What is Colour Trading - Meaning, How it Works, Legal Status

Colour trading is an online activity where users try to predict the next color that appears on the chart. It is usually red, green, or violet. On predicting the right color, the bidder received the profit. Though this seems to be a good way to trade and earn, there are various questions. This is not regulated by any financial body in India.

Starting from what colour trading is to its legality, you should know everything. So, read this guide to know the details you need.

What is Colour Trading

Colour trading is an online prediction game where users bet money on which colour will appear next—red, green, or violet. It is often promoted as a way to earn quick profits. But it is not a regulated way to earn and falls under gambling.

Hence, there is a significant risk involved as there are no regulated guidelines or rules. Though the payouts are offered, the risk is quite significant.

Based on the colour trading meaning, the key features are:

• Users place bets on red, green, or violet colours

• Each round typically lasts 30 to 60 seconds

• Investment starts as low as Rs. 10

• High returns and profitability are showcased

• Referral programs, bonuses, and other perks to invite new people

• Lacks transparency as a hidden algorithm shows the results

• No official oversight from financial regulators

• Commonly found on mobile apps and websites

• Often targets beginners with low-risk claims

• Financial risks are way too high

How Does Colour Trading Work

Colour trading is a method that uses colour-coded indicators on charts and trading platforms. This is the primary colour trading strategy. It helps to represent different market trends. This makes it easier for traders to quickly interpret and act on market data. 

Using the visual approach helps the traders identify trends easily. This increases their chances of earning profits. So, here is how the colour trading actually works.

1. Colour trading platforms and charting tools assign specific colours to represent market trends and conditions:

• Green for upward trends or buying signals

• Red for downward trends or selling signals

• Yellow or orange for caution or neutral markets

2. Traders use these colour cues on candlestick charts, technical indicators, and heat maps to quickly assess whether to buy, sell, or hold an asset.

3. The process enables rapid decision-making, as users can visually spot trends, reversals, and momentum shifts without deep numerical analysis.

4. Some platforms also use colour signals in prediction-based games, where users bet on the next colour outcome, but this is more akin to gaming than regulated trading.

Colour Trading Rules

Colour trading rules refer to the guidelines and procedures that govern how these platforms operate and how users participate. In India, colour trading typically involves predicting or betting on the outcome of a colour selection. It is considered illegal and part of gambling in India. Yet, here are a few rules that you must know:

• Only registered users with a funded account can participate in rounds.

• Each round has a fixed time window for placing predictions (usually 30 seconds to 1 minute).

• Users must select a colour and confirm their prediction before the round closes.

• Once a prediction is placed, it cannot be changed or cancelled.

• The outcome is determined by the platform’s algorithm or system after the round ends.

• If the selected colour matches the result, the user receives a payout based on the platform’s payout ratio; if not, the stake is forfeited.

• Platforms may set limits on minimum and maximum bet amounts for each round.

• Winnings are credited to the user’s account and can be withdrawn according to the platform’s withdrawal policy.

• Any attempt to use unfair means, exploit bugs, or manipulate results can lead to account suspension or forfeiture of funds.

• The platform reserves the right to change rules, payout ratios, or suspend service at any time without prior notice.

Colour Trading Tricks Claimed by Promoters

Promoters of colour trading platforms often claim there are special “tricks” or “guaranteed strategies” to win money quickly and consistently. But these are not usually true. Here are a few common colour trading tricks shared:

• Insider Tips: Promoters claim to have secret knowledge or “insider tips” on which colour will appear next, often shared through Telegram or WhatsApp groups. These tips are designed to build trust and encourage bigger deposits.

• Winning Streaks: New users are sometimes allowed to win small amounts in the beginning, making it seem like the tricks or strategies work. This encourages them to invest larger sums, which are then lost or blocked from withdrawal.

• Pattern Analysis: Promoters suggest that users can analyze past results or follow certain patterns to predict future outcomes. In reality, the results are random and controlled by the platform’s algorithm, making such analysis useless.

• Referral Bonuses: Users are encouraged to invite friends and family with the promise of referral rewards or commissions, turning victims into promoters and expanding the scam’s reach.

• Martingale or Doubling Strategies: Some claim that doubling your bet after a loss (Martingale system) guarantees eventual profit. This is risky and often leads to large losses, as outcomes are not truly random or fair.

• Fake Testimonials and Social Proof: Platforms display fake success stories, screenshots of big wins, and fabricated testimonials to convince users that the tricks are effective and profits are real.

• Withdrawal Tricks: Promoters may claim there are “special timings” or steps that allow successful withdrawals. In most cases, users are blocked from withdrawing large winnings and asked to deposit more money to unlock their funds, which never materializes.

How to Identify Colour Trading

The colour trading platforms often disguise themselves as legitimate investment opportunities but are actually unregulated prediction or betting schemes. 

