Hi, I’m Hazem, a Muslim by religion. I have read a lot about Islam and it’s somewhere written that forex and binary options trading can be Haram. I do trading and have several accounts on different brokers. Especially i like short-term options trading. But i once argued with one of my colleagues about it: he said it’s Haram. I use SWAP free accounts and Islamic Trading accounts (as it was written on brokers’s sites). I asked a question to the tech support of one of the broker and got the answer:
‘Chat operator: Rashid Iqbal
Good afternoon! Thanks for your interest in our company and asking your question. We understand it can be confusing so let’s look at some points:
The worldwide spread of such a religion as Islam was largely obtained through worldwide trade.The Islamic world was always connected to trading - as we all know, Muhammad himself was a trader.
According to the Quranic declaration: “Allah has permitted trade and forbidden riba [usury].” Our company don’t take commissions at night, do not take commissions for prolonging a trading position, and do not write off or charge interest for the presence of funds or trading activity. We are focused on working in Arabic speaking countries for over 10 years and all of our accounts are Islamic.
Gambling addiction is haram. But trading is not haram if you are not addicted to trading like gambling and if you apply technical analysis, research the global economy, and practice financial planning.
Another good example to see the difference: a car may be used for both good and harmful purposes. You can break traffic rules because you’re driving an ambulance and need to save lives or because you’re driving a car and want to crush a crowd of people. Your income from trading can be used for both good and bad purposes. The car itself cannot be haram, as well as the trading platform.
Speaking about trading in our conpany, we are providing binary option tranding services means no risk of losing more than allocated in the trade. In the binary trading mode the amount of possible profit and loss is known in advance.
Binary option trading refers to the practice of an investor selling/buying a trading instrument that he does not possess at the moment of sale. He sells/buys them with the belief that the price of those instruments will changed, allowing him to profit by repurchasing them at price change. So, a binary option is a contract that gives the buyer the right, but not the duty, to purchase a certain underlying at a specific price and on a specific date. As a result, it just grants you the right but not the responsibility. And it is more like making a down payment on a car or house with no obligation to purchase it. The buyer has the option to decline to purchase the underlying and forfeit the down payment. If you had the right to buy a house, but in a month the price of this house fell 2 times, why would you use the right to buy this house at the old, higher price? Agree that such rights and actions are not haram in everyday life, and in the same way it cannot be haram in the field of online commerce.
I’m curious: as Muslims, are you satisfied with this answer? Or does this broker manipulate the facts to deceive me? What is your opinion?
I want to continue trading because i get profit and earn money but i want to be sure.
Private retail forex trading seems a potential problem in this regard.
A lot of new traders believe when they enter the field that we are engaged in buying and selling currency. They believe that the broker accepts their order to for example buy EUR/USD and the firm take some of his account capital, convert it to USD and sell the Dollars and use the proceeds to buy Euros.
This is of course not what happens. If it did, this would be buying and selling commodities, which happen to be currencies rather than oil or grain or iron.
What actually happens is that the trader places a bet with the broker that the exchange rate of Euros to Dollars will rise. I can’t tell you that private retail forex trading is haram, but I can tell you it definitely is betting.
Discussed an important topic. Which is very important for Muslim traders. If you trade swap in Forex, then trading is forbidden for Muslim traders. swap is taking interest which is haraam for Muslims.
However, if a Muslim trader trades without a swap, then Forex trading is halal for him.
The question basically is whether trading is morally acceptable or not. So it comes down to the question what trends you support with your investment, whether these trends are well intentioned towards a positive development for all living beings or whether you are betting on society to fail. The letter is giving energy to the dark side. The former is helping positive trends to form and yourself to reinvest. When it comes to manifestation, intention is key.
I will try to benefit from positive developments and to refrain from betting on negative events, to not be part of the problem. Fingers crossed guys
Swap cannot be traded for Muslim traders. And interest is forbidden in Islamic analysis. This is not to say that I am referring to Forex trading. I said swap trading should not be done for Muslims.
Swap free account supports Muslim escolars or not , its a very complicated issue , but after all trading is a business so no way to compare this as Haram
Forex is permitted in Islam, but I think it’s the rollover fees that are haram or not permissible in Islam. This is why you will see many brokers offering ‘Islamic accounts’ to their traders in which no swap fee is levied on traders.
The act of trading is not forbidden in Islam. It’s not something you should look at from a religious perspective. Trading has absolutely nothing to do with religion in any way. Trading is only possible if you have a thorough understanding of the market. There is no added value to any religious belief system. Whether you are a hindu, Buddhist, or from some other religious group, you can learn and practice trading.
I absolutely disagree. If a person is a genuine disciple of their own religion, then they should seek where their religion is applicable in every aspect of their lives and every action they take. They must then follow the codes of their religious beliefs.
Forex trading is both halal and haram, depending on the intent and behaviour of the individual investor. Trading with a proper strategy and Islamic account is halal, whereas with a regular interest charging account and no system, it’s considered gambling and haram.
I agree. I don’t see how private retail forex trading can not be gambling. We have to recognise, we are not buying and selling currency the way a shop buys and sells bread. We are purely speculating on the exchange rate.
As an example, we might just as well speculate on the difference between the population of France and the population of the UK - we can bet the difference will go up or go down but we will never own any people.
Gambling and earning interest are sometimes associated with forex trading and this is why some people consider currency trading as haram. Forex trading, in general, is forbidden under sharia law, a modified version of Forex trading, i.e., Islamic swap-free version, is completely permissible and halal for Muslims to invest.
I understand that an interest-paying account cannot be used by Muslims to trade forex, but I wonder in what other ways is an Islamic account different to a conventional account?
