Currency Trading In India: Your Ultimate Resource For Forex Trading Success

Introduction

Currency trading, also known as forex trading or foreign exchange trading, has become increasingly popular in recent years. It offers individuals and investors in India the opportunity to engage in the global currency market and potentially profit from fluctuations in exchange rates. Whether you're a seasoned trader or a beginner looking to explore the world of currency trading, understanding the basics and finding the right resources and platforms is essential. In this comprehensive guide, we will delve into the intricacies of currency trading in India, providing you with valuable insights, a list of currency pairs, best brokers, trading timings, taxation details, and practical examples to help you navigate this dynamic market successfully.

The scope of currency trading in India has expanded significantly, thanks to technological advancements and the ease of accessing global financial markets. With the ability to trade various currency pairs, including major currencies like the US dollar, euro, and British pound, as well as cross-currency pairs, investors can diversify their portfolios and take advantage of international market opportunities. Additionally, the availability of user-friendly trading platforms and mobile applications has made it easier than ever to engage in currency trading in India. However, it is crucial to choose the right broker that aligns with your trading goals, offers competitive fees, provides robust research tools, and ensures regulatory compliance. Whether you're interested in spot trading, futures and options, or exploring the exciting world of forex, this guide will equip you with the knowledge and resources needed to embark on your currency trading journey with confidence.

Types of Forex Market

There are 5 types of currency markets in India – spot, forward, futures, options and swaps.

The spot market is the marketplace for currency trading at real-time exchange rates. 

On the other hand, forward markets deal in over-the-counter (OTC) forward contracts. Forward contracts are agreements between parties to exchange a particular quantity of currency pair at a specific rate and on a given date. They help in hedging currency risks i.e. the risk of changing values of currency assets due to fluctuations in currency exchange rates. However, forward markets do not have a central exchange for their operations. Therefore:

They are highly illiquid (hard to find buyers or sellers randomly)

They usually do not require any collateral and thus have counterparty risk i.e. risk of parties not following through with an agreement

The futures markets are basically forward markets, but with centralised exchanges like the NSE. Therefore, they have higher liquidity and lower counterparty risk than forward markets. Currency futures or FX futures or currency derivatives are available on the NSE on INR and four currencies viz. US Dollars (USD), Euro (EUR), Japanese Yen (JPY) and Great Britain Pound (GBP). Cross Currency Futures & Options contracts on EUR-USD, USD-JPY and GBP-USD are also available for trading in the currency derivatives segment. Since all transactions are publicly available and settled in cash, it is easier to trade, speculate and perform arbitrage in the futures market.

The options market allows traders the right to buy/sell currency at a specified price on a specified date through a central exchange such as the NSE. The currencies available are the same as that of the NSE currency futures market.

Currency swaps are agreements between two parties to exchange a principal and interest amount in different currencies only to be re-exchanged at a specific later date. At least one of the interest rates in the agreement is fixed.

Future scope of currency trading in india

Today, scope of Forex management is very wide. All need Forex for their own purpose. Companies, firms and individuals uses foreign currency for achieving their aims. So, everywhere is Forex management.

Understand the Scope or Area of Forex Management with Simple Examples

1. An Employee Who is Working in Foreign Company:

A person who is providing service to foreign company and earning salary in foreign currency. He need to manage whether he will convert it in his country's currency today or wait for good time.

2. A Student Who is Studying in Foreign Country:

A student who went to foreign country for study, needs foreign currency. He has to deposit his own currency into bank and gets foreign currency on the basis of current Forex rate.

3. Banks :

Banks also need foreign currency because it earns money by providing foreign exchange currency. For example, if any Indian who has earned $ 3200 from USA will deposit in his bank. Bank will convert in Indian rupees and then bank will get fees for this.

4. Tax Departments : 

Tax department also included in scope of Forex management because they are interested to get service tax when other country's currency is converted into their own currency.

5. Importers :

Forex is also needed for importers. Because they have to pay to foreign country's company for getting their products. So, scope of Forex management. Means when importer will pay. It depends when his country's currency will strong. Otherwise, imports will be costly.

6. Exporters :

Exporters will some time gets his sales earning in foreign currency. So, they need to convert into their own currency. 

7. Transfer of Profit to Holding Company :

If any subsidiary company is working in any foreign currency, it needs to transfer his profit to his holding company in foreign currency. Holding company can also earn profit on Forex if it convert it on the right time. 

8. Travelling :

If any tourist will will visit any foreign country, he or she need the currency of same country. So, it will convert its own currency from bank.

9. For Doing Forex Business :

If you are the Forex dealer, you need to buy or sell forex. So, there is big scope of forex in forex business. 

10. Foreign Investment :

Our P.M. goes to foreign country. Foreign P.M. comes in our country. They contract for their country's people welfare. So, there will transfer big foreign currency from one country to another country in the form of investment.

