Prop trading firms also known as proprietary trading firms have been rising in popularity. These unique firms offer traders around the globe a unique business model, where traders purchase funded challenges and get funded accounts once passing these challenges. With funded accounts, financial traders can then trade on financial markets and keep the majority of profits, making prop trading super attractive. India is especially attractive for prop trading firms as the country has a rising number of financial traders and allows firms to find talent faster. However, financial traders in India must find reliable firms that offer a safe trading environment and high profit-splitting opportunities.
Prop trading in India is among the fastest growing endeavors as the country has a growing economy where many traders try to acquire trading capital and make a living. Let’s explain and explore prop trading in India and why it has become so popular among local financial traders.
Till now, prop trading was something only a big professional trader could explore. But with modern technology and increased accessibility to the internet, there have been new prop firms that started to offer funded accounts to the masses. There are two sides to the prop trading equation, the trader, and the prop firm.
Prop firms offer funded challenges to financial traders in India, allowing them to acquire access to funded accounts once they pass the challenge by hitting predetermined profit targets. Traders need to follow rules and limit risks to ensure they won’t get disqualified for careless trading. Prop firms need to protect their capital and acquire talented traders who trade responsibly, and trading challenges are the best way to achieve this goal. The amount of funded capital dictates how much traders can risk on each trading position. Funded accounts can be several types, including 1-step, instant, 1st-step, and even 3-step. Instant funded accounts for the most experienced traders in India, enabling them to access funded accounts and start trading for profits immediately. 1-step funded accounts are among the most popular models, as they require traders to hit the profit target only once to get funded and trade for profits.
Overall, prop traders in India have an opportunity to select from the best prop trading firms available worldwide.
Prop trading is not regulated worldwide, which allows these firms to launch the business with little effort. The reason behind this is that prop firms do not manage or get client money, and do not offer trading series, unlike traditional financial brokers.
Prop firms in India simply offer funded account challenges and trading capital, which is used by traders to speculate on financial exchanges and is deposited with regulated brokers.
Prop firms typically offer up to 90% profit sharing, meaning traders can withdraw 90% of profits made in funded accounts. This enables traders in India and worldwide to make a living and retain the majority of their profits, making prop trading incredibly attractive. Traders in India can access almost any prop trading firm platform, as these firms are usually available worldwide. This enables financial traders to sign up for the best and most reliable firms and increase their chances of success. As with any other country, in India as well, traders have to follow strict risk rules while trying to hit the profit target simultaneously. These rules are standard and include daily loss limit, overall drawdown, and profit target. Depending on the prop firm selected, these rules might vary depending on the funded account type. Some firms might as well set other rules such as consistency, allowed trading strategies, news trading allowance, overnight trading, and weekend holding.
Unlike Forex brokers, prop firms do not provide securities for trading or manage client deposits. Prop trading firms in India only provide trading capital to traders and are not required to have a license like brokers, who are very strictly regulated.
In India, Forex trading is regulated by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). Trading is only allowed in currency pairs that involve the Indian Rupee (INR), such as USD/INR, EUR/INR, GBP/INR, and JPY/INR.
Forex prop trading firms in India that are offering funded challenges are not specifically regulated in India, meaning local startups can launch and operate prop firms without much legal trouble and regulatory scrutiny. Since these firms are typically operated abroad, they usually do not fall under the regulations of local Indian authorities. There is also no explicit regulatory framework for prop trading and prop firms in India, which is advantageous for local financial traders who wish to access large trading accounts and trade without risking their own money.
As for the capital gains tax, it depends on the tax bracket the trader falls under.
In India, if Forex trading is considered speculative, profits are taxed as short-term capital gains at regular income tax rates (based on an individual’s tax slab). For non-speculative trading, it can be treated as business income, with different tax rules applying based on the trader’s total income.
When traders select a prop trading firm in India, they also need to ensure the firm accepts their payment methods. In India, there are several channels which become popular among the population and retail financial traders in particular. These payment methods include bank transfers (NEFT/RTGS/IMPS), UPI (Unified Payments Interface), debit and credit cards, Netbanking, E-wallets, and cryptos.
The best prop trading firms in India that accept clients from India typically accept local debit and credit cards. These cards are often issued by local Indian banks and can be used for funding accounts with Forex brokers or prop trading firms. However, traders have to be cautious as restrictions might apply to transactions to foreign trading platforms due to RBI regulations. This is true only for transactions that are aimed at broker account deposits, while traders who pay for challenges are less likely to get restrictions.
