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How to Start Currency Trading in India?

Currency trading is one of the most lucrative investment options for retail investors. But lack of knowledge, resources and vague government laws have discouraged retail middle-class investors from participating in the forex markets.

Before we discuss how to start currency trading in India, it is essential for you to know:

  • What is Currency Trading?

  • What are the basics of Currency Trading?

  • How to start Forex Trading in India?

  • Who can trade in the Forex markets?

  • What are the various types of Currency Trading strategies?

  • Should you start Currency Trading?

  • FAQs

What is Currency Trading?

Currency trading, forex trading, FX trading are all one and the same and refers to buying and selling of currency pairs for hedging, speculation or arbitrage.

What are the basics of Currency trading?

To master currency trading, you need to be well informed about the basics of currency trading like:

  • Currency pairs: Currencies are always traded in pairs.

  • Bid & ask: The price at which a currency is bought is known as the ‘bid’ price and the price at which a currency is sold is known as the ‘ask’ price.

  • Spread: The difference between the bid and the ask price is known as the ‘spread’.

  • Pip: A point in price or pip is the smallest movement (change) in the exchange rates of the currency pair.

  • Lots: Unlike the share market where you can buy 1 share, currency market deals in lots.

  • Leverage: Leverage helps you take big positions against a small collateral i.e. margin.

You can refer to our article on ‘What is Currency Trading or Forex trading?’ to understand the basics of currency trading in detail.

How to start Forex trading in India?

As mentioned earlier, currency contracts in India are cash settled i.e. you do not get physical delivery of the currencies. Therefore, you don’t need a demat account for currency trading. You only need a trading account to start forex trading in India.

The steps to start forex trading in India are simple:

Get on the internet.

Find an authorised and real forex broker (similar to finding a needle in a haystack).

Open the best forex trading account in India and make the initial deposit.

Get access to your broker’s forex trading platform.

Place your first trade and you’re done.

Well, it’s easier said than done. So let us elaborate.

How to start forex trading in India : Step #1 : Get on the internet

To start forex trading in India, you need a good internet service provider with minimal disruptions. Forex trading is all about quick reactions. A delay of even 5 seconds can be the difference between profit or loss. Since forex trading is done in lots and on high leverages, even a small delay can magnify your loss.

How to start forex trading in India : Step #2 : Find an authorised and real forex broker

There are thousands of fake forex brokers online. Finding a trustworthy forex broker is a time consuming activity.

While selecting a forex broker ensure that:

The broker is authorised by SEBI to provide forex trading services.

The broker is well-reputed amongst forex traders.

The broker offers a low, flat brokerage structure.

The broker offers a high leverage ratio against low margins.

The broker has a well maintained and accurate trading platform.

Assuming you do find a real traditional forex broker, you will end up paying very high brokerage charges in exchange for forex research and tips.

It is therefore recommended to opt for a discount broker like Samco . Samco has the lowest brokerage rates in the industry and charges flat Rs 20/trade irrespective of the trade size.

How to start forex trading in India : Step #3 : open the best forex trading account in India

Many traditional and discount brokers still have a lengthy offline trading account opening process which involves unnecessary back and forth couriers.

Typically, you can spend anywhere between Rs 120 to Rs 200 on these couriers. With the same amount, you can place 6-10 trade orders with Samco. To sweeten the deal, you get 100% brokerage cashback for the first month.

The best part about opening a samco trading account is that the account opening process takes only 5 minutes. There is no minimum deposit required to open a trading account with Samco.

[Suggested Reading: How to Open a Forex Trading Account?]

How to start forex trading in India : Step #4 : Get access to the forex trading platform

Your broker will provide you an online trading platform or a software through which you can place your orders and start forex trading. Samco launched StockNote, its flagship trading app which is powered by a Giga trading engine. It gives you real time news, insights from the markets and is the best, most reliable trading platform for currency trading in India

How to start forex trading in India : Step #5: Place your first trade

After successfully completing the above steps, you can start trading in the Indian forex markets. As a beginner you should start with smaller amounts and a low leverage. You should also not expose more than 1% - 2% of your capital in each trade.

You can refer to the top 10 forex trading tips and the top forex strategies before you start trading in the forex markets.

Who can trade in the Forex markets?

The primary participants in the forex market are:

  • Hedgers

    Hedgers use the currency markets to hedge against unfavourable exchange rate movements. Their primary objective is not to make money but to hedge their risk. Hedgers typically include importers, exporters, central banks, banks and corporations.

  • Speculators

    The primary objective of speculators is to generate profits in the forex markets. They do not carry any foreign exchange risks but simply buy and sell currency derivatives to profit from exchange rate movements.

  • Arbitrageurs

    Arbitrageurs are only interested in capitalising on the price differences of the same currency derivative between the three stock exchanges.

So, they will buy the derivatives contract at a low rate on one exchange and sell the same at a higher rate on another exchange. Arbitrageurs are quick profit makers and do not hold long positions in the market.

What are the various types of Currency trading strategies?

There is no ‘one-strategy-fits-all’ when it comes to currency trading. Every trader has a unique trading style which forms the basis of their investment strategy. Some investors might prefer day trading, while others might prefer scalping.

The top forex trading strategies can be broadly classified as:

  • Price action trading

    Price action trading strategy involves studying the historical price movement of currencies and deciding the support and resistance levels. This strategy works in all market conditions and across all time frames (short,medium and long-term).

  • Position trading

    This is a long term strategy and involves taking positions to benefit from major shifts in currency rates. This strategy takes months to unwind and requires immense patience and discipline.

  • Day trading

    This strategy is also known as intraday trading strategy and the positions are closed by the end of the trading day. This is a pure short- term technical strategy and does not involve fundamental analysis.

  • Scalping

    Scalp trading involves buying and selling currency pairs for the smallest pips. Scalp trades last anywhere between 30 seconds to 1 minute. The trader needs to be glued to the screen at all times to take advantage of the smallest currency movement.

[Suggested Reading: The top Forex trading strategies and how to implement them]

Should you start Currency trading?

Currency trading is a unique market wherein all kinds of investors can make money. You can make money scalping, day trading or by taking long-term positions. You can be a fundamental analyst or a technical analyst.

All you need to be a successful forex trader is discipline, patience, practice and the right partner. Samco , with more than two decades of experience in forex trading is the perfect trading partner for you.

To open a forex trading account with Samco, simply visit https://www.samco.in/ and get started.

[Suggested Reading: How to Open a Forex Trading Account?]

FAQs

Q
Is online forex trading illegal in India?
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A
No, online forex trading is not illegal in India, but is allowed only through a SEBI registered forex broker like Samco.
Q
Do I need a demat account for forex trading?
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A
No, you only need a trading account for forex trading in India.
Q
Which is the best app for currency trading in India?
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A
Each app has its pros and cons, however the best trading app should be reliable and easy to use. Samco’s Stocknote is one of the best forex trading apps in India.
Q
What is the difference between forex trading and currency trading?
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A
Forex trading, currency trading, FX trading and foreign exchange trading are all one and the same.
Q
Is forex trading gambling?
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A
No, forex trading is a legal activity jointly regulated by SEBI and RBI.