Hence, recognising these platforms early is crucial to protect your finances and avoid falling victim to potential scams or illegal activities. So, here is how you can find such platforms:

• The platform asks you to predict or bet on which colour will appear next, often using terms like “double your money in minutes” or “colour prediction.”

• The app or website is not registered with SEBI, RBI, or any official financial regulator.

• There is no real asset involved—you are not buying or selling stocks, commodities, or currencies, just guessing outcomes.

• The platform promises guaranteed or unusually high returns in a very short time.

• Company details are vague or missing; there is little or no information about who runs the platform.

• Payout issues or sudden account bans are common; users often report being unable to withdraw their money.

• Heavy use of referral schemes, WhatsApp groups, or peer pressure to bring in new users.

• The platform may use flashy marketing, fake testimonials, or social media influencers to lure people in.

• If you search online, you’ll find complaints, scam reports, or warnings from cybercrime authorities about the platform.

• The platform is often banned or blocked by Indian authorities, and news reports may mention police or ED action against such apps.

Reasons to Avoid Colour Trading

If you are still looking for an answer to how to do colour trading, then one thing is clear: it is illegal. Now, this is one of the major reasons why you should avoid colour trading strictly. Here are a few other points that suggest why you should not get involved:

• Illegal in India: Colour trading is not recognized or approved by SEBI, RBI, or any financial authority, and is considered illegal under national and most state gambling laws.

• No Underlying Asset: There is no real asset involved in the process. It is more based on chance, not skill or market analysis.

• High Risk of Fraud: These platforms are unregulated, making it easy for operators to scam users, refuse withdrawals, or shut down without notice.

• No Legal Recourse: Victims have no protection at all. So, if you lose money on color trading, there is no way to raise or file a complaint. This is because it is unregulated.

• Addictive and Harmful: The fast-paced, game-like format can lead to addiction, causing severe financial and emotional distress for individuals and families.

• Frequent Scam Reports: Numerous complaints, police actions, and cybercrime warnings have been issued against colour trading apps due to widespread scams and fraud.

• Misleading Promises: Platforms lure users with guarantees of high returns and fake testimonials, but the odds are always stacked against the player.

• Blocked or Banned Apps: This is mainly due to defaults. Most of these apps due not follow the cyber and basic laws. So, avoid using this as much as possible.

Legal Risks of Colour Trading

Engaging in colour trading in India exposes users to several legal risks because the practice is not recognized or regulated by any financial authority and is considered illegal under national and most state gambling laws.

• Violation of Gambling Laws: Colour trading is classified as a game of chance and falls under the Public Gambling Act, 1867, as well as various state-specific gambling laws. Participating can result in criminal charges, fines, or prosecution.

• No Legal Protection: Since these platforms are unregulated and not registered with SEBI or RBI, users have no legal recourse if their money is lost, withheld, or if the platform shuts down.

• Risk of Fraud and Scams: Many colour trading apps have been linked to scams and fraud. Victims cannot seek help from financial regulators or courts, increasing the risk of total financial loss.

• Account Freezing and Asset Seizure: Authorities have banned and blocked several colour trading apps, and users found participating may have their accounts frozen or assets seized during investigations.

• Criminal Investigation: Law enforcement and cybercrime units have acted against operators and users of colour trading apps, leading to arrests and legal proceedings.

Conclusion

Colour trading may seem tempting with its promises of quick profits, but it is nothing more than an unregulated betting scheme. There are no real assets, no transparency, and no legal safeguards. Most users lose their money to unfair systems or scams. 

If you are looking to grow your wealth, focus on trusted and regulated financial instruments. Avoid colour trading to protect your money, your data, and your peace of mind.

FAQs

Q1. Is Colour Trading Legal in India?

No, colour trading is illegal in India. It is considered a form of gambling and is not regulated by SEBI or RBI. Engaging in it may lead to legal action or penalties under Indian gambling laws.

Q2. Is Colour Trading Real or Fake?

Colour trading platforms exist, but the trading itself is fake. It is based on random predictions, not real assets or market data. These platforms often mislead users with false promises and manipulated outcomes.

Q3. How Does Colour Trading Differ from Stock Trading?

Stock trading involves real companies, market analysis, and is regulated. Colour trading is based on chance, not data, and is unregulated. It offers no ownership or investment value and resembles online gambling more than actual trading.

Q4. Is Colour Trading Approved by SEBI?

No, SEBI does not approve or regulate colour trading. These platforms operate outside official financial systems and are not recognised as legitimate investment options. Any claims of SEBI approval are false and misleading.

Q5. What Are the Risks Involved in Colour Trading?

Risks include financial loss, fraud, blocked withdrawals, and legal consequences. Since these platforms are unregulated, users have no protection or recourse. Most users lose money due to system manipulation or hidden platform rules.

Q6. Is colour trading real or fake

Colour Trading is often deceptive, unregulated, and commonly associated with gambling and scams.