What is the punishment for forex trading in India?

[bikula]

i used to work for an illegal forex company where they would create a demo account with the actual money you gave them, said it is a live account(quotes are same)...they know you will never make a profit...every paise used to go to them..and they had the nerve to charge $10.00 per trade as well....a client once made $1000.00 and booked the profit and the next day there was no history of the transaction.well he could not do anything..just felt like sharing

 

[sumeetsj]

Lot of discussions have been done regarding trading of Forex using a foreign broker.

Two questions in running are my mind:

1. Has any one really made money by trading Forex in offshore accounts ?

If the answer to question no. 1 is yes then,

2. Have u actually seen that money come back to you and spent it ?

Awaiting reply..
Thanks in advance

 

[Piratetrader]

Lot of discussions have been done regarding trading of Forex using a foreign broker.

Two questions in running are my mind:

1. Has any one really made money by trading Forex in offshore accounts ?

If the answer to question no. 1 is yes then,

2. Have u actually seen that money come back to you and spent it ?

Awaiting reply..
Thanks in advance

Personally i funded 340$ in etoro. this was 7 months ago . i blew it in 6 days! blowing the money was like taking a candy from a baby! to your second question "no" ! but if i funded again and even made profit forget about withdrawing for 3 years, i need to make a good capital. my dream is a 200,000$ capital and 30-40k every month(just day dreaming sometimes) PPPPP maybe in the next 3-4 years ! your questions tell me you have no idea about what forex is i tell you what come and visit the threats "some of my forecast" and "i have funded 500$ , what amount should i aim for everyday" in traderji! There is my trading guru. His name is Mr paul he has 7 years of exp and beleive me he is really a super expert if you have any questions ask him he will reply and help you for sure!

 

[sumeetsj]

All the best my dear friend in all your endeavors.

$500 to $2,00,000. Means 400 times.

Not that its not do-able, will require heavy amounts of discipline.

How do u plan to inward remit this kind of money ?

About my knowledge of forex: we can discuss later.

Thanks for your reply. Awaiting response for this also.

 

[Piratetrader]

All the best my dear friend in all your endeavors.

$500 to $2,00,000. Means 400 times.

Not that its not do-able, will require heavy amounts of discipline.

How do u plan to inward remit this kind of money ?

About my knowledge of forex: we can discuss later.

Thanks for your reply. Awaiting response for this also.

hello friend, i said i was day dreaming, i wish to have that kind of capital!! and its not possible at least not possible for me! and if you talk about the plan if i had that capital i would make 35k every month and transfer it to royal bank of scotland i would make a transcation of 2000$ every 2 or 3rd day, anything above 2,200$ is reported to rbi, anyways maybe if i had that capital i would be in an audi a6 with beautful girls.i hope u know what i mean

 

[4xpipcounter]

The thing that is puzzling to me, and I'd like to hear an answer to this:
If it is illegal to trade forex in India (As per FEMA, that settles it.), then why are brokers allowed to make it available to traders in India?

Here's an example of something I ran into. I don't like trading on just 50:1 margin. That is all that is available by US brokers. I've inquired to overseas brokers and many have told me they are not allowed to open accounts for US citizens. There are also many that have terrible reputations. My point is the door is shut with many brokers and banks overseas. Why is the door just not shut to Indian residents when they try to open an account with an overseas broker?

I would also think it is easier to fly under the radar when someone has a smaller amount of money vested. But then, to one degree or another, all are subject to the letter of the law.

 

[adityasaraf007]

The thing that is puzzling to me, and I'd like to hear an answer to this:
If it is illegal to trade forex in India (As per FEMA, that settles it.), then why are brokers allowed to make it available to traders in India?

Here's an example of something I ran into. I don't like trading on just 50:1 margin. That is all that is available by US brokers. I've inquired to overseas brokers and many have told me they are not allowed to open accounts for US citizens. There are also many that have terrible reputations. My point is the door is shut with many brokers and banks overseas. Why is the door just not shut to Indian residents when they try to open an account with an overseas broker?

I would also think it is easier to fly under the radar when someone has a smaller amount of money vested. But then, to one degree or another, all are subject to the letter of the law.

This is for all those who think trading Forex is illegal in India. We all know that we need to comply with RBI Guidelines along with FEMA in order to trade in Forex.

------------------------------------------

Here are the casual definitions of the words I would use in the post. I won't go into the complexities of the definitions, these would be such that a common individual can understand them:

1. Forward Contracts: These are different than Future Contracts. Forwards Contracts are just like Futures except for that they are non-standardized and can be entered into by any two individuals/entities. Whereas Futures Contracts are traded on the Exchange and standardized by the Exchange.

2. Transaction Exposure: When we have a certain amount of Foreign Currency Receivable/Payable, but the equivalent amount of Home Currency is unknown. Example: in case of Exports/Imports when a bill is drawn in Foreign Currency.

------------------------------------------

What is illegal is trading in FORWARD CONTRACTS without Transaction Exposure. This means that we cannot go to a Bank and enter into a Forward Contract to buy $500 just because we feel like buying it.

Trading in Futures and Options on an Exchange is perfectly fine for anyone even when he doesn't have any sort of Transaction Exposure.... There is no violation of any Law.

-------------------------------------------

How to Trade in Forex Derivatives/Commodity Derivatives/Foreign Securities - General Guidelines according to my perception:

1. Resident Individuals (only Indian Resident Individuals are allowed to avail this Scheme - HUF, Partnership, Companies, etc are not allowed to avail this Scheme) can take the advantage of "Liberalised Remittance Scheme for Resident Individuals". This Scheme allows you to make remittance upto $ 2,00,000/- per Financial Year for any Capital or Current Account Transaction. (Trading is classified as Capital Account Transaction).

2. Please contact your Bank to use this Scheme. I guess, we would need to open a Foreign Currency Account. Also, enquire if you would have to furnish any other Declaration to RBI for performing any sort of transaction through it.

-------------------------------------------

PS: I have gone through a brief overview of FEMA. However, please consult a qualified CA or your Bank Manager to know all the things required to be complied for this. What I can say for sure is Indians are completely allowed to Trade in Forex Derivatives/Commodity Derivatives whether in India or abroad however we need to give some declarations to RBI (either directly or through the Banks) and there is a maximum limit that we can remit outside.

I do not trade in Forex and neither do I have any accounts with Foreign Brokers. Please take it as a general guideline and not as a Supreme Court Verdict

 

[4xpipcounter]

Adityasara, so if I am reading this right, you can trade forex as long as you keep the transaction exposure under $2 million. (That amount would have to include the leverage as exposure to the trade.)
If that is the case, I guess Indian residents would be able to trade up to that with one broker. Stop trading with that broker, then divest funds with another.
BTW, these are all in the forms of questions for my personal understanding.

You and I are polarized with the markets we trade. I only trade forex, but just desire the understanding on this matter.

This is for all those who think trading Forex is illegal in India. We all know that we need to comply with RBI Guidelines along with FEMA in order to trade in Forex.

------------------------------------------

Here are the casual definitions of the words I would use in the post. I won't go into the complexities of the definitions, these would be such that a common individual can understand them:

1. Forward Contracts: These are different than Future Contracts. Forwards Contracts are just like Futures except for that they are non-standardized and can be entered into by any two individuals/entities. Whereas Futures Contracts are traded on the Exchange and standardized by the Exchange.

2. Transaction Exposure: When we have a certain amount of Foreign Currency Receivable/Payable, but the equivalent amount of Home Currency is unknown. Example: in case of Exports/Imports when a bill is drawn in Foreign Currency.

------------------------------------------

What is illegal is trading in FORWARD CONTRACTS without Transaction Exposure. This means that we cannot go to a Bank and enter into a Forward Contract to buy $500 just because we feel like buying it.

Trading in Futures and Options on an Exchange is perfectly fine for anyone even when he doesn't have any sort of Transaction Exposure.... There is no violation of any Law.

