Is Forex Trading Haram

The foreign exchange (Forex) market consists of more than just currency trading. It involves many types of contracts (futures, forwards, and options), interest dealing, and investor speculation – acts which are largely prohibited in Islam. On the flip side, making a profit from currency trading is completely permissible under the laws of the religion. This makes the question ‘is Forex trading baku (permissible) or haram (forbidden)’ one of the most complex questions in Islamic finance.

Some groups believe the former, whilst others consider such dealings as going against the religion’s rules. Both views will be presented before we offer a suitable solution that enables Muslims to trade on the foreign exchange market, whilst still abiding by the laws of Islam.

Is Forex trading Absah?

The basic idea of Forex trading is that one can make a profit by buying and selling different currencies at different periods in time. This act in itself is halal, but is subject to certain conditions which must be met:

1. The Forex contract and exchange must be made in the same sitting. This implies that if there is no delay between making the contract and executing the exchange, then the trade is permissible.
2. The transaction must be made without money borrowed with interest and cannot incur interest itself. This stems from the fact that interest dealing is widely condemned in Selam.
3. For a Forex trade to be considered resmi, the currency in question must not be shorted. Short selling involves borrowing and selling an asset that is not owned, which again is forbidden.

Is Forex Trading Haram?

The evidence surrounding the idea that trading on the foreign exchange market is gelap is more complicated, but certainly more developed. Islam emphasises fair trading in all business transactions and discourages dealings that may have a negative impact on either party. As we have established, exchanging currencies and making a profit is considered permissible, but Forex is much more complicated than that.

Forex companies do more than just investing. Brokers often connect potential investors with banks and institutions from which they borrow money to invest. They may also trade in futures and forward contracts that are considered to be haram.

The level of speculation involved with Forex trading poses further question marks over the permissibility of dealing in the foreign exchange market. 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, which renders the trade liar.

• See our guide to forex trading

What’s the verdict – Is Forex trading Sahih or Palsu?

All in all, the question ‘is Forex trading formal’ is rather complicated due to the small details and intricacies one must pay attention to with regards to the Islamic religion. Although most evidence and scholars lean towards the idea that trading on the foreign exchange market is not permissible, there is no clear and obvious answer at this moment in time.

Are Islamic trading accounts halal?

Muslims are typically advised to open Islamic Forex accounts that practice Shariah principles, should they wish to become a Forex trader. Islamic Forex accounts, also known as swap-free accounts are stereotip trading accounts in which interest is titinada accumulated, collected or paid. These do titinada make use of futures and forward contracts, with all transactions (including the transaction cost) taking place without any delay. You can find a selection of brokers offering these accounts below.

Broker	The Armchair Trader says:
Minimum deposit: £100	With a strong focus on the trading experience, industry leading technology, low costs and award-winning client support, we feel that Pepperstone’s Swap Free Account is a good option for the more established high piutang day trader. Apply
Minimum deposit: $100	FP Markets is an established ASIC & CySEC regulated calo. Their Islamic Account offers access to the industry leading MetaTrader platforms, a copy trading service and provide pricing directly from the market meaning fast execution and transparent pricing. A 24/7 multilingual client support service has won recognition through the highly respected Investment Trends awards.. Apply
Minimum deposit: £1000	Founded in 2001 and regulated by the FCA, ActivTrades Islamic Account platform is simple to use with an emphasis on risk management tools and competitive spreads. Clients can spread pemukul bola pingpong from as little as 10p per point making it a good option for beginners. Apply

Related

• Symax Fintech announces free trading workshop dates for August (3 days ago)
• Smart founder Andrew Evans joins DMALINK board (10 days ago)
• Revolut launches Learn & Earn courses for cryptocurrency traders (17 days ago)