Indian Traders Guide
For many Indian residents, trading in its various forms has become an immensely popular way of increasing income; with day trading especially becoming particularly prevalent. For many, it is a second income, working around a full-time job, with the majority of trades being completed automatically. If that is your situation, you have a very particular set of needs to achieve success.
Because there is no licensing process within India, trading is all done using offshore broker services and there are many vying for trade within the Indian market. In one way this is a good thing, as it gives you plenty of brokers to choose from, but from the other perspective, it makes for a tedious task sifting through them to find a reliable one.
In this respect, we hope to assist you by explaining what to look for so that you can find the ideal broker. As well as gleaning some general advice from our guides, you can also read through our selection of broker reviews, which have been created with Indian day traders in mind.
In this article, you will learn:
- Which countries have the best licensing
- The types of assets that are available
- How important broker customer support is
Traders in India
Because you will be dealing with a broker based in a different country, there are a number of things we believe you should look carefully at before signing up for an account. We appreciate that you will want to get started as soon as possible, but a little time spent now will save you more in the future:
For those of you who are operating your day trading activities around work or whilst on the move, the availability of mobile access to your trading platform will have prime importance. Almost all brokers servicing Indian clients offer some sort of service, but we recommend that you consider carefully the best option for your trading style, the type of device you use and whether you prefer a downloadable app or an optimised website.
Deals And Incentives
As we mentioned earlier, there are hundreds of brokers trying to attract the attention of potential Indian clients. One way that they do this is by offering substantial bonuses for signing up. While this may initially appear a good thing, many of these offers are made at the expense of longer-term benefits. You are advised to treat these seemingly great opportunities with some level of caution and always check the related terms and conditions before signing up for an account on the basis of a bonus or deal alone.
Diverse Asset Types
You may already have an idea of the type of asset you want to trade or a particular strategy to implement. Some brokers offer a wide-ranging selection of different assets, while others specialise in a particular type, along with its derivatives. If you are just starting out as a day trader, then a broker that has plenty of variety will most probably be a good choice for you, but for someone more experienced, there are others may give you a better deal on the more niche markets.
Good Customer Support
There is no denying the value of a broker that offers good support to clients, that is, support throughout the whole site, not just the people who man the service desks. An ideal scenario is a broker that has the majority of client’s questions already answered by providing extensive FAQs, easy-to-read T&Cs and other helpful guides. Always look for a broker that offers 24-hour support during trading days, with knowledgeable staff and preferably is able to offer communication in one or more Indian language.
Broker Fees And Tax
You will find that each broker has a different set of fees, or may even offer you a variety of accounts that have different structures. Generally speaking, the two most common ones are fixed trading fees or commission-based fees. Both have their purposes, which are dependent on how much you trade and your choice of assets. NB. If you are required to use an Islamic account for religious reasons, there may be a different fee structure in place.
In addition, some brokers add charges for account administration, unused accounts, currency conversion and occasionally for certain types of deposit or withdrawal method. These costs are usually made entirely transparent on the broker’s site but always check the terms and conditions as well to be sure of where you stand.
All profits made from day trading in India are subject to taxes, which is based on a sliding scale system. For this reason, you must keep detailed accounts relating to your trading activity which are randomly requested by the tax authority from time to time.
As a country, India does not have its own licensing system for investment brokers. There is some regulation and monitoring of financial investment matters undertaken by the Securities and Exchange Board of India (SEBI), but this is largely at government level and does not protect you as an individual day trader. Unfortunately, this lack of protection makes India an ideal target for a number of dishonest brokers, so you need to be extra vigilant and ensure that the broker you trade with is genuinely licensed.
There are still plenty of genuine opportunities available for you to trade with an offshore broker. Many reliable brokers, who are licensed under some of the best authorities in the world, legally offer their services to Indian residents. Here is a shortlist of some which are known to apply stringent regulation to the brokers under their jurisdiction and therefore come highly recommended:
Brokers operating under these authorities are proud to show their credentials and it should be a simple matter to check licence information on their website. Many brokers also extend their regulatory commitment by voluntarily becoming members of other financial watchdogs, such as the European Securities and Markets Authority (ESMA), for those with CySEC and MFSA licensing, this means that they also comply with regulations set out by MiFID (Markets in Financial Instruments Directive).
For many Indian residents, trading in its various forms has become an immensely popular way of increasing income.
How we Recommend Brokers
We always try to recommend brokers that are licensed in the same country as you are resident, but unfortunately, India does not operate a licensing scheme. This means selecting from a whole host of offshore brokers, which can seem a very daunting task; this is where we come in. The brokers we look at are those which are stringently licensed and able to offer a good experience to their Indian clients.
One of the things that may be of importance to you is the availability of an Islamic account that can offer you the same benefits as any other account but complies with your needs in terms of its operation. We always check that brokers offering trading accounts to Indian residents are able to provide suitable customer support to them in terms of currency, knowledge of Islamic accounts and (ideally) direct support in their own language.
If you are dealing with an offshore broker, it is also of great importance that you can also obtain secure access to all services from a mobile device as well as through the main site, so we ensure that every aspect is fully functional. We also investigate the level of assistance each broker provides, both through website information and by means of direct contact.
Is day trading in India legal and safe?
Day trading is legal in India, but as there is no licensing system. To ensure that your investment stays safe, you are recommended to choose an offshore broker which operates under a respected licensing authority.
Do I need to pay fees and taxes on my profits?
You will be liable to pay fees for every trade. Depending on the account you open, this will either b a fixed fee or based on a percentage commission. Indian tax laws require you to pay tax on any trading profits made, so it is important that you keep detailed records for this purpose.
Can I test brokers before trading with real money?
Almost every broker now offers a free demo account service and even if you are already an experienced trader, we highly recommend that you make use of the opportunity to ‘try before you buy’.
Is it easy to make deposits and withdrawals?
Once you have selected your funding method, making deposits or arranging withdrawals is usually a very simple process. However, you may encounter additional fees for exchanging to your local currency.
Can I trade using my mobile or tablet device?
Almost every broker provides this service, with the majority favouring the download of an Android or iOS app. There are still a few that allow access using a mobile-optimised website instead, so always check first if you have a preference.
Emily has written for us for 2 years, and with an education and career in economics, markets are something she understands. Working as a consultant for various financial institutions gives Emily the ability to devote a certain amount of her time to the site.