How to Start Forex Trading in India

Forex trading in India is often seen as a lucrative opportunity for many to earn extra income.

With the rising inflation in the country, people want to earn more to cover their livelihood expenses. But forex trading is not as easy an option as it seems.

Yes, seeing and reading about the success of others makes one excited to also jump into this pool, but they often end up trading illegally or losing money.

This is why it is very crucial to have the right knowledge and the right legal approach to become a proficient trader and earn more profits through forex trading.

In this blog post, we will provide you with a beginner’s guide to forex trading in India that will help you take the first step.

So, with that, let’s start this blog!

What exactly is forex trading?

First, let’s clarify what forex trading is and how it operates. Buying one currency and selling another to make a profit is known as forex, or foreign exchange trading. The words foreign and exchange are combined to form the term forex (FX).

According to the Foreign Exchange Market Report, in 2024, the size of the global foreign exchange market was estimated to be USD 861 billion. According to the publisher, the market will grow at a compound annual growth rate (CAGR) of 6.64% from 2025 to 2033, reaching USD 1.53 trillion.

The forex market is a marketplace where currencies are exchanged. This global market’s lack of a central marketplace is among its oddest characteristics. Instead, OTC (over-the-counter) electronic currency trading is used. This suggests that rather than taking place on a single, centralized exchange, all of the transactions are conducted between traders worldwide via computer networks.

Is forex trading legal in India?

Before diving into forex trading, it’s essential to understand its legality in India. The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) regulate forex trading to prevent illegal activities like money laundering.

In India, forex trading is legal but with restrictions. You can trade only in major currency pairs (like USD/INR, EUR/INR, GBP/INR, and JPY/INR) through SEBI-registered brokers. However, trading in minor or exotic currency pairs or using international brokers without RBI approval is illegal.

So always ensure you are trading through an authorized broker to avoid legal troubles.

How does forex trading work?

Forex trading involves currency pairs, where one currency is bought while the other is sold. The first currency in the pair is the base currency, and the second is the quote currency.

For example, in USD/INR = 83.50, USD is the base currency, and INR is the quote currency. This means 1 USD = Rs 83.50.

If you believe the USD will strengthen against the INR, you buy the pair. If you think the USD will weaken, you sell. Your profit or loss depends on how the exchange rate moves.

Now, let’s understand some steps that you must know before starting forex trading in India.

Steps to start forex trading in India (2025 Guide)

Step 1: Learn the basics:

Read books, watch tutorials, and follow financial news.
Understand technical analysis and fundamental analysis.

Step 2: Choose a SEBI-regulated broker:

Avoid unregulated international brokers.
There are many indian brokers available. Go check them out now.

Step 3: Open a trading & demat account:

Submit KYC documents (PAN, Aadhaar, Bank details)
Some brokers offer forex trading via their platforms.

Step 4: Start with a demo account:

Practice with virtual money before investing your real capital.
Test strategies without financial loss.

Step 5: Develop a trading strategy:

Set entry/exit rules, risk-reward ratio, and stop-loss.
Avoid emotional trading— stick to your plan.

Step 6: Start small & use risk management:

Begin with small capital (e.g., Rs 5000- 10,000)
Never risk more than 1-2% of your capital per trade.

Step 7: Monitor & improve:

Review trades weekly and identify mistakes.
Stay updated with global economic events.

Thus, these were some of the steps you must follow, but don’t jump in blindly. Learn first.

Conclusion

If done correctly and legally, forex trading in India can be lucrative. Choose a regulated broker, practice on a demo account, start with education, and trade disciplinedly.