-------------------------------------------

How to Trade in Forex Derivatives/Commodity Derivatives/Foreign Securities - General Guidelines according to my perception:

1. Resident Individuals (only Indian Resident Individuals are allowed to avail this Scheme - HUF, Partnership, Companies, etc are not allowed to avail this Scheme) can take the advantage of "Liberalised Remittance Scheme for Resident Individuals". This Scheme allows you to make remittance upto $ 2,00,000/- per Financial Year for any Capital or Current Account Transaction. (Trading is classified as Capital Account Transaction).

2. Please contact your Bank to use this Scheme. I guess, we would need to open a Foreign Currency Account. Also, enquire if you would have to furnish any other Declaration to RBI for performing any sort of transaction through it.

-------------------------------------------

PS: I have gone through a brief overview of FEMA. However, please consult a qualified CA or your Bank Manager to know all the things required to be complied for this. What I can say for sure is Indians are completely allowed to Trade in Forex Derivatives/Commodity Derivatives whether in India or abroad however we need to give some declarations to RBI (either directly or through the Banks) and there is a maximum limit that we can remit outside.

I do not trade in Forex and neither do I have any accounts with Foreign Brokers. Please take it as a general guideline and not as a Supreme Court Verdict

 

[adityasaraf007]

Paul Sir,

First of all the amount is $0.2 million and not $2million.
Next, Transaction Exposure is required only for Forward Contracts.

To trade in Forex Derivatives of Futures and Options on an Exchange, there is no requirement of any Transaction Exposure.

(I hope you understood the meaning of 'Transaction Exposure' well - it means that you already have a payable/receivable in Foreign Currency by way of Import/Export/Borrowing/Lending/etc. To make it clear for example: I export a laptop to you in US for which you would pay me $800 say after 10 days. This is a Transaction Exposure for me as I know the amount of Foreign Currency I would receive, but I do not know for certain how much Rupees would get into my pocket. To hedge this I can enter into a Forward Contract with my Bank. Transaction Exposure is a requirement to enter into Forward Contract.)

However, without this Transaction Exposure too I am completely eligible to trade in Currency Futures or Options listed on NSE.

But suppose I want to trade Currency Futures on a US Exchange. For this I would have to remit some amount of money to the US Broker. I can remit a maximum of $0.2million during a Financial Year. Here, I am talking about remittance, so the question of leverage doesn't arise over here. If the US Broker allows me a 50 times Margin, then I can even Trade for $10million. But to make this remittance to US Broker I would have to submit a Declaration to RBI and have to seek its approval.

Probably, because we need to seek the approval of RBI to trade abroad, I guess people call Forex Trading illegal for Indians. This is just my guess though, I am still quite an amateur in this field.

Regards

 

[4xpipcounter]

Thanks for you time in clearing it up. In a way, it sounds like a paradox. It's illegal to trade forex, but if you get RBI approval, then it is okay.

Paul Sir,

First of all the amount is $0.2 million and not $2million.
Next, Transaction Exposure is required only for Forward Contracts.

To trade in Forex Derivatives of Futures and Options on an Exchange, there is no requirement of any Transaction Exposure.

(I hope you understood the meaning of 'Transaction Exposure' well - it means that you already have a payable/receivable in Foreign Currency by way of Import/Export/Borrowing/Lending/etc. To make it clear for example: I export a laptop to you in US for which you would pay me $800 say after 10 days. This is a Transaction Exposure for me as I know the amount of Foreign Currency I would receive, but I do not know for certain how much Rupees would get into my pocket. To hedge this I can enter into a Forward Contract with my Bank. Transaction Exposure is a requirement to enter into Forward Contract.)

However, without this Transaction Exposure too I am completely eligible to trade in Currency Futures or Options listed on NSE.

But suppose I want to trade Currency Futures on a US Exchange. For this I would have to remit some amount of money to the US Broker. I can remit a maximum of $0.2million during a Financial Year. Here, I am talking about remittance, so the question of leverage doesn't arise over here. If the US Broker allows me a 50 times Margin, then I can even Trade for $10million. But to make this remittance to US Broker I would have to submit a Declaration to RBI and have to seek its approval.

Probably, because we need to seek the approval of RBI to trade abroad, I guess people call Forex Trading illegal for Indians. This is just my guess though, I am still quite an amateur in this field.

Regards