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Though forex (currency) trading is unquestionably a high-risk venture, the market can be lucrative especially for highly skilled currency traders. In India, the foreign exchange niche is estimated to have an average daily volume of $33 billion (USD) – between 2018 and 2019 – according to the country’s central bank, RBI. The exchange traded forex derivatives market, on the other hand, is reported to have an average daily volume of $8 billion (USD).
This transaction volume is attracting more and more investors into the industry. Many Indian traders are aware that forex trading is legal in the country but to a degree. The next question that is top of mind for many is what FX brokers are the safest and offer the best trading conditions for clients.
Currently, there are more than 20 brokers offering forex trading services to residents in India. However, this article narrow down the vast options to the three best brokers in the country. All three brokerages operate legally and provide higher-than-average trading environment and tools for users. However, in terms of competitive pricing, leverage, brand trust, and high-tech trading platform/tools, each broker is an industry leader in one (or more) of these areas.
- 1 What Are The Advantages Of Using A Regulated Broker?
- 2 3 Best Forex Brokers in India
- 3 3 Simple Ways to Minimize Loss and increase Profits in Forex Trading
- 4 How to Verify If a Forex Broker Is Legit and Regulated
- 5 Conclusion
- 6 FAQs
What Are The Advantages Of Using A Regulated Broker?
Forex trading is legal in India and falls under the jurisdiction of the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India. Any broker that want to legally offer this service to residents in the country has to be authorized by these two bodies especially SEBI. The strict rules of SEBI, many times, limit the leverage, FX pairs and other attractive features that its registered members could offer Indian customers.
While this may discourage some professional traders, there are four primary advantages to sticking with these platforms. First is the safety of investors’ funds. Regulated brokerages are compelled to separate clients’ money from the firm’s funds. This is to ensure that traders can easily get their money if the company goes bankrupt. Second is people who use licensed brokers can lodge a complaint with the regulatory body in the event of dispute with the broker. Third and fourth is protection from fraud and transparent operations respectively. Respectable supervisory agencies like SEBI usually require their members to serve their users with full transparency.
SEBI is not the only top-tier agency monitoring Forex brokers. There are other international regulators like the Financial Conduct Authority (FCA) and the Australian Securities & Investments Commission (ASIC). While these agencies compel their members to follow stringent rules, they may not offer as much protection to traders as a local regulatory authority.
3 Best Forex Brokers in India
1. Zerodha – High Brand Trust & Lowest Brokerage
Zerodha is Indian’s #1 forex brokerage firm and it was founded by two brothers, Nithin and Nikhil Kamath, in 2010. The company has the largest trading platform (by volume of active users and transactions) in the country. It grew to become the most preferred broker among Indian traders due to features like low brokerage and high exposure which it offers. It also has one of the lowest currency futures fees in the Indian forex market. All information about the transaction fees are clearly displayed on the company’s website and there are hidden fees.
Zerodha allows users to trade in forex but only in the form of futures. The company further only supports currency pairs approved by the Indian financial market regulatory bodies, SEBI and RBI. One of the rules is that all currency pairs must have the Indian rupee (INR) – it could either be the base currency (INR/USD) or the quote currency (USD/INR). Due to this requirement, the lineup of currency pairs on the Zerodha platform were USD/INR, EUR/INR, GBP/INR, and JPY/INR.
In 2018, new directives from the Indian National Stock Exchange permits specific cross currency derivatives. As a result, Zerodha now have cross currency futures such as EUR/USD, USD/JPY, and USD/GBP among their tradable assets.
The company is regulated by SEBI and has 6.5 million active users. The account opening charge is Rs 200 with deposit fee of ₹9 + 18% GST for a single transfer. The minimum initial deposit is Rs 0 and it does not charge withdrawal fee nor inactivity fee no matter the length of time the account was dormant. The broker deducts a maintenance charge of Rs 75 from client’s trading account per quarter making a total of Rs 300 per year.
Maximum Leverage according to the company’s website is 1X or 100% of NRML margins (SPAN and Exposure). It levies a commission of ₹ 20 or 0.03% for every executed order on intraday trades. It has a proprietary trading Platform, Kite, which has versions for web, desktop, iOS, and android devices. Total FX pairs supported on the platform include EUR/USD, GBP/USD, USD/JPY, USD/INR, EUR/INR, GBO/INR, and JPY/INR.
