Currency Trading in India
Currency trading in India is one of the fastest growing sections of the Forex market. In India, Forex works a little differently than it does in other countries.
With a combination of legal issues and a lack of Forex brokers, it can be a bit more difficult for traders in India. Here are the basics of how it works to trade in India.
Exchanging the Rupee
The national currency of India is the Rupee. In order to trade in the Forex market, Indian citizens have to exchange the Rupee for some other type of currency. This is because in the Forex market, none of the major pairs contain the Rupee. Indian law only allows you to exchange up to 200,000 USD per year without having a specific reason.
Trading on Margin
Although you have the option of exchanging up to $200,000 USD in Rupees, that does not necessarily mean that you will have the opportunity to trade Forex with that money. Indian laws prevent individuals from using that money to trade on margin. Since trading on margin is a requirement of the Forex market, this means that it is not technically legal to use this as a way to trade in the foreign exchange market.
Side Note - If you happen to be reading this and you're looking for a good Indian broker to work with, check out our review of Forex Control here. They're situated in Bangalore, India and are a good option to consider.
Ways Around The Problem
It is not technically illegal to trade Forex in India. They just make it very difficult for you to do so because you can't trade on margin with money that you exchange and you can't trade Rupees in the market.
One way around this is to say that you aren't exchanging your money for the purpose of depositing it in a margin account with your broker. This is semi-legal because they won't be able to verify what you are using the money for.
Another option is to give your money to a friend outside the country and have him transfer the money for you. This is a completely legal option and it works well.
The third option is to use a form of online currency. For example, E-Gold is an online currency that allows you to make purchases and fund accounts. You simply deposit money with an E-Gold provider and then you can use your money with any broker who accepts it.
Brokers
If you're looking for an Indian online Forex broker, there are a few of them to choose from. For example, GK Forex and India Forex are a couple of the more popular brokers in that area.
You can also deposit money into foreign brokers when you live in India. If you'd like to see a few of the brokers that are available to you, you can check out a Forex broker comparison here.
Getting Started
Before you get started trading, you need to spend some time learning about the market and how to trade. Check out as much information about the Forex market as you can and learn about trading systems. Otherwise, you'll probably end up blowing up your account and all of the trouble getting started will be for nothing. If you enjoyed this article about currency trading in India, be sure to share it with your friends by clicking on the social networking buttons below. Thanks for stopping by Forex Trading Rookie!