List of Currency Trading in India

Currency Derivatives are Future and Options contracts which you can buy or sell specific quantity of a particular currency pair at a future date. It is similar to the Stock Futures and Options but the underlying happens to be currency pair (i.e. USDINR, EURINR, JPYINR OR GBPINR) instead of Stocks. A call option contract of USDINR of expiry 27th Jun, 2017 for Strike Price ‘46’ will be represented by symbol ‘OPTCUR-USDINR-27JUN2017-46-CE’. It is not only a good investment option but there are multiple benefits of currency trading in India as well.

Currency Trading Pairs for India

• USD/INR (U.S. Dollar to Indian Rupee)

• EUR/INR (Euro to Indian Rupee)

• GBP/INR (British Pound to Indian Rupee)

• JPY/INR (Japanese Yen to Indian Rupee)

• AUD/INR (Australian Dollar to Indian Rupee)

Best RBI approved forex broker in india

When it comes to choosing the best broker for currency trading in India, several factors need to be considered, including trading platforms, fees, customer support, research tools, and regulatory compliance. Here are some of the top brokers known for their reliable services in the Indian currency trading market:

1. Angel Broking: 

Angel Broking is a popular brokerage firm known for its innovative technology and research capabilities. They provide a user-friendly trading platform, detailed market analysis, personalized trading advice, and a wide range of investment options, including currency trading.

2. Zerodha: 

Zerodha is one of the leading discount brokers in India, offering a user-friendly trading platform called "Zerodha Kite." It provides seamless trading experience, competitive brokerage fees, advanced charting tools, and a vast range of educational resources for traders.

3. ICICI Direct: 

ICICI Direct is a renowned full-service broker with a strong presence in India. It offers a feature-rich trading platform, in-depth research reports, personalized advisory services, and access to multiple markets, including currency trading.

4. HDFC Securities: 

HDFC Securities is another well-established broker in India, offering a comprehensive range of financial services. Their trading platform provides a seamless trading experience, real-time market data, research tools, and personalized support to cater to the needs of currency traders.

It's important to note that the choice of a broker depends on individual preferences and trading requirements. Before finalizing a broker, it is advisable to evaluate their offerings, compare fees and services, and consider reviews and feedback from existing customers.

Currency Trading in India Time

The Indian forex market operates from Monday to Friday, allowing traders to participate in currency trading during specific trading sessions. The market timings in India are as follows:

• Indian Standard Time (IST): 9:00 AM to 5:00 PM

• European Session: 1:30 PM to 10:30 PM IST

• U.S. Session: 7:30 PM to 4:30 AM IST

• Asian Session: 4:30 AM to 1:30 PM IST

Best App for currency trading in India

1) Angel One App

The Angel One trading application has a very simple and easy-to-use interface, which makes it a great option for beginners. It comes with many advanced trade analysis tools, helping people discover their mistakes and become better traders.

• Android Rating - 4.2/5.0

• IOS Rating - 3.6/5.0 stars 

• App Downloads - Over 1 crore

• Speciality - Has many advanced trade analysis tools 

• Company - Angel One

Features

• Quick selling and of stocks 

• Amazing user interface

• Mutual funds investment option is available

Advantages 

• Low investment charges 

• Option to invest in the upcoming IPO in India

Disadvantages

• Provides no support for e-wallets

• Does not have the copy trading feature

 Charges

• Rs. 20 is charged across commodities, forex, options and futures.

2) Zerodha Kite

Zerodha Kite is an all-in-one trading solution for people. It has many advanced trade analysis tools and a very simple user interface, making it a superb option for both beginners and professional traders.

• Android Rating - 4.3/5.0

• IOS Rating - 3.2/5.0 stars 

• App Downloads - 100 Lakhs +

• Speciality - Provides all types of trading option

• Company - Zerodha

Features

•Superfast buying and selling of stocks

• Large number of both local and international stocks are listed

• Simplistic user interface

• It is an all-in-one trading solution

Advantages

• Numerous languages are supported

• Trading can be done even with a weak internet connection

Disadvantages

• The mutual funds option is not available.

Charges

• Rs. 20 is charged per executed order in intraday

• No brokerage charges across any investments

3) ICICI Direct App

ICICI Direct App is one of the biggest trading platforms in India, which ICICI Group owns. It provides online trading and investment services to more than 50 lakh customers. You can open your account on this platform for free.

• Android Rating - 3.6/5.0

• App Downloads - Over 10 lakhs

• Speciality - Easy to use trading application  

• Company - ICICI Group

Features

• Provides many analytical tools such as charting, graphs, live P&L statements 

• Speedy order placements, just swipe to sell or buy stocks 

• Offers several plans with features and benefits such as neo plan, prime plan, etc.

Advantages

• Just swipe to buy or sell stocks 

• Pay later with a marginal trading option 

Disadvantages

• Not great reviews on iOS and Android

• Slow login process

Charges

• Rs. 20 per executed order for equity delivery, options, etc.

4) 5paisa App

5paisa App is one of the most popular trading applications in India. It allows its customers to trade at all three big exchanges, i.e., BSE, NSE, and MCX, which makes it a superb option.

