RBI very clearly says that if money is taken overseas, it cannot be used by resident Indians for leveraged trading (so you cannot really trade on any futures, forwards, options or any other kind of derivatives). Check this link.
But you can use this money ( it was $200,000 earlier and was cut to $75,000 per year to curb rupee depreciation) to invest into stocks and real estate.
Though retail can't use these funds for leveraged products, institutions can - if they can prove that it is done for hedging purposes.
It is legal to trade in forex with Indian Exchanges like NSE, BSE, MCX-SX where they currently offer 4 pairs (USDINR, JPYINR, GBPINR, EURINR) in Derivatives (Futures and Options Segment). So if you are trading with Indian Brokers whom have membership with the above mentioned Indian Exchanges it is perfectly legal as i took forex recommendations from MMF Solutions.
Also it is perfectly legal for Indian Retail traders to invest in overseas equity markets. But margin trading in overseas is suppose to be illegal as per RBI regulation guidelines.