What is the punishment for forex trading in India?

[adityasaraf007]

It's illegal when don't follow RBI Guidelines.... If guidelines require us to get the approval but we don't do so, we are violating the laws......

Just like if I start a Exchange in USA without obtaining prior approvals of SEC and all the other regulatory clearances, it would obviously be illegal

 

[Piratetrader]

hi aditya, seemsyou didnot readthe new rule and clarification by rbi -

The Reserve Bank today said resident Indians cannot trade in forex market as per the existing regulation.

The existing regulations under Foreign Exchange Management Act (FEMA), 1999, do not permit residents to trade in foreign exchange in domestic or overseas markets, RBI said in a statement.It also said, remittance in any form towards overseas foreign exchange trading through electronic/internet trading portals is not permitted under the FEMA.

RBI cautioned investors against advertisements issued by certain electronic and internet portals offering trading or investing in foreign exchange with guaranteed high returns.

Many companies even engage agents who personally contact gullible people to undertake forex trading and investment schemes and entice them with promises of disproportionate or exorbitant returns, it said.

The clarification of the RBI assumes significance in the light of several people losing heavily in forge trade through internet portals in the recent past.The Reserve Bank of India (RBI) has cautioned Indian investors and banks against illegal overseas foreign exchange trading through internet and electronic trading portals which offer guaranteed high returns.

It has been observed that overseas foreign exchange trading has been introduced on a number of internet/electronic trading portals luring the residents with offers of guaranteed high returns based on such forex trading. The advertisements by these internet/online portals exhort people to trade in forex by way of paying the initial investment amount in Indian rupees, the RBI said in a circular.

According to the RBI, some companies have reportedly engaged agents who personally contact people to undertake forex trading/ investment schemes and entice them with promises of disproportionate / exorbitant returns.

Most of the forex trading through these portals are done on a margining basis with huge leverage or on an investment basis, where the returns are based on forex trading. The public is being asked to make the margin payments for such online forex trading transactions through credit cards/deposits in various accounts maintained with banks in India.It is also observed that accounts are being opened in the name of individuals or proprietary concerns at different bank branches for collecting the margin money, investment money, etc, the RBI said.

Banks are advised to exercise due caution and be extra vigilant in respect of such transactions, the RBI warned.

It is clarified that any person resident in India collecting and effectingremitting such payments directlyindirectly outside India would make himself/ herself liable to be proceeded against with for contravention of FEMA, 1999 besides being liable for violation of regulations relating to know your customer (KYC) norms and anti money laundering (AML) standards, it said.

 

[Piratetrader]

and as an individual u will never get approval from rbi to trade in forex

 

[4xpipcounter]

I think most good traders would agree with me that trading is not about making goals. The only goal that should be is develop a solid trading methodology, then develop money managements skills, then have the mindset to have a rigid set of rules to always trade by. I was quoted in another thread at saying that anyone could start off with a small amount of money and become wealthy. That part of it stands to reason, because if the trader adheres to a rigid percentage of equity on each trade, then the more that is gained in the account, the more that is made.
There are principles with regard to trading that have to be met, and until that is the case, it is only dreaming.
The reason I think most traders do not make goals, such as x amount of pips over a given space of time, or x amount of dollars to be made in a space of time, is because in trying to attain to those goals, bad habits develop. Traders get into trades and stay longer than they should, or they start ignoring their money management rules just to attain their goals.
Just my 2 cents worth. If there's an opposing view, I'd like to hear it.

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!

 

[Piratetrader]

I think most good traders would agree with me that trading is not about making goals. The only goal that should be is develop a solid trading methodology, then develop money managements skills, then have the mindset to have a rigid set of rules to always trade by. I was quoted in another thread at saying that anyone could start off with a small amount of money and become wealthy. That part of it stands to reason, because if the trader adheres to a rigid percentage of equity on each trade, then the more that is gained in the account, the more that is made.
There are principles with regard to trading that have to be met, and until that is the case, it is only dreaming.
The reason I think most traders do not make goals, such as x amount of pips over a given space of time, or x amount of dollars to be made in a space of time, is because in trying to attain to those goals, bad habits develop. Traders get into trades and stay longer than they should, or they start ignoring their money management rules just to attain their goals.
Just my 2 cents worth. If there's an opposing view, I'd like to hear it.

HI Sir thank you,I was just telling him how i used to day dream about making money in forex and that was months ago and blew up my account!! but i don't think you will here an opposing view here because all people here are going to agree with you! developing solid trading methodology is very important as you said and, as for the money management i think 2% risk on each trade is fine but i do somehow feel that there should be a fine capital to start with like savant grande said 10k minimum. but in my case its just 500$, so it would require a very tight discipline and great patience to make a good capital with this amount which i lack completely and to do that i would require to built solid trading methodology to avoid draw-down's! maybe it will take me a year or more! but as for now i am finding a good signal provider for the 500$ with less draw-down to try some luck and increase my capital!! i think even if it blew up my account i willl go live again when i have developed a methology!

 

[Piratetrader]

sir today was a very choppy eur/usd market no movement at all, it trader between 1.4435 to 1.4370, for all the time i didn't get any signals from indicators so i was scalping in that range!

 

[4xpipcounter]

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If it is the EUR/USD, only, that you plan on trading, then that's fine. The following comment will not be designed to dissuade you from that conviction.

Sometimes it is the crosses you have to look to. I took this trade after the correction from the spike, and exited at the WR1. I also had the entry to short at that level and rode it back to the WP because I liked the momentum. Afterward, I thought it would go to my WR2, so I went long again, but it ran out of steam at the WR1 again, so I closed the trade, again.

After all that, I still have my entries set for the EUR/USD. They were set the whole time, so whenever they kick in, I will be in those trades.

sir today was a very choppy eur/usd market no movement at all, it trader between 1.4435 to 1.4370, for all the time i didn't get any signals from indicators so i was scalping in that range!

 

[Piratetrader]

sir what are your entries for eur/usd? i think it may be heading down to the WS but looking at this chart tells me it could be a breakout above

 

[Piratetrader]

sir i do not plan to trade only eur/usd only i like aud/usd and usd/cad but i want to focus on 1 pair at the moment !

 

[adityasaraf007]

Hi Saif.... Thanks for bringing this up....

The confusion arises because.... in this notification, RBI has mentioned "Foreign Exchange", whereas under FEMA it is mentioned that we are allowed to trade in "Foreign Exchange Derivatives whether in India or abroad"....

Anyway, I am going through the Act, give me some time and I would get back on this.

Regards.