OTC Forex Trading illegal in India, Here is trick to trade major currencies

by Bhaveek Patel · 17 comments

in Forex

In year 2011, RBI has come up with a clear notice that, Indians are not allowed to trade in International Forex OTC (over the counter) market (you can read it on the website of RBI). In the meanwhile, stock exchanges has opened the gateway for traders to take positions in currencies like USDINR, EURINR, GBPINR and JPYINR. Currently these four currency pairs are available for trading, But there is a trick by which big traders are trading EURUSD, GBPUSD and USDJPY using those 4 currencies. This trick is known as creating exotic currency pairs i.e. by using standard currency pairs you can create exposure into major currency pairs. This is done by taking positions on different currency pairs, long and short combination.

Example: If you wish to be long on EURUSD, then long EURINR and short sell USDINR. So with these two positions you are net long on EURO and net short on USD. Where as your position in INR will be neutral as you are both long and short on it. For more help look on the below image.

How forex trading is legal in India

Article published on 18 August 2012.

⇒ Recieve FREE Trading Tips Directly to Your Email:

{ 17 comments… read them below or add one }

1 darshan

Thanks for sharing. Are you trading eur usd with this equation and what are the results you get ? As I calculated the brokerage, it is double (2 pip) as compared with international trader because volume you trade is double (one is short other is long position). And the leverage is less (1:20 max) BUT if it give results as in eur/usd pair then it is fantastic TRICK. Thanks again and do share your results. Take care

Reply

2 Bhaveek Patel

I haven’t traded currencies till now. You are right the brokerage will be double as you will open 2 positions here. I have seen the 3 months correlation between them and found it very high around 0.97. So our made EUR/USD more likely will move same as the internationally traded EUR/USD. I can remind you that this is only legal to trade forex major currencies. :) I will trade my self and let you know about the results, I am also very eager to see this.
There are few limitation for this as we can trade currency from 9am to 5pm, But international trading goes 24/5 till Saturday morning. Leverage is limited for us, but international forex have very high leverage about 1:500 :o

Reply

3 Moeen

I am trading in forex from last 2 years. I am here is Saudi, no restriction to Indians to open forex account and all income is white. But in India my relatives are saying that as per RBI its illegal to trade forex there.

Reply

4 Bhaveek Patel

I am not sure about this thing, But as per RBI Indian citizen is not permitted to trade foreign over the counter (OTC) market. But yes if your relatives are having citizenship of other country then they can trade this forex market.

Reply

5 fyroz

I had seen your mail in ournifty.com . Forex trading legal in arab countries like as Saudi, Dubai, Bahrain.

Reply

6 ashish joge

Bhaveekji, I am regular trader in forex, but I am not making money that I was expecting. Can you teach me those techniques/strategies that can help me for positional trading.

Reply

7 Bhaveek Patel

Hi Ashish, I see its becomes difficult to trade forex some times, but yes money can be made trading forex, I am currently managing some forex account with some seriously high balance. If you wish to know more about it contact me on +91-9970777789.

Reply

8 sasidhar

sebi keeps on watching the looting mechanisim happening in the mkts by operators ,and just saying it is probing investigating leaving retal investors hands burn.if fii r favoured why cant t indians be allowed to trade forex overseas

Reply

9 Jaspal Singh

Hi, I was thinking to start forex trading but later on going through your article, I will be trading forex on indian exchanges. I think it will be safer to trade here, do you provide any advice or tips on forex trading. Also I was interested in organising seminar here at new Delhi. I have already mailed you the proposal for seminar.

Reply

10 Bhaveek Patel

Sir, We can conduct seminar at your place, call me on +91-9970777789 for complete info on terms and conditions on it, along with the charges.

Reply

11 darshan

As I trade last week in eur/inr & usd/inr pair with reference the eur/usd movement means when I want to long eur/usd what I did :- long in eur/inr and short in usd/inr but the result I get nothing because both pair eur/inr and usd/inr goes long so result is zero we should find some other idea to get the result. There is very much up down movement(average 100-150 pip) in eur/usd but didn’t find with inr. What you suggest if I do only long in eur/inr nothing in usd/inr if want to long eur/usd

Reply

12 joe

hi ashish is possible if you can watch price action and trade the trends ,please contact so can get a reasonable success in trading

Reply

13 easy Forex uk

In other words, you stand to profit from major moves when economic news events such as
trade balance data releases, Interest Rate decisions and
monetary policy decisions are scheduled. Still, others brokers
allow you to trade whichever size you wish, even one unit.
5GB of data in 90 seconds in the on-demand scan test
(that is, scans started by pressing the Scan Now button).

Reply

14 Nick

ok that is good, but that’s called spread call. and it happen some time but if you watch line chart & compare both EURINR & USDINR uill get that 80% time they moves together……

Reply

15 sushovon das

sir i am interested in Forex trading.but i did’t understand Forex trading is legal or e legal in India.if this platform is legal so,how to procedure in trading plsss inform me, as soon as possible.

Reply

16 sumit kumar

Hi, please suggest me …..
(1) if i give the forex fund managing service to out of India(to foreigners like in USA, UK…etc).And i will take 50% profit sharing fee for my fund managing service to my clients. Then i want to give the tax for earning by ‘forex fund-managing service’, it is legal or not in India?
(2) if i made some US Dollars in e-currency like perfect money by online selling any services or software in USA. And if i use these USD in forex trading(on eurusd, gbpusd, usdjpy etc.) even i will not transfer a bit of amount from outside of country(India) for forex trading. Then i want to give the tax for earning by forex trading, it is legal or not in India?
(3) also explain briefly…..what are the logics behind that “why Indian government are not allowing forex trading”?

Reply

17 ANIL

hi sir. i want to start trade in forex trading like eur/usd . of out of india base portfhollio like u.k, philippines, . sir my question is
1- is this legal in india
2- if i do transgation can bank block my account
plz give me ans. thanking you

Reply

Leave a Comment

Previous post:

Next post: