Step by Step Guide to Start Forex Trading in India For Beginners 2025

Demat account is not required to start forex trading in India as you won’t get delivery of forex in your account at the end of the day.

All the forex trades are cash-settled. You need only two accounts, a forex trading account, and a bank account to start forex trading in India.

Factors to Consider Before Opening a Forex Brokerage Account

#1. Leverage

Leverage is the multiplier, the X times the margin for which you can take a position. For example, if you have $10,000 in your account and have a 10 times leverage then you can take a $10,000 x 10 times = $100,000 worth of the position.

Forex brokerage houses provide a varying amount of leverage in a range of 50:1 to as high as 300:1. Leverage allows you to make large gains with a small investment. However, losses are also bigger if the trades go wrong.

Remember, the higher the leverage, the higher is the level of risk involved. Brokerage houses have protective stops to prevent an account from going negative.

#2. Commissions and Fees

Unlike stock trading, you don’t need to pay fees on each forex trade. Forex trading deals directly with market makers and not through brokers.

Spread on a currency pair is what differs from firm to firm. The difference can be as small as one pip (0.0001), but with a large volume, it can make a significant difference. Larger spreads allow more pips to capture or lose.

You need to check the spreads offered by the brokerage houses on the currency pairs that you intend to trade.

#3. Other Factors

The other factors that matter in the selection of the best forex broker in India are – the different levels of services & programs offered, fees charged, and the education support and training programs offered.

The Forex brokerage houses are regulated in a number of countries under which the firm is registered.

Regulated brokers are required to have certain minimum capital and follow benchmark standards which result in healthy trade practices. Check the reputation of the company before opening an account.

How to Do Forex Trading in India 2025

Forex trading can be done either by buying and selling currency pairs or by purchasing derivatives such as options and futures.

Both of which are quite similar to equity trading.

#1. Buying and Selling

In simple buying and selling currency pairs, you are long on the pair with a belief that the value of the pair goes up and you benefit in the process.

For example, let us assume you purchased a GBP/USD pair at 1.2936. You will profit if the value increases to 1.2937 and above and lose money the moment the value decreases to 1.2635 and below.

The pair rises when the GBP increases in value against the US Dollar.

#2. Using Derivatives

The other way to trade in forex is to use derivatives on the currency pairs like futures and options.

Buying a futures contract creates an obligation to buy the underlying currency pair at a set point in a future date.

Whereas purchasing an option on a currency pair gives you the right to purchase the currency pair at a set rate before a set point in a future date.

In options, you are purchasing the rights and need to exercise them or let the right expire before the set future time and date.

Derivative products can be a bit complex in the beginning but you should understand the basics to start trading.

Read my – Step by Step Guide on Options Trading to know more.

Types of Forex Trading Orders

Now that you know forex trading, it will be handy to know the various types of orders that can be placed.

#1. Market Order or a Limit Order

This is the very first order to open a new position which can be a buy (long) or sell (short) position. Now you have two choices

Market Order

To take a position at whatever exchange rate currently available in the market which is called the market order.

The market order is executed immediately at the exchange rate currently available.

Limit Order

Another way is to set the rate at which you want to buy or sell which is called the limit order.

Limit order gets executed when the rate comes to a predefined limit set by you.

#2. Take-Profit Order

For an open position, a trader may want to lock profits which can be done by placing a take-profit order.

For example, a trader is optimistic that the GBP/USD will touch 1.2940, but is not very certain of the rate moving any further. In that case, he can place a take-profit order and lock in the profits.

The take-profit orders also get executed when the rate reaches the predefined set limits. It may be possible that the rate may move further ahead or may not reach the limit to get the order executed.

#3. Stop-Loss Order

The stop-loss order is just the opposite of the take-profit order, where the trader restricts losses.

For example, you take a long position in GBP/USD at 1.2936 and know that the maximum losses you can bear are 3 pips. In such a case you can place a stop-loss order for closing the position at 1.2933.

A stop-loss order restricts the losses in case the rate moves further down.

How Much Leverage is Right in Forex Trade

Forex trading involves leverages up to 300:1, which means you can trade for amounts up to $30,000 with just $100 in your account.

Misuse of leverage is one of the reasons why forex traders lose money.

A correct way is to get yourself educated and choose a comfortable level of leverage corresponding to your forex trading skills.

#1. Risk of High Leverage

High leverage is akin to borrowing large sums of an amount to take positions. Any adverse rate movement can erode large capital in a single trade.

Let us understand with an example. Assume that you have $1,000 in the account and use a 200:1 leverage which means you have borrowed $200 for every single dollar you have.

Now you can trade up to $1000 x 200 = $200,000.

Forex trading happens in three lot sizes. Standard lots with 100,000 units, mini lots with 10,000 units, and micro-lots with 1000 units of any currency.

With $200K you can buy 2 standard lots.

One pip movement in a standard lot corresponds to 100,000 x 0.0001 = 10 units of change. Thus each pip movement will cost $10 x 2 = $20. If the trade goes against 25 pips then you stand to lose 25 pips x $20 = $500. Which is 50% of the total amount of capital.

#2. Lower Leverage

Now in the same example if you would have restricted to leverage of 50:1. Then you would have $1000 x 50 = $50,000 to trade. Which is sufficient to purchase 5 mini lots.

In mini lots, one pip movement cost $1. Thus each pip movement will cost you $5.

Now if the position goes wrong even by 25 pips, then you stand to lose $5 x 25 = $75. Which is 7.5% of the total amount.

How to Pick the Right Leverage Level

If in the starting a lower leverage of 5:1 or 10:1 would be appropriate. With experience you will be able to figure out the right leverage level.

The prudent way is to

• Trade forex with a comfortable level of leverage
• Place stop-loss orders to reduce losses and
• Limit each position to 1% to 2% of the total capital

Understanding Bid, Ask, Spreads & Pips in Forex Trading

For a new person, quoting standards in the forex market can be confusing when compared to share market quotes as there are no strict rules.

Quoting also depends on the country. Most countries use direct quotes, however, countries like Canada, the UK, Australia, and New Zealand use indirect quotes.

#1. Quote

A quote is a pair of currency, where the value of one currency is reflected through the value of another currency. A quote for a currency pair of the British pound and US Dollar would look like GBP/USD = 1.2936.

The pair will also represent the currency you are trading. The first currency (GBP) is the base currency and the USD is the quote currency.

The base currency is always equal to one unit.

The most used base currencies are USD (US Dollar), EUR (Euro), GBP (British Pound), and AUD (Australian Dollar).

The quoted amount of 1.2936 is the amount of the quoted currency (USD) equivalent to 1 unit of base currency (GBP). This means 1 GBP = 1.2936 USD or that with 1 GBP you can buy 1.2936 US dollars.

Direct & Indirect Quote

Quotes can be direct or indirect based on the domestic currency.

In a direct quote, the domestic currency is the quoted currency. For example, for a US-based forex trader GBP/USD, is a direct quote.

In an indirect quote, the domestic currency is the base currency. In the above example for a British forex trader GBP/USD is an indirect quote.

In other words, suppose USD is the domestic currency then GBP/USD = 1.2936 is the direct quote in which with 1 GBP you can buy 1.2936 USD and USD/GBP = 0.7730 is the indirect quote where 1 USD can purchase 0.7730 GBP.

#2. Bid & Ask

You will always find forex quotes with a bid or buy price and ask or sell price. Both of which are essential with reference to the base currency.

BID – When you intend to buy a currency pair, the ask price refers to the amount of quoted currency that has to be paid in order to buy one unit of the base currency.

Here, in order to buy 1 GBP, you need to pay 1.2944 USD.

ASK – When you intend to sell a currency pair then bid price is considered, which reflects how much of the quoted currency you will get when selling one unit of the base currency.

Here, on selling 1 GBP you will get 1.2940 USD.

In the quote ASK price will always be higher than the BID price.

Another easy way to get the hang of the terms is to think yourself of visiting the forex market where banks are ready to buy and sell currencies.

The Bid price is what the bank is ready to “buy at” and the Ask price is what the bank is ready to “sell at”.

In the above example, the bank is ready to buy 1 GBP at 1.2940 and ready to sell GBP at 1.2944

You can buy 1 GBP at the bank sell (ask) rate and sell 1 GBP at the bank buy (bid) rate.

#3. Spread and Pip

The difference between the Ask price and the Bid price is the spread. In the above case, the spread is 1.2944 – 1.2940 = 0.0004.

Pip is the smallest amount a price can move in any currency quote.

In the GBP/USD quotes, the smallest price movement can be 0.0001. Hence one pip would be 0.0001.

6 Steps to Start Forex Trading in India 2025

#1. Pick a Reliable Forex Broker

Choose a trustworthy forex broker regulated by a financial authority dealing in foreign exchange. In India, stockbrokers (regulated by SEBI) only offer currency trading in INR pairs. To trade in other currency pairs, you need a global forex broker.

Reliable forex brokers are found to be regulated by authorities like CySEC (Cyprus Securities Exchange Commission), FCA (The Financial Conduct Authority, UK), ASIC (The Australian Securities and Investment Commission), FSC (Financial Services Commission) and FSRA (Abu Dhabi Financial Services Regulatory Authority, UAE).

#2. Practice Fx Trading With Demo Trading

Before using real money, practice trading with a demo account. This way you will get used to the FX trading platform, test strategies, and understand how the forex market works without risking any money.

Demo trading will help you build confidence and prepare for live trading.

#3. Start Small By Opening a Micro Fx Trading Account

Start by opening a micro account with a lesser amount of money ($100 to $500). This will help you trade with less risk while you learn. A micro account lets you trade small amounts with low leverage, which is perfect for beginners.

As you get better, you can start trading with more money.

#4. Fund Your Forex Trading Account

Next, you need to fund your account to start live trading. You can deposit money through bank transfers, net banking, credit cards, and e-wallets like Neteller, Skrill, and Webmoney. Few forex brokers accept deposits in the form of Bitcoin and Tether.

Make sure you understand any fees involved and only deposit the amount that you are comfortable with.

#5. Buy/ Sell Currency Pairs

Forex trading is all about buying and selling currency pairs, like EUR/USD depending on the price movements.

When you predict a particular currency will rise in value, you buy it. And if you have a view that the currency pair will fall in value then you need to sell.

IMPORTANT: You need to do your own research and analysis before you make trading decisions and try to profit from the price changes.

#6. Implement Risk Management Techniques

Risk management techniques protect your money. Set stop-loss orders, control the size of your trade, and avoid risking too much (leverage) on a single trade.

Risk Management will help you stay safe and keep your capital intact, especially during unpredictable market movements.

Most Popular Currencies for Forex Trading in India

#1. The U.S. Dollar (USD)

The USD has globally wide acceptance in trade and commerce. The U.S. Dollar is highly liquid and is the most traded currency having a pair with all the major currencies across the world.

Additionally, the dollar is the most sought-after global reserve currency used by central banks of almost every nation.

#2. The Euro (EUR)

The Euro is the second most traded currency and the second largest reserve currency used across the world for trade and commerce.

The Euro is largely used by multiple nations as a common currency in the eurozone

#3. The Japanese Yen (JPY)

The Japanese Yen is the most traded currency in Asia. The Yen reflects Japanese manufacturing-export strength.

#4. The Great British Pound (GBP)

The Great British Pound is the fourth most traded currency due to high liquidity. The GBP has a high value due to its relative association with peers like USD.

#5. The Canadian Dollar (CAD)

The Canadian Dollar is the world’s foremost commodity currency. The CAD has a high correlation with crude and the neighboring USD currency.

#6. The Swiss Franc (CHF)

The Swiss Franc is considered a safe haven in forex markets because of its negative correlation to the Canadian dollar, Australian dollar, and US treasury yields.

#7. The Australian Dollar (AUD)

The Australian dollar offers the highest yields among the other popular currencies. The AUD has a correlation with commodities like gold and silver.

Learn – How to invest in Gold in India.

Most Commonly Traded Currency Pairs

All the countries have their official currency but few of them trade actively in forex markets. The demand is always there for highly liquid currencies of the developed countries that are politically stable like USD, GBP, and JPY.

The list of commonly traded pairs in no specific order is under:

USD/CAD	EUR/JPY
EUR/USD	EUR/CHF
USD/CHF	EUR/GBP
GBP/USD	AUD/CAD
NZD/USD	GBP/CHF
AUD/USD	GBP/JPY
USD/JPY	CHF/JPY
EUR/CAD	AUD/JPY
EUR/AUD	AUD/NZD

Reasons for Currency Fluctuations

Changes in interest rate, GDP, consumer confidence, inflation, unemployment, and political stability of a particular country have a huge impact on its currency movements.

Depending on the announcement and the current state of the country its currency can exhibit large fluctuations which can lead to extreme gain or losses.

Below is the list of economic indicators that are generally considered to have the greatest influence on the currency.

#1. Employment Data

A strong increase in employment indicates that the country has a prosperous economy which can affect positively. The decrease in employment numbers is a sign of potential contraction which can send the currency downward.

Economic data and the movement of currency will often depend on the circumstances that exist when the data is released.

#2. Interest Rates

The higher interest rate tends to attract foreign investments, thus increasing the value of the home currency.

Conversely, lower interest rates are unattractive for foreign investment and hence decrease the currency’s relative value.

#3. Inflation

Price increases are signs of inflation which depreciates the home currency.

#4. Gross Domestic Product (GDP)

GDP measures the economic health of the country. The healthier the country, the more foreign investment it attracts, which ultimately leads to an increase in the value of the currency.

#5. Trade and Capital Flows

Exports and Imports create huge monetary flows between countries which have a large impact on the value of their currencies.

A country with more imports than exports will see a decline in the value of its currency as it needs to purchase foreign currency by selling its own currency.

#6. Macroeconomic and Geopolitical Events

Events such as wars, elections, financial crises, and monetary policy change or reshape the country’s fundamentals. Hence, the biggest fluctuations in the forex markets result from these macroeconomic and geopolitical events.

Is Forex Legal in India

Under LRS (RBI’s Liberalised Remittance Scheme), all resident individuals like you and me can freely remit up to $250,000 for any permissible current or capital account transactions in a financial year.

The LRS cannot be used by HUF, trusts, partnership firms, and corporates for remitting money.

However, the remittance facility has certain restrictions. Below is a snapshot from the RBI website highlighting one of them

Now interpretations can differ as you are funding the account.

Please make an informed decision as there are still debates on the legality of the same. Better if you could consult a lawyer having expertise in forex matters.

By that time you can start learning and practicing forex trading by opening a practice or demo account.

The demo account mimics the actual trading and movements happening in the market with a facility to place orders and execute a trade without involving any real money.

Pros of Forex Trading

• Low Cost
• Offers High Liquidity
• No central exchange
• Variety of currency pairs to trade
• Low capital requirement
• Ease of trading

Cons of Forex Trading

• Lack of transparency
• The complex price determination process
• High Risk and High Leverage
• Self-learning
• High Volatility

I tried to provide complete information on how to trade forex in India. Let me know what is missing in this article so that I can cover it in the next updated version next month.

FAQs

Is forex trading legal in India?

In India, forex trading is allowed on the NSE & BSE where INR is one of the currencies. For example USD-INR, GBP-INR, EUR-INR, and JPY-INR. And among the 4 currencies (USD, GBP, JPY, and EUR) that have INR pairs.

But if you want to trade the USD-CHF pair then it is not possible to trade on the NSE and BSE. You need to take the help of a forex broker.

RBI allows remitting money under the LRS scheme for various purposes with restrictions.

Does Zerodha allow forex trading?

Zerodha is the largest discount broker that also allows currency trading in India along with stock trading.

You can trade USD-INR, GBP-INR, EUR-INR, and JPY-INR and all 4 currencies that have INR pairs on Zerodha.

Which broker is best for forex trading in India?

If you are trading forex on NSE & BSE then you can open a trading account with Zerodha. Zerodha charges Rs. 20 for all the currency F&O trades irrespective of the trading volume.

Here you can find the Best forex brokers if you want to trade in other currencies.

Can I start forex trading with 1,000 rupees?

Yes. A few of the forex brokers allow a minimum deposit of $10 like XM Forex.

For taking positions and risk management it is recommended to fund your account with a higher amount.

Can I teach myself forex?

Why not. There are tons of materials on forex available on the internet and even from financial institutions that will help you learn forex like Forex & Commodities Training from NSE and Coursera.