Dabba Trading is not allowed in India. It is a way of buying and selling stocks without using proper stock exchanges like NSE or BSE. In this type of trading, deals happen in secret between traders and brokers, and no official records are kept.
How Does Dabba Trading Work?
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A trader tells a Dabba broker what stock they want to buy.
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The broker pretends to buy the stock but does not actually buy it on the stock exchange.
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The trader and broker agree on a buy and sell price, and only the profit or loss is settled in cash.
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Since there is no record of these trades, they are risky and illegal.
Why Do People Do Dabba Trading?
Some traders do Dabba Trading because:
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No taxes or fees – They avoid paying government taxes and brokerage fees.
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Fast profits – They try to make quick money without following rules.
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No official checks – They think no one will catch them since trades are not recorded.
But these short-term gains come with huge risks.
Risks of Dabba Trading
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Legal Trouble – Dabba Trading is illegal in India, and anyone caught can be fined or even sent to jail.
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No Protection – Since these trades are not recorded, if a trader loses money, they cannot complain to SEBI.
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High Fraud Risk – Dabba brokers can cheat traders since there is no proof of the trade.
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Huge Losses – Many traders lose all their money because Dabba Trading is like gambling.
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Dabba Trading vs. Legal Trading
What Does the Law Say About Dabba Trading?
Dabba Trading is banned under the Securities Contracts (Regulation) Act, 1956.
SEBI can fine or jail people involved in Dabba Trading.
Brokers caught doing Dabba Trading can lose their license forever.
How to Stay Safe from Dabba Trading?
Use only SEBI-registered brokers – Always check if your broker is officially registered with SEBI.
Trade through NSE or BSE – Use proper stock exchanges where all trades are recorded.
Avoid “too good to be true” deals – If someone offers “easy money” through secret trades, say NO.
Check your trade records – Always get a contract note for every trade you do.
Final Words
Dabba Trading might look tempting, but it is dangerous and illegal. It can ruin your money and even get you in legal trouble. Always trade the right way through NSE and BSE to keep your money safe and secure.
Remember: If something seems too easy or too good to be true, it is probably a scam! Stay safe and invest smartly.
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