In recent years, a new type of online activity called “Color Trading” has gained traction across social media platforms and mobile apps, luring people with promises of quick money. But what exactly is color trading, and more importantly, is color trading legal in India?
Let’s get into the details of what color trading is and its legality. Above all, the risk is associated with color trading.
Is Color Trading Game Legal in India?
Not everything with the last word “trading” becomes legal or ethical. One must always and always consider knowing more and more about the trading platform and product where they are putting their hard-earned money.
A few years back, there was a hype around cryptocurrency, and people were blindly trading cryptocurrency on any random platform. In doing so they lost money trading in fake cryptocurrency apps.
Since cryptocurrency is legal but not regulated in India, it becomes impossible for traders to recover their money. However, people didn’t stop and continued looking for the easiest ways to make money.
This gave scammers, who are tech-savvy, the opportunity to create new software and apps that claim easy profits. Ignoring the dark side, people again fall for such scams and lose their money.
So, in short, when it comes to the question, is color trading legal in India, the answer is NO. Color trading is not legal in India.
Here’s why:
- Not Regulated: Color trading apps are not registered with SEBI (Securities and Exchange Board of India), RBI, or any other authorized regulator.
- Resembles Gambling: The mechanism of predicting a color’s outcome is purely based on chance, not financial analysis. This makes it no different from online gambling or the lottery.
- Violates Indian Laws: As per the Public Gambling Act, 1867, most forms of betting and gambling (unless state-regulated) are prohibited in India.
- No Financial Instruments Involved: These platforms don’t trade in actual securities, commodities, or currencies — which are required to be traded through regulated exchanges like NSE, BSE, or MCX.
Colour Trading Scam
Let’s get into the details of what it means and how colour trading works. As the name suggests, these platforms use different colors to indicate uptrends and downtrends.
For example, the green color indicates an uptrend, and the red color indicates a downtrend.
Traders can take respective positions according to the color displayed.
People often call stock market trading gambling, so what would you call those involved in color trading, who are taking positions based solely on color changes in the app?
Many of these platforms operate under names like:
- DTT App
- 91 Club
- F2 Trading
- Power Bank App
- Win Go
- FAST Color Prediction Game
They often falsely claim to be regulated or affiliated with major stock exchanges or government bodies, while in reality, they’re neither recognized by SEBI nor registered under any Indian financial regulatory authority.
Every day, our team comes across at least one case of Color Trading where people lose lakhs of capital.
Color Trading Scam: Real Case
One such case is of Manik (name changed), who lost ₹1.5 lakh in a color trading scam. Manik said he came across a Color Trading app on Telegram. Initially, he didn’t understand how it worked, but later the scammer reached out to him and influenced him by showing easy gains.
Manik was convinced and registered himself on the app. He started trading with ₹30,000 and gradually added more, totaling ₹1.5 lakh.
For every trade he executed, the app charged him a ₹300 commission, and thus, he ended up paying around ₹40k to the scammer.
He made a profit for a few days, but since it is pure gambling and provides no accuracy or any idea of risk-reward, he soon lost his entire capital.
Like any other scam, when he tried reaching out to the scammer, he found his number blocked, leaving no option for loss recovery.
How to Report Color Trading Scam in India?
Unlike other cases, this case can’t be reported to SEBI because neither Color Trading nor its activities are legal nor regulated. The best one can do is report it to Cyber Crime. But does cyber crime refund money?
Well, it depends on the documentation & sensitivity of the case. Hence, there is no guarantee of getting your capital back.
Anyway, let’s discuss how to report a color trading scam in cybercrime:
- Visit cyber cybercrime portal.
- Register and log in.
- Choose the type of scam
- Draft the complaint.
- Upload proof
- Submit and note down the acknowledgement number to track cyber crime complaint status.
Need help? Register with us and get assistance in reporting the complaint against the platform running this scam.
Conclusion
No doubt, there are solutions for everything. But in the first place, why get trapped in the problem, especially when it is controllable?
Protect yourself and become responsible with your money. One needs to understand that there is no such thing as easy money or quick gains. If this were possible, big businessmen would put huge capital in such apps and get richer.
Real trading demands focus, in-depth analysis, knowledge, and skills. It can give you good returns if you put effort into learning and doing it honestly.
Today, it is about color trading; tomorrow, it could be something else. In simple terms, it will never stop until you stop yourselves from being greedy.
