Is Binary options trading legal in India? Find out how law regulates this activity and how people can trade using it.
There has been a gigantic leap in the development of Internet trading at a worldwide level and India isn’t behind other countries. Since the day binary trading appeared, binary options like IQ Option, have rapidly become popular in India. With more traders needing to put resources into IQ Option, India actually has a large number of individuals who are uninformed of how binary options work, and how much profit they can generate.
What is binary trading?
Binary trading is a type of ‘go big or go home’ alternative wherein the payment is made out of a fixed compensation when the option expires, or of nothing if the option is out of money. This approach is based on ‘yes or no’ probability, this is why the term is ‘binary’. The option holder doesn’t have the choice to sell or purchase the asset as everything is traded automatically.
Trading software like IQ Option requires high-risk management and in any case, the trader is always aware of the number of risks involved, which allows limiting the loss.
Is this practice legal in India?
Unlike in other regions, this type of trading is illicit in India. According to the rules settled by the Reserve Bank of India, any kind of trading and form of foreign exchange isn’t legitimate in the country. The financial sphere there is essentially managed by the RBI and Securities and Exchange Board of India (SEBI), which don’t encourage investing in IQ options and other similar assets on the territory of the country.
The FEMA disallows forex and other kinds of trading through electronic gadgets and online trading platforms. Any trader who performs the above-mentioned activities does as such at his own risk, with no law to regulate deals or options.
To learn more read our article - Is Forex trading allowed in India 2021?
How to try this trading approach in India?
Indian dealers who need to put resources into binary options can do as such by joining with an offshore broker because they cannot be found on Indian platforms (there are no official brokers or trading firms). Binary options trading in the country is performed the following way:
- Create an account with an offshore options trader.
- Select the asset you need to operate with.
- Make forecasts regarding the trade.
- Pick the sum you plan to invest into your binary option.
- Exchange the option.
- The result is either an immediate profit from the venture or the full loss of investment.
Is IQ Option lawful in India?
The principal question that strikes a reader is ‘What the heck is IQ Option?’ This is an organization operating under the name of ‘IQ Option Europe Ltd’. It is a regulated and authorized options dealer, yet since there is no such trading allowed, it doesn’t hold a lawful status in India.
In any case, individuals utilize 3 various types of IQ options in India:
- Demo account, which is a free record through which the trader can train with options trading without utilizing genuine cash.
- Entry level or standard record, which has a low minimum deposit.
- VIP account, in which users can exercise trading together with a personal manager.
What if you happen to work with a scam IQ option broker in India?
Without any laws or rules to control options trading in India, investors have to perform all the trading manipulations at their risk. There is no lawful support access to a broker engaged in trading or working with a scam. There are many phony sites over the web that trick individuals and end up taking their data and cash.
Returns additionally vary from one dealer to another. While one dealer might offer a 60% profit from a venture, the other may offer a 300% profit from speculation. With no rule on speculations and returns, the broker should make certain to return rates, least investment sum. Also, they should have withdrawal rules and a bonus policy.
With so many continuous IQ Option scams occurring on the planet, the trust factor lies underneath all levels and the Indian authorities would not like to engage in any risks and experience financial crisis in case of unknown unknowns.
Why is it a risky alternative?
In binary options, no property is bought, there are no securities, and there is no depository.
You can even estimate the difference by studying the list of documents for registration. To register you on the exchange, the broker will definitely ask for a passport – you will need to sign an agreement with the broker itself and with the depositary for the storage of securities. These treaties are your protection. Even if your broker goes bankrupt, the securities will not be lost: they can be transferred through the depository to another broker.
To register for binary options, no documents are needed at all: an email is enough. To withdraw large amounts, the manager may ask for documents, but how much is considered large and what kind of documents to ask for – each broker decides for himself.
To deposit money into the account, you do not need any agreements with a broker or a depository – the maximum is a user agreement, which you automatically accept upon registration. After the account is replenished, the money is kept by the binary broker. If a binary broker goes bankrupt or simply closes, your money will remain in his account, and it will not work to transfer it to another binary broker.