Zerodha has two main types of account for trading forex: i) trading account (for trading only futures, options, and currencies), and Trading and Demat account (for trading stocks, futures, options, and currencies). The platform supports three payment method including UPI, Instant payment gateway, and IMPS/NEFT/RTGS/Cheque.
- Low fees
- Technology-driven platform
- Range of investment products
- Limited forex trading options
- No 24/7 customer support
Regulation information: Zerodha is regulated by the Securities and Exchange Board of India (SEBI), which is the regulatory body for the securities market in India. SEBI regulates brokers to ensure they comply with regulations and provide fair and transparent trading practices for their clients.
In conclusion, Zerodha is a popular online broker in India that offers low fees, advanced technology, and a range of investment products. While it may have some limitations in terms of forex trading options and customer support, it is a well-regulated broker under SEBI, which ensures that it follows fair and transparent trading practices. Overall, Zerodha can be a good choice for traders who prioritize low fees and user-friendly technology, and who are comfortable with the limited selection of forex pairs and customer support availability.
2. AvaTrade – Lowest Fixed Spread & Top-notch Copy Trading Tools
AvaTrade was founded in 2006 and regulated by over 8 agencies in different continents – The ASIC in Australia, CBI (Ireland), CySEC (Cyprus), B.V.I FSC (British Virgin Islands), FRSA (UAE), FFAJ (Japan), ABDGM (Abu Dhabi) and FSCA in South Africa. The broker has an active clients’ base of 300,000.
Account opening charge is free but customers need to deposit a minimum initial amount of $100 to begin trading. Users are not charged for withdrawing or depositing but will be levied an account inactivity fee of $50 fee after 3 months of inactivity and $100 after 1 year of not trading.
AvaTrade is not an Indian brokerage like Zerodha but the company complies with all the main requirements of the country’s financial regulator. It has the necessary licenses that allows it to legally provide a trading platform for Indian investors. Like Zerodha, this broker is widely used by several Indian traders and does not charge when withdrawing to local bank accounts. Unlike Zerodha, AvaTrade does not charge for deposits and it provides better training, research, and educational resources for users.
Generally, Zerodha tops most forex brokers in India in the area of overall low trading fees and high brand trust. AvaTrade, on the other hand, leads the pack in terms of providing the latest trading platform (MT5) and most competitive spreads – starting from 0.9 pips for EUR/USD – on its standard accounts. The broker supports various deposit and withdrawal methods and has some of the best trading tools in the market. For instance, there is the AvaSocial, DupliTrade, and ZuluTrade programs which help novice traders replicate strategies of professional traders to their own portfolio.
The spread depends on the asset the customer is trading with but it starts from 0.9 for EUR/USD. Maximum Leverage also varies but begins from 30:1 to 400:1. The broker has three primary trading platforms: i) web-based (WebTrader, MT4, MT5, AvaOptions); mobile apps (AvaTradeGO, AvaOptions, MT4); and iii) desktop Trading Platform (MT4, MT5, AvaOptions).
Unlike offshore investors who can trade in nearly 40 FX pairs, Indian traders can only trade in SEBI-approved derivatives – EUR/USD, GBP/USD, USD/JPY, USD/INR, EUR/INR, GBO/INR, and JPY/INR. The platform has three types of account retail, professional account, and corporate account and can fund/withdraw from their account using any of these options: credit/debit card, bank transfer, and e-wallets.
Due to not been fully licensed by SEBI and restricted by their strict requirements, AvaTrade can give higher bonuses and leverages to Indian traders. Although Zerodha offers lower trading fees, AvaTrade charges too are lower than most brokers in the Indian forex niche. The firm also supports more forex options – about 44 of them – and is considered a safe, low-risk broker due to the several international licenses it holds.
- Wide range of trading platforms
- Educational resources
- Competitive trading conditions
- Limited product selection
- Limited customer support hours
Regulation information: AvaTrade is regulated by multiple financial regulatory bodies, including the Central Bank of Ireland, the Australian Securities and Investments Commission (ASIC), and the Financial Services Commission of the British Virgin Islands. It is important to note that while AvaTrade is regulated in these jurisdictions, it is not currently regulated by the Securities and Exchange Board of India (SEBI). Traders in India should carefully consider the regulatory status of any broker they are considering using, and ensure they understand the risks involved with trading in foreign jurisdictions.
In conclusion, AvaTrade is a popular online broker with a wide range of trading platforms, educational resources, and competitive trading conditions. While it may have some limitations in terms of product selection and customer support hours, it is well-regulated by multiple financial regulatory bodies in different jurisdictions. It is important to note, however, that AvaTrade is not currently regulated by SEBI in India, which may be a consideration for traders in that country. Overall, AvaTrade can be a good choice for traders who value a variety of trading platforms and educational resources, and who are comfortable with the product selection and customer support hours.
3. XM – Broker with Lowest Variable Spread & Advanced Trading Platform
XM was launched in 2009 by Constantinos Kleanthous, a trader at a German Investment bank. One of the main goals of the founder was for XM to provide ultra-low spreads to traders. As a result of this, the broker uses floating spreads for all accounts on the platform instead of fixed spreads. At XM, traders can get tight spreads from 0.6 to 1 pip on all major currency pairs. During peak trading hours, the average spread on a Standard account usually goes for 1.7 pips.
XM has four basic types of account: Micro, Standard, Ultra-Low, and Shares Account. All the accounts have 10 base currencies – USD, EUR, GBP, JPY, CHF, AUD, HUF, PLN, SGD, ZAR – except the Shares account which uses only the USD. The INR is not among the base currencies offered by XM. So Indian clients have to convert their native currency to trade on the platform.
As seen from the list of base currencies, XM supports a greater number of currencies compared to other brokers in India and globally. The broker carries over 50 currency pairs but under the SEBI framework, investors who reside in India can only trade in the following pairs: EUR/USD, GBP/USD, USD/JPY, USD/INR, EUR/INR, GBO/INR, and JPY/INR.
The maximum leverage is 1:1000, initial minimum deposit is $5, withdrawals and deposits are free, and users are not charged to open an account. Each of the account type have the demo and Islamic version. The demo version is for users to test their trading skills and to get a feel of the trading environment/tools provided by the broker. A Muslim trader can swap any of the account to the Islamic version if they want trading conditions that follow the Sharia law.
In accordance with their founding objective to be a leader in the area of tight spreads, XM introduced the Zero account in 2016. This new account features spreads as low as 0 pips on all 56 currency pairs offered by the company. A monthly fee of $5 is levied on dormant accounts. However, if the account has zero balance, no fee is imposed.
XM is not a true ECN broker but it does provide an ECN-style account to customers. Like AvaTrade, the firm uses sophisticated trading platforms like the MetaTrader 4 and MetaTrader 5 and is regulated by top tier agencies – FCA (UK), ASIC (Australia), CySEC (Cyprus), and IFSC (Belize).
XM meets all the rules of the local financial regulator in India and is thus legally allowed to provide forex trading services to investors in the country. The platform allows its Indian customers to trade in all 56 currency pairs. Notwithstanding, users from the country need to be aware they could get into trouble with the tax agencies if they trade in the derivatives prohibited by SEBI.
- Competitive trading conditions
- Wide range of trading platforms
- Educational resources
- Limited product selection
- Limited customer support options
Regulation information: XM is regulated by multiple financial regulatory bodies, including the Cyprus Securities and Exchange Commission (CySEC), the Australian Securities and Investments Commission (ASIC), and the International Financial Services Commission (IFSC) of Belize. It is important to note that while XM is regulated in these jurisdictions, it is not currently regulated by the Securities and Exchange Board of India (SEBI). Traders in India should carefully consider the regulatory status of any broker they are considering using, and ensure they understand the risks involved with trading in foreign jurisdictions.
In conclusion, XM is a popular online broker with competitive trading conditions, a wide range of trading platforms, and a variety of educational resources. While it may have some limitations in terms of product selection and customer support options, it is well-regulated by multiple financial regulatory bodies in different jurisdictions. However, it is important to note that XM is not currently regulated by SEBI in India, which may be a consideration for traders in that country. Overall, XM can be a good choice for traders who value competitive trading conditions and a variety of trading platforms and educational resources, and who are comfortable with the product selection and customer support options.
3 Simple Ways to Minimize Loss and increase Profits in Forex Trading
Leveraged products such as forex trading are much more volatile than other financial markets. The presence of scam and dishonest brokers in the industry further compounds the risk for traders. How then does a trader protect their trading capital and boost their investment returns? While there are many ways to achieve this, this section presents three simple strategies for investors to protect their investment.
1. Always Use Brokers That Are Fully Regulated
The importance of using a regulated broker cannot be overstated. There is no better way to protect your funds in the Forex market than using a broker with top-tier license and proven track record. Before being lured by attractive leverages and commissions, an investor should check and confirm the regulation of potential brokers.
