and find any of the platforms great. We will definitely include that in our list.

Disclaimer: Forex Trading is a very specialised trading and investment in forex trading is subject to high market risks. Please follow due diligence before trading. This post is not an advice to chose any broker in particular.This blog is for information purpose only and can’t be constituted as a professional advice in any regard. Fintrakk.com or any of its representatives are not responsible for any losses occurring in Forex Trading.