Trade in oversea forex market from india

[Riskyman]

He is not talking about movement in last X or Y years.
He is talking about daily volatility in pips in forex paris
Morever, currency markets in india close at 5 PM which means ,so its nearly impossible to swing trade it, since USD moves many times in the evening due to various things , and you will not be able to close your position in case of it going to your stop loss, but
at the same time, who have access to forex can close out their INR positions in interbank markets.

its totally different trading a market that is open 24x7 , without worrying about gaps ... compared to USDINR futures

I am aware what he is talking about. He is saying that usd/inr volatility is less. Volatility maybe less compared to say gbp/jpy but usd/inr has been trending long term. What more does a trader need? Please open usd/inr 1 min charts and you will notice it behaves the same as many other currencies. People can make more money in trending markets too

Markets closing at 5pm is understandable. That is a problem I agree. However, you can still swing trade it. You can even hedge your futures positions with options to protect your positions from unwanted gaps. Moreover, you can money in the indian markets by writing options also.

I have been trading currencies in the international markets from 2014( if i remember correctly). There are definitely some advantages trading these markets. But at what cost? people think its easy to trade these international markets and make money. Fact is, its the same everywhere. If you cannot make money trading USD/INR in the indian markets, then good chances you wont make it elsewhere. It is true that there are many more currency pairs you can trade in the International markets. But all that comes at a cost example violating fema rules etc.

Also, all these guys who complain that USD/INR doesnt move must take some time out and calculate the average daily movements and then compare it to other majors. From what I have seen usd/inr can easily move around 150 pips on most days.

 

[Riskyman]

I've heard that there are some international brokers with whom some indian banks like ICICI have tie ups in which you can invest upto $250K through RBI's LRS schema.

Please read this


Q 1. What is the Liberalised Remittance Scheme (LRS) of USD 2,50,000 ?

Ans. Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both. Further, resident individuals can avail of foreign exchange facility for the purposes mentioned in Para 1 of Schedule III of FEM (CAT) Amendment Rules 2015, dated May 26, 2015, within the limit of USD 2,50,000 only.
The Scheme was introduced on February 4, 2004, with a limit of USD 25,000. The LRS limit has been revised in stages consistent with prevailing macro and micro economic conditions.
In case of remitter being a minor, the LRS declaration form must be countersigned by the minor’s natural guardian. The Scheme is not available to corporates, partnership firms, HUF, Trusts etc.

Q 2. What are the prohibited items under the Scheme?

Ans. The remittance facility under the Scheme is not available for the following:

1. Remittance for any purpose specifically prohibited under Schedule-I (like purchase of lottery tickets/sweep stakes, proscribed magazines, etc.) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000.
2. Remittance from India for margins or margin calls to overseas exchanges / overseas counterparty.
3. Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market.
4. Remittance for trading in foreign exchange abroad.

 

[Riskyman]

@raj521995 There is a way out if you are hell bent on doing this. If you have any relatives or reliable friends who are abroad specially in Gulf countries, you can ask them to open an account in their name with a foreign broker. You control the account. When you withdraw your profits, it will go to their account in their local currency. They can remit it back to their NRI account in India. From there they can transfer to your account. Or they can directly remit to your account in India.

 

[trade2411]

I am aware what he is talking about. He is saying that usd/inr volatility is less. Volatility maybe less compared to say gbp/jpy but usd/inr has been trending long term. What more does a trader need? Please open usd/inr 1 min charts and you will notice it behaves the same as many other currencies. People can make more money in trending markets too

Markets closing at 5pm is understandable. That is a problem I agree. However, you can still swing trade it. You can even hedge your futures positions with options to protect your positions from unwanted gaps. Moreover, you can money in the indian markets by writing options also.

I have been trading currencies in the international markets from 2014( if i remember correctly). There are definitely some advantages trading these markets. But at what cost? people think its easy to trade these international markets and make money. Fact is, its the same everywhere. If you cannot make money trading USD/INR in the indian markets, then good chances you wont make it elsewhere. It is true that there are many more currency pairs you can trade in the International markets. But all that comes at a cost example violating fema rules etc.

Also, all these guys who complain that USD/INR doesnt move must take some time out and calculate the average daily movements and then compare it to other majors. From what I have seen usd/inr can easily move around 150 pips on most days.

Ageed on the 1 min part .
Good to hear you were trading international markets from 2014, are you doing it now too ?
I was a forex trader too, but stopped now because of RBI getting stricter on FEMA and banks asking lots of questions.

On forex , you can easily have at least one swing position at a time , given there are so many pairs . not the case with INR pairs.
Now, trading intraday on USDINR , atleast i dont find many trades everyday,its no way like crude in volatility for trading intraday.

 

[trade2411]

@raj521995 There is a way out if you are hell bent on doing this. If you have any relatives or reliable friends who are abroad specially in Gulf countries, you can ask them to open an account in their name with a foreign broker. You control the account. When you withdraw your profits, it will go to their account in their local currency. They can remit it back to their NRI account in India. From there they can transfer to your account. Or they can directly remit to your account in India.

Do you have any suggestion, if someone do not have any relative abroad ?
have you explored the options of setting up a company abroad, and trade from that company

 

[Riskyman]

Ageed on the 1 min part .
Good to hear you were trading international markets from 2014, are you doing it now too ?
I was a forex trader too, but stopped now because of RBI getting stricter on FEMA and banks asking lots of questions.

On forex , you can easily have at least one swing position at a time , given there are so many pairs . not the case with INR pairs.
Now, trading intraday on USDINR , atleast i dont find many trades everyday,its no way like crude in volatility for trading intraday.