• Android Rating - 4.3/5.0

• IOS Rating - 4.1/5.0 stars 

• App Downloads - Over 50 lakhs

• Speciality - Perfect for auto investing 

• Company - 5paisa 

Features

• You get auto investing option   

• Allows you to invest in mutual funds

• Regularly provides amazing offers to its customer

Advantages

• You can set price and time alerts 

• No commission on the mutual fund's investment

Disadvantages

• Do not have commodity trading option.

Charges

• Rs. 20 is charged per order for all forms of trading segment 

5) Upstox Pro Trading app

Upstox Pro is one of the biggest trading applications in India, owned by Upstox. It is popularly known for its instant investing feature and huge local and international stock portfolio. 

• Android Rating - 4.3/5.0

• IOS Rating - 4.1/5.0 stars 

• App Downloads - Over 1 crore

• Speciality - Universal searching tools to determine easy and complex stocks 

• Company - Upstox

Features

• Allows instant investing  

• Comes with TFC feature

• You can define n number of price alerts to get instant updates 

Advantages

• You can set limits for aftermarket orders

• Very simple user interface 

Disadvantages

• You can't invest in IPOs and FPOs using this app

Forex Currency Trading in India:

Forex currency trading in India refers to the trading of foreign currencies in the global forex market. It offers opportunities to profit from fluctuations in exchange rates between different currency pairs. Individuals can participate in forex trading through authorized brokers and adhere to the regulations set by the Reserve Bank of India (RBI).

** Frequently asked questions **

1) what is currency trading in india?

➡️ Currency trading in India refers to the buying and selling of different currencies in the foreign exchange market. It involves speculating on the exchange rate fluctuations between currency pairs, such as USD/INR or EUR/INR.

2) how to do currency trading in india?

➡️ To engage in currency trading in India, you need to open a trading account with a reputable broker, complete the necessary documentation, and fund your account. Then, you can access the trading platform provided by the broker and start placing trades by selecting the currency pair you want to trade and deciding whether to buy or sell based on your market analysis.

3) How do you trade currency?

➡️ Currency trading involves trading one currency against another in pairs, such as USD/INR or EUR/USD. Traders analyze various factors, such as economic indicators, political events, and market trends, to make informed decisions on whether to buy or sell a particular currency pair. Orders can be placed through online trading platforms provided by brokers, and profits or losses are determined by the exchange rate movements.

4) How do I start trading currency online?

➡️ To start trading currency online, you first need to choose a reliable online broker that offers currency trading services. Open a trading account with the broker, complete the necessary verification process, deposit funds into your account, and then you can access the broker's online trading platform to start placing currency trades.

5) What are the available cross currency pair for trading?

➡️ The available cross currency pairs for trading depend on the broker and the currency pairs they offer. In India, popular cross currency pairs include USD/EUR, GBP/JPY, and AUD/CAD, among others. These pairs involve trading currencies that do not include the Indian Rupee (INR).

6) What is the market timing?

➡️ The forex market operates 24 hours a day, five days a week. The market timings can vary depending on the session. In India, the Indian Standard Time (IST) trading hours are typically from 9:00 AM to 5:00 PM. However, it's important to note that the forex market is a global market, and trading activity occurs across different time zones.

7) What will be the base currency in any cross currency pair contract?

➡️ The base currency in any cross currency pair contract is the first currency listed in the pair. For example, in the EUR/USD pair, the base currency is the Euro, and the quote currency is the US Dollar. The base currency represents the unit of measurement and determines the value of the quote currency.

If you want to know more about to currency trading in india watch out this video - Currency Trading or forex trading

Conclusion

Currency trading in India offers individuals and investors the opportunity to participate in the global forex market and potentially profit from fluctuations in exchange rates. It is crucial to understand the risks involved and make informed decisions based on individual financial situations and investment objectives. 

Throughout this guide, we have provided insights into currency pairs, choosing the right broker, trading timings, and taxation. Remember to conduct thorough research, seek professional advice, and practice sound risk management strategies when engaging in currency trading. While the potential for financial gain exists, it's important to note that currency trading involves risks, and past performance is not indicative of future results. By staying informed and making educated choices, individuals can navigate the currency markets with confidence.

Disclaimer: 

The information provided on this website/blog is for general informational purposes only and should not be considered as financial or investment advice. Currency trading in India involves significant risks, and individuals should carefully consider their financial situation, risk tolerance, and investment objectives before engaging in any trading activities. The content provided is based on personal opinions and experiences and should not be interpreted as a guarantee or prediction of future performance. 

We strive to provide accurate and up-to-date information, but we cannot guarantee the completeness, accuracy, or reliability of the information presented. Any reliance you place on the information provided is strictly at your own risk. It is advisable to consult with a financial advisor or professional before making any investment decisions. 

Currency trading in India is subject to market risks, including the potential for financial loss. Past performance is not indicative of future results, and historical data should not be relied upon as a guarantee of future performance. The regulatory guidelines and tax implications related to currency trading may vary, and it is essential to familiarize yourself with the rules and regulations set by the relevant authorities and seek advice from a tax professional to understand the tax obligations associated with currency trading. 

In conclusion, while currency trading in India can provide opportunities for financial gains, it is important to exercise caution, conduct thorough research, and make informed decisions based on your own circumstances.