Is Forex Trading Profitable in India?

The key to making profits while trading currency pairs is having a sound understanding of forex trading. You may already know this. In fact, you may be a stock or commodity trader who’s looking to diversify your portfolio by entering the world of online forex trading

No matter your area of expertise, you are right to wonder – is forex trading profitable in India? Let us answer your question with a short answer first. Yes and no. Whether or not forex is profitable depends on multiple factors. For the long answer, continue reading!

What is Online Forex Trading?

Basics first in case you’re new to the world of forex. Forex trading or foreign exchange trading is one of the largest financial markets in the world. Forex trading allows traders to sell, buy and exchange international currencies on prevailing market rates. 

Trading forex involves the simultaneous selling of one currency while buying another, known as ‘currency trading’. In the case of this blog, we’ll stick to forex trading that involves currency derivatives.

Derivatives are future-looking contracts that act as a promise to buy or sell something at a later date and pre-agreed price. USD-INR, EUR-INR, GBP-INR, and other currency pairs can be traded in India via derivatives. 

The trade is conducted through a registered forex derivatives broker like Dhan. When you trade currency derivatives, your goal by default becomes profits. How you earn profits depends on you. 

For example, some people like to swing trade currency derivatives while others go long on currency contracts. Either way, you need to learn forex trading and figure out strategies that fit your goals, risk appetite, and other factors.  

Forex Trading Profitable

Who Does Forex Trading in India?

To fully understand the concept of forex trading, you must be aware of the purpose and players involved in this market. Four key players in the forex market are distinguishable based on their purpose- the government, banks, hedgers, and speculators.

The banks and government in the currency trading market are involved for purely regulatory or economic reasons. On the other hand, there are speculators or hedgers in it to make a profit. If you’re an individual trading forex for yourself, you’re a speculator. Curious? Keep reading. 

1. Hedgers

Hedging involves protecting oneself from potential loss by entering into a currency futures or options contract. Hedgers guard themselves against fluctuations in currency prices by taking a position in the market.

2. Speculators

Speculators look to forecast volatility in currency derivatives to make profits. These speculations are based on multiple factors. like marcoeconomic factors or what a technical indicator reveals. 

The speculator thus trades the currency that they predict to rise or fall. If you are still on the fence about currency trading, the answer to the biggest question is in the next section. 

Is Forex Trading Profitable in India?

Yes, forex trading has the potential to be profitable in India. The forex market is larger than the stock, futures, and options markets combined. But there are a lot of factors that you should consider before jumping into currency derivatives. 

While there is potential for making a decent profit when trading currency pairs, the way in which currency pairs work is different to stocks and commodities. Currencies are quoted up to the fourth decimal place. This is known as a PIP. 

You can read more about PIPs in this blog: PIP Calculation in Forex Explained!

Furthermore, there are laws to protect the interest of traders, providing them with a safe environment to trade forex derivatives. However, you must have the power of research and general knowledge. 

Make sure you read about margin requirements and the leverage that brokers offer as well as keep tabs on the macroeconomic and geopolitical climate. 

After all, currencies are affected by macroeconomic factors like inflation and interest rates as well as geopolitical scenarios that may cause tensions between countries. Regulated online forex platforms like Dhan offer high earning potential and attractive opportunities to trade currency derivatives. 

How to Gain Profit in Forex Trading?

Now you have understood the concept and ascertained the potential of forex trading in India.

Be aware that there are no surefire methods to ensure forex trading profit. However, here are a few points to keep in mind and make you a smart forex trader.

1. Understand Forex

Take enough time to read about the forex market and understand the basics. Determine whether you want to enter forex trading as a speculator or hedger.

If you are seasoned at predicting the rise and fall of currency values, speculation is the way to go. Else, you can choose to hedge.

This guide will help you get started: A Guide to Forex Trading in India: Learn Forex Trading

2. Develop Your Trading Strategy

You can choose to trade based on a trial/error basis, however, you might lose money. The best method would be to develop your trading plan based on best forex practices using the best forex trading strategies

3. Do Your Research

To reach your goal of forex trading profit, you must perform extensive research on the market and trending currency pairs. Track live price changes in currency pairs, and keep a tab on global news, especially imports and exports. Remember to trade only because you want to, not because someone told you about their wins in the forex market.

4. Ascertain Risk Level

Ascertain the risk that you are willing to take before putting your hard-earned money on the market. Hedging may be a better option for new traders as it is safer in comparison to speculation. 

5. Differentiate Opinion from Advice

The internet is overflowing with free financial advice from people who may or may not have extensive forex trading experience. Be wary of trusting the opinions of these self-proclaimed experts. Instead, do your own research and learn how to begin forex trading in India the right way.


Online forex trading platforms allow you to analyze and trade currency pairs seamlessly from your trading account. But whether or not you can make forex trading profitable depends on your strategy and understanding of the market.

If you want to know more about trading currency derivatives, check out these blogs: