forex trading halal in islam
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Binary options traded outside the U. They offer a viable alternative when speculating or hedging, but only if the trader fully understands the two potential and opposing outcomes. These types of options are typically found on internet-based trading platforms, not all of which comply with U.

Forex trading halal in islam institutional forex platform

Forex trading halal in islam

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Islam emphasizes fair trading in all business transactions and discourages dealings that have a negative impact on one or the other party. There are four types of tradings that are considered haram in Islam:. The basic idea of Forex is that you make money profit by buying and selling different currencies. In itself, buying and selling currencies is not Haram, but it is subject to certain conditions.

According to the fatwa below and the interpretation of multiple sheikhs, dealing in two different currencies is permissible in Islam as long as the contract and exchange are made in the same sitting. Gold is to be paid for by gold, silver by silver, wheat by wheat, barley by barley, dates by dates, and salt by salt, like for like and equal for equal, payment being made hand to hand. If these classes differ, then as you wish, payment is made hand to hand. Learn more about the halal way of taking a loan in Gold and how a Muslim ought to pay back a loan in gold.

In the case of the same currency, both the amounts should be equal and the contract and exchange must take place in the same sitting. Exchanging currencies and making a profit is considered permissible , but Forex is much more complicated than that. The fluctuation in currency is very small and currencies move only a small fraction at a time. Therefore, to make a profit in Forex trading, you need to invest a large sum.

For example, if someone makes a cent in profit for every pound they invest, then for a thousand dollars, they will make a ten dollar profit, which is not exactly an attractive amount. On the other hand, if someone invests a hundred thousand dollars, then they will make a profit of a thousand dollars, which is serious money. This brings us to our next point, leverage — borrowing. Forex companies do more than just investing.

Forex brokers connect potential investors with banks and institutions from which they borrow money to invest on certain conditions. They also often trade in futures and forwards contracts that are considered haram in Islam source.

Once again, borrowing money for forex trading in itself is not haram. The issue here is that there are strings attached to the borrowed money. The broker only lets the investor borrow money to transact through them on which they can make a brokerage fee — a fixed return on each loan.

Islam allows only one type of loan, Qard-e-Hasan — an interest-free loan. Secondly, in a Forex trade, a swap fee is charged when an investor holds on to an open position overnight. According to most Muslim scholars, this swap or delay fee is considered Riba and is therefore haram source. Charging a fixed amount on a loan is Riba which is haram and the Islamic scholars have a consensus over it. O you who believe! Fear Allah and give up what remains due to you from Riba from now onward if you are really believers.

And if you do not do it, then take a notice of war from Allah and His Messenger but if you repent, you shall have your capital sums. Deal not unjustly by asking more than your capital sums , and you shall not be dealt with unjustly by receiving less than your capital sums. Forex trading is considered Gharar — uncertainty because it involves excessive risk.

In Forex trading, investors borrow huge amounts of money to invest in the Forex market, which brings harm to both the investor and the economy in general. Not only does this kind of transaction involve risk, but it often involves cheating and misleading people to get easy money.

Furthermore, Forex investors often make an attempt to anticipate the varying value of a currency without owning, buying, or selling the currency. That falls under the category of speculation or gambling deeming the trade haram. However, Forex is not mere speculation but involves research, market analysis, and making use of historic data to determine the best strategy and minimize risk.

Islamic Forex accounts also known as swap-free accounts are halal trading accounts in which interest is not accumulated, collected, or paid. These accounts do not make use of the futures or forward contracts. In an Islamic Forex account, all transactions including the transaction costs take place immediately and without any delay.

Mufti Taqi Usmani, a leading scholar, and Islamic finance expert was asked the following question:. The creation of risk with no justifiable prospects for creating any value is rather dangerous and can potentially lead to the exacerbation of economic crises. Now, what happens with Forex trading? You are like the people on the Island that were betting on the price of the Islander without taking possession of it.

You are creating risk in the market with no prospects of creating any value which can justify your risk creation. This is gambling and is absolutely Haram prohibited in Islam. Gambling has to do with the creation of risk with no prospects of creating value that can justify the risk creation. Aside from gambling, the other matter that arises when analyzing Forex trading is the issue of Riba. Any loan which involves a contractual requirement for the lender to benefit from the loan involves riba.

However, it is haram to borrow money with the condition that the money is used to purchase something from the lender. This is because the loan in this case will be bringing about a contractually guaranteed benefit to the lender. I see no material differences between Forex trading for the purposes of speculating on price and gambling. However, I would argue that although painful at first, transitioning to a career with a more worthwhile pursuit will be much more fulfilling and likely more profitable as well.

View all posts. I have a leveraged account i. When I open a trade I can close at any time and If i choose to do so I can choose to swap my base currency to the other currency I am trading or withdraw in a different currency. And it is not exactly paying him for the money he lend. We are paying for the service done. Salaam Rakaan. Shukran for the good contents.

Indice trading. This site uses Akismet to reduce spam. Learn how your comment data is processed. Search for: Search. Rakaan Kayali. Like this: Like Loading Previous Previous post: Delete your stock trading app! Next Next post: Getting started in the Stock Market. Good Info! Glad you liked it. What is worse? Trading forex or working in a U.

I think the way I trade is halal: 1. I have a muslim account with no swaps riba 2.

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