NEFT/RTGS/IMPS bank transfers are common methods for transferring funds directly to bank accounts. IMPS offers real-time transfers, while NEFT and RTGS are more traditional options, but are still very popular among Indian traders.
NetBanking is accepted by many prop platforms as a payment method. It allows users to directly trade funds from their bank accounts through the broker’s payment gateways. It can also be used for purchasing challenges.
E-wallets like Paytm and others are very popular among Indians for domestic use, and PayPal is super popular for international payments. PayPal can be used for purchasing trading challenges, which makes it a very robust payment option for Indian prop traders.
India has been known for regulatory uncertainty around cryptos, but some traders still prefer them for transactions and many international prop firms accept cryptos for payments.
Despite generally being focused on Forex pairs, prop trading in India still offers local traders plenty of choices between different asset classes. Most of the reliable prop firms in India offer the following asset classes: Forex pairs, commodities, indices, and cryptos. However, some firms also offer stocks and futures. In fact, there are dedicated prop firms that only allow futures trading and offer significant amounts of capital for futures trading.
Forex trading is very popular among Indian prop trading firms and the majority of them offer a wide range of FX instruments including majors, minors, and even exotics. Currency trading is very popular among Indian financial traders. Surely, local traders will mostly trade Rupee pairs. However, prop trading firms in India offer a unique opportunity to trade any currency pairs without falling under local regulations, which is a big advantage of prop firms in India when compared to locally regulated brokers. Depending on the funded account, the spreads can be raw, with many prop firms making it possible to develop scalping methods to quickly pass the challenge and get funded.
Commodities are popular assets, which include precious metals. Gold is particularly interesting for Indian investors and traders, as the country is a significant player in the global gold markets. India is one of the largest consumers and importers of gold, which makes this metal especially popular among Indian Forex traders. The leverage is generally low for gold, with a maximum being at 1:50. However, this is more than enough to conduct proper gold trading using a funded account with significant capital. The spreads are higher on gold and other commodities, but price swings are also larger than Forex pairs, which makes commodities very attractive for some traders.
Prop firms in India, that do not provide stocks and futures, often allow for indices trading. Major indices like the S&P 500 and NASDAQ 100 are popular indexes traded by many traders who love stock trading. With these indexes available, stock traders can find their preferred sectors to speculate on. Trading indices allow traders to gain exposure to the stock markets, which is an important tool for diversification in the arsenal of Indian prop traders.
The vast majority of prop trading companies in India allow Bitcoin and Ethereum trading in the form of CFDs available on their partner brokers’ platforms. Cryptos tend to make large price swings and enable traders to make large profits when approached with well-tested trading strategies. Some firms also offer other crypto instruments such as XRP, Litecoin, and many more. Indian prop traders typically have a wide range of assets to choose from, and they can swiftly switch between Forex and cryptos to increase their chances of catching opportunities.
Just like stocks, there are dedicated prop firms in India that only focus on futures instruments. These firms typically have monthly fees and allow only for futures trading. Traders in India who sign up for a futures prop trading challenge can select from a wide range of futures instruments.
Stocks are not commonly offered by prop traders, and only a handful of firms allow access to them. A handful of Indian prop trading firms offer stocks, sometimes above 100 instruments. Popular stocks for speculation include Apple, Microsoft, Tesla, Amazon, Walmart, Coca-Cola, and more. Most prop trading firms that offer stocks for trading are not generally focused on other assets such as Forex, commodities, and indices, and traders have to make a difficult choice between these assets. To ensure that prop firms in India allow stock trading, traders need to check the FAQs section of the firm and search for available trading instruments. All prop firms list their allowed instruments in their FAQ or help page to allow traders to check the list of available assets.
Yes, prop trading is legal in India. However, prop firms operate globally and are not regulated by Indian authorities like brokers. They offer funded accounts that traders can use to speculate on markets and generate profits.
Indian prop traders can access a wide variety of assets, including Forex pairs, commodities like gold, indices such as the S&P 500, cryptos, and even stocks in some cases. Forex remains the most popular asset class due to its flexibility with international prop firms that allow trading beyond INR-based pairs. Commodities such as Gold are also popular among Indian prop traders.
Yes, prop trading can be highly profitable for skilled traders in India, especially with firms offering up to 90% profit sharing. In the end, it all depends on how well the trader can test their strategies and adopt them for prop trading purposes.
Get the most recent news at your inbox
Stay up to date with the financial markets everywhere you go. We won’t spam you.