There are many unlicensed platforms (or licensed by low quality regulatory bodies that offer no protection to investors) with dishonest trading practices in the niche. So, the first step to avoid falling prey to scammers is to make sure a broker is supervised by quality authority agencies
2 Always Use Stop-Loss Orders
Stop-loss orders are designed to lock in profit or reduce loss on existing positions. Although the tool may prevent a trader from making significant profit during bullish upturns, as a risk management strategy, it provides two key advantages: First it limits loss when the market makes unfavourable moves. Second, the trader does not need to constantly monitor their holdings when this feature is activated. The end of the transaction may only yield a small profit, but the presence of this tool gives peace of mind. That a portfolio is protected against huge loss in an unpredictable and volatile market.
3. Use Copy-Trading Platforms
There is no doubt trading currencies could be highly engaging, but learning the techniques is quite difficult. For many investors, it may not be feasible to keep an eye on trends all day. This is where the copy trading software comes in. This function lets a trader imitate the strategies of more experienced investors and the broker gets a tiny fraction of the profit. To choose what professional to copy, it is best to check their risk profile, success rate, and past losses – all these information are shown on the copy trader app.
How to Verify If a Forex Broker Is Legit and Regulated
To know if a forex broker has the regulation they claim to have, check for the registration number. This detail is usually disclosed near the bottom of the brokerage’s homepage. If it is not in this location, then it may be provided on the company’s information page. After this, a trader should go to the website of the regulatory body to check if the company is listed among the authorized members.
For Indian traders, it is important their chosen brokers have the SEBI license as this body has stringent rules for its members to follow. These requirements make sure customers are protected from dishonest trading practices employed even by licensed brokers and are reimbursed in the event of bankruptcy.
One of the driving reasons that attract people to forex is the opportunity to earn potentially great profits with very small investments – even with an amount as low as $100. However, the possibility of losing big is similarly high especially if a trader does not select a broker that will help them succeed.
As many professional traders will state – no single FX broker is the best choice for all traders. The reality is that no one broker excels in all core areas – e.g. low fees & commission, advanced trading platforms, competitive leverage, training material, research analysis, customer support, etc. – in FX trading. The right option depends on the needs and experience of the client.
For novice investors, picking a platform that has lower trading costs and comprehensive educational and training materials may be the best choice. Zerodha is an excellent choice for Indian clients in this regard. For those who intend to trade frequently and capture small moves, choosing a broker with tight spreads (like XM) may be the way to go. For those who prefer to trade on sophisticated trading platforms like the MetaTrader, AvaTrade and XM excel in this regard. Lastly, ensuring a broker is regulated by top-tier financial agencies like SEBI, FCA in UK, and ASIC in Australia is another factor to consider. The supervisory services of these regulators ensure the broker’s operations follow ethical rules. This in turn help keep customers’ funds safe from mismanagement or theft.
Forex trading is legal in India, but it is subject to certain restrictions and regulations. The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) are the primary regulatory bodies overseeing the forex market in the country. To legally offer forex trading services to Indian residents, brokers must be authorized by SEBI and comply with its rules and guidelines.
Using a regulated broker ensures the safety of your investment by providing certain protections. Regulated brokers must separate client funds from their own, which helps safeguard your money in case the company goes bankrupt. They also offer a formal complaint process with the regulatory body, protection from fraud, and transparent operations. Regulated brokers are held to high standards by reputable supervisory agencies like SEBI, FCA, and ASIC.
To verify if a forex broker is regulated, look for their registration number, which should be disclosed on their website, typically near the bottom of the homepage or on their company information page. Then, visit the regulatory body’s website and check if the broker is listed among the authorized members. For Indian traders, it’s crucial to ensure that their chosen broker has a SEBI license.
Three simple strategies to minimize losses and increase profits in forex trading include: (1) using fully regulated brokers with top-tier licenses and a proven track record, (2) implementing stop-loss orders to lock in profits or reduce losses on existing positions, and (3) utilizing copy-trading platforms to replicate the strategies of experienced traders, which can help you learn and benefit from their expertise.
The best forex broker for you depends on your needs, experience, and preferences. For beginners, a broker with lower trading costs and comprehensive educational materials may be the best choice, such as Zerodha for Indian clients. Frequent traders may prioritize brokers with tight spreads like XM. Those who prefer advanced trading platforms like MetaTrader should consider AvaTrade or XM. Always ensure the broker is regulated by top-tier financial agencies like SEBI, FCA, or ASIC to guarantee ethical operations and protection for your funds.
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