Ok, I understand why India has made it illegal to trade stocks other than doing investing because of speculation!
Also, People should be aware that trading overseas in foreign exchange is illegal!
You can invest but you cannot trade!
Here’s how I found out a way to do it legally! Please let me know if it’s illegal with correct reasoning:)
Rbi made it illegal because there is a risk of losing dollar from our country because trading is mostly considered gambling(although it’s not) so mostly Indians will lose money going out of India to Foreign Exchange, so India will be actually losing money compared to gaining according to probability
I think even if we show consistent profits India won’t care about it(let me know what you think about this in the comments section)
How to make it legal (this is not advice I’m not responsible for whoever follows this):
1.) Find someone from the US, maybe your friend relative!
2.) find a way to get funded your overseas US trading account by them, like a gift for learning overseas trading in realtime.
3.) you can bring back money to India but it’ll get complicated(I would like someone to explain if this can be legal because I’m not remitting any money from India so there is no risk for India to actually lose money from the country other than just gaining),
I would recommend to keep the money in trading account and keep it growing to the point you can afford a temporary living in the US, once you get to the US, open a bank account and withdraw your fund:)
I like your idea, thank you for bringing this up, I kept ruminating over this and came up with the following suggestions (not an advice but a list of possibilities to think about before acting and also consult a finance professional or even a lawyer). Please do not act on these before consulting experts! These are just my random thoughts –
Do brokers in US allow non-US citizens to open account with them for trading purposes? I know they allow for investing because I have an E*TRADE account. I am not sure if they will allow for trading. You may have to fill W-8BEN form etc. and submit it to IRS.
If they allow you to open the account, will they divulge that you are an Indian citizen having US trading account to the Govt. of India, in case the Govt. gets a bit fishy and wants to snoop on you. In this case maybe your dear friend can open an account under his name, so now technically its not your account but his account and you have the username and password.
Let’s say they don’t divulge and you are able to open the account, then you have crossed the main hurdles. Now you will have to transfer funds to your friend living in the US under a different remittance scheme than “investment” (investment falls under LRS scheme S0001). Once your friend gets the money he is free to use it in whatever way he wants, since technically its now his money. In this case he uses the money to fund your trading account.
You log in to your US trading account from India and start trading. You make daily profits.
You tell your friend to withdraw the profit to his own account from your trading account and do an inward remittance to you as a “gift”, since this amount now comes from your friend’s account it does not show up as suspicious activity. Alternatively, you can ask your friend to remit money to you from his own personal bank account in US and you reimburse him from your trading account.
Do you find anything illegal in the steps that I listed?