Glad to hear you are a Fx trader too. Only few of them active here
Yes! I am still active in the International markets. I also trade the Indian stock markets till 3:30 PM. From 6:00 pm till 11 pm I used to trade the Ifx markets. It was long working hours. I have 2 small kids so they need time and attention as well. Plus the wife needs lots of attention
Moreover, our own stock markets have been moving very well since the beginning of 2018. So, I decided to take it easy on Fx trading. I do hold some positions in GBP/JPY and USD/NOK from time to time. Mostly, swing trades where I can enter a trade, put a SL in place, a take profit order and close the terminal. So either my SL gets hit or my limit gets hit
Fyi, I have been trading with FXCM. I have tried Alpari and a couple of other brokers as well. Some how preferred the former.

 

[Riskyman]

Do you have any suggestion, if someone do not have any relative abroad ?
have you explored the options of setting up a company abroad, and trade from that company

Since I already have overseas trading accounts, I haven't had the need to set up a company etc. However, there was a time when me and a friend were planning on something. We had decided to start a company in RAK/Dubai FZE. These guys have office in Mumbai. You can approach them and duly complete formalities. After paying the fee etc you can have a company set up in the free zone. You can pay for it in INR. Once, the company is set up, you can fund it with INR and approach any forex broker who can then open a fx account in your company's name. You can start your trading.
I didn't do it because it involved too many formalities. In short, it was not worth all the trouble for me.

PS: I have not explored option of setting up paper companies in places like Singapore for Fx trading.

 

[trade2411]

Since I already have overseas trading accounts, I haven't had the need to set up a company etc. However, there was a time when me and a friend were planning on something. We had decided to start a company in RAK/Dubai FZE. These guys have office in Mumbai. You can approach them and duly complete formalities. After paying the fee etc you can have a company set up in the free zone. You can pay for it in INR. Once, the company is set up, you can fund it with INR and approach any forex broker who can then open a fx account in your company's name. You can start your trading.
I didn't do it because it involved too many formalities. In short, it was not worth all the trouble for me.

PS: I have not explored option of setting up paper companies in places like Singapore for Fx trading.

Wow, i am glad you have so much information.
I have few more queries if you dont mind :
1. Does it not violate FEMA if you set up a company abroad and trade in the name of the company.
I have approached 2 lawyers, one of the guys told me this route too violates FEMA as it doing indirectly something that cannot be done directly, He says, you can fund the company as the capital for the company, but when you want to get the money back as profits from the company, you will have to show how the company generated profits . so it is quite apparent you setup a company just for forex trading. The other lawyer is yet to get back to me on this.
2. I understand, you already have offshore accounts, which means thats probably not the money you remitted out from india , for trading , In this case how are you getting the profits back . I mean, if its a Wire transfer what reason do you give at the bank for the purpose of remittance.

 

[trade2411]

Glad to hear you are a Fx trader too. Only few of them active here
Yes! I am still active in the International markets. I also trade the Indian stock markets till 3:30 PM. From 6:00 pm till 11 pm I used to trade the Ifx markets. It was long working hours. I have 2 small kids so they need time and attention as well. Plus the wife needs lots of attention
Moreover, our own stock markets have been moving very well since the beginning of 2018. So, I decided to take it easy on Fx trading. I do hold some positions in GBP/JPY and USD/NOK from time to time. Mostly, swing trades where I can enter a trade, put a SL in place, a take profit order and close the terminal. So either my SL gets hit or my limit gets hit
Fyi, I have been trading with FXCM. I have tried Alpari and a couple of other brokers as well. Some how preferred the former.

lol, agree on the wife part .
are you swing trading indian markets or strictly intraday ?

All of my trading has been like setting SL or TP and letting one hit and not bother too much about the trade . I traded Forex on the hourly. but this might not work on our futures markets because of the gaps. off late, markets have been good for intraday quick scalps .. I hope this volatility stays for a long time.

 

[Riskyman]

Wow, i am glad you have so much information.
I have few more queries if you dont mind :
1. Does it not violate FEMA if you set up a company abroad and trade in the name of the company.
I have approached 2 lawyers, one of the guys told me this route too violates FEMA as it doing indirectly something that cannot be done directly, He says, you can fund the company as the capital for the company, but when you want to get the money back as profits from the company, you will have to show how the company generated profits . so it is quite apparent you setup a company just for forex trading. The other lawyer is yet to get back to me on this.
2. I understand, you already have offshore accounts, which means thats probably not the money you remitted out from india , for trading , In this case how are you getting the profits back . I mean, if its a Wire transfer what reason do you give at the bank for the purpose of remittance.

Setting up a company and remitting funds in itself does not violate any FEMA rules. But if you use the funds solely for the purpose of FX speculation it violates FEMA. Your lawyer is right. When you bring the money back, you will have to show how the profits were generated which is exactly why I said that its not worth the trouble. Just to accomplish one thing, we will end up violating many many regulations. Simply time consuming and expensive hiring lawyers, setting up companies etc.

Under LRS you can remit upto 250k to family members without any questions asked. You can even remit online to family members without going to any bank. However, you have to cite a reason like education, sickness etc. 250k is a lot of Money. Most of us traders dont even exceed 5000 usd. A few may be under 20-25k usd in trading accounts. So, even If you are remitting 15-20k USD RBI is not bothered. The income tax may send you a notice asking for source of funds but this is easily handled if you have been filing ITR regularly.

Finally, it will all depend on what kind of money you want to have as your trading capital. If it is under 10000 usd, I would say its not worth the effort, expense and time to set up a foreign company only for the sake of trading in the fx markets. All of this is very expensive and run into a few lakhs. So you get the drift... Lastly, it pays not to be on the wrong side of the law. There is no money bigger than peace of mind.