Is Forex Trading Allowed in Islam?
Is forex trading halal from an Islamic account which is swap-free? See the references below for further clarification.
Islamic Trading Accounts
The question as to whether Forex trading is permissible according to Islamic law is a difficult question to conclusively answer. Although Islamic authorities certainly agree that currency exchange under certain conditions is halal i.
If the types are different then sell however you like, so long as it is hand to hand. Usury is of course completely prohibited in Islam, and is defined very widely. For a long time, retail Forex brokers reflected the market practice of paying or charging to the trader the interest differential between the two components of any currency pair whose position remains open overnight. You might ask how they did so and maintained the profitability of their operations.
This was achieved by charging increased commissions in spot Forex trades, and this practice has become the hallmark of nearly all Islamic Forex brokers. Arguably, this in itself is just a camouflaged interest component, and if this view is taken, it makes Forex trading problematic according to Islamic law.
The interest problem also eliminates any possibility of trading Forex forwards, as there is always an interest element involved in these transactions. Having reduced the issue to one of trading spot Forex and assuming there is no interest element deemed to be involved, we move onto the next issue. So clearly, the Prophet Mohammed peace be upon him had in mind exchanges of different types of commodities that would be made between two parties, recognizing that this was a natural and just aspect of commerce.
In fact, one could extrapolate that it was natural and accepted for a deal to made between two different parties. Like buying stocks from alcoholic beverage seller:. The one who presses it, the one who has it pressed, its drinker, its carrier, and the one it is carried to, its server, its seller, the consumption of its price, the one who purchases it and the one it was purchased for.
Home Questions Tags Users Unanswered. Is forex trading halal from an Islamic account? Possible duplicate of Is buying or selling forex, commodities and stock indices halal in Islam?
Hello and welcome to Islam. It would have been best if highlight what is confusing and detailed your findings. Let see definition of Forex from Wikipedia: Like buying stocks from alcoholic beverage seller: Narrated Anas bin Malik: For more info, check out this link: I don't know how many of these types of companies there are around the world, this is the only one I have found with a little research.
Assuming the definition of riba is not derived from ra-ba-wa to grow as hinted by Allah SWT at The abuse of ra-ya-ba to the point of harming others is what i define as riba. So in the case of futures, as long as it's for the good of others it's ok. Cases like anticipating a hardship season to come, would be an example of a good for others. Cases like insider trading would be bad for others and be categorized as riba. Thank you for your interest in this question.
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Home Questions Tags Users Unanswered. Is buying or selling forex, commodities and stock indices halal in Islam? According to these decrees, the conditions for trading currency are: Immediate buying and selling without delay The currencies needs to be transferred from the account of the seller to that of the buyer and vice versa The cost of the trade should be paid without delay No interest on trades.
Noah 1, 7 20 Speculating is a problem, as it is very similar to gambling. However, if you invest without speculating, that is fine i. Commodities are also fine, but indices can be risky as they can involve companies which muslims cannot invest in. Salaam and welcome to Islam. We are glad to have you as part of our community.