Is Forex Trading Halal? What does Islam say On Online Forex Trading Profits?
Is Forex forbidden or legal in Islamic jurisprudence dealings? This question is frequently in the minds of most of those who intend to enter the Forex trade to relax their heart and know that the money they earned is permissible.
The foreign exchange market, or the so-called forex market, is a modern market in terms of financial transactions that take place in it compared to the stock market, and what preoccupies most traders is a bewildering question, which is whether forex is forbidden or permissible and whether the process of trading in forex is done in accordance with the provisions of Islamic law.
The forex market is the foreign exchange and commodity trading market, which operates five days a week, and continues throughout the day, and scholars differed in several matters, and it can be summarized here by the swap in the board and the leverage that is commission in addition to the cast-off process in which the company takes a commission owed on regular accounts And fall on the Islamic accounts.
The scholars considered these operations to be a violation of the provisions of Islamic law, and from there the forex companies adopted that point and to contain these violations, they rushed to establish so-called Islamic accounts in which there are no interest on financial leverage, or the deals are settled, and thus the suspicion of usurious interest that falls on regular accounts is denied from them.
Forex trading is one of the most discussed topics among Muslim scholars. In order to arrive at whether Forex is forbidden or legal, many decrees and fatwas have been issued. The internationally recognized Islamic ruling on this matter stated that the majority of Islamic scholars agree that currency exchange is permissible within the framework of Islam, and it has been practiced for years.
The scholars differed regarding the issuance of a fatwa about trading in the foreign exchange market, and they set a set of caveats and conditions that must be met in trading in order to be certain whether forex is forbidden or permissible, and currency trading through it is in accordance with the provisions of Islamic Sharia.
That the trader is familiar with the buying and selling operations, as well as the rules of buying and selling, so that he does not fall under the legal prohibitions.
That the delivery and receipt be hand in hand, and this does not happen in the forex trade, but rather the account in the company or the bank account and this is permitted by the scholars of Islamic jurisprudence.
And that buying and selling takes place immediately, without usurious commissions.
Not to gamble with capital that costs the investor losses.
What is an Islamic Forex Account?
There has been no Islamic Forex account since time immemorial in the world of Forex, and it is in fact a fairly new account type, which is why Forex trading is constantly evolving and changing. This applies to current Forex trading platforms and to the laws and regulations of Forex trading that have issued an Islamic Forex Account, and it also applies to the various accounts available to traders.
Islamic Forex accounts are also known as commission or swap-free accounts, which are special accounts provided by many brokerage firms, so that some companies specify these accounts for Muslims and provide them to everyone who wants them. Accounts without commission or swap do not impose any fees on trading or on extending deals until the morning of the other day. The majority of companies that offer swap-free accounts offset these fees in other ways.
Now, through your review of this article and what was mentioned in the article on the forex rule in Islamic law, is forex forbidden or permissible, you have sought your heart now, and we have mentioned what has been said about our honorable sheikhs and what have been attained from the provisions of Islamic law. From other markets.
And remember well that the foreign exchange market is a somewhat complex contemporary jurisprudential issue, so every scholar clarifies the ruling according to his understanding of forex, and each of these has his reward in devising the legal ruling for the issue before him, whether wrong or correct, and you have the absolute choice to take anyone’s opinion.
Currency trading is halal or forbidden
Currency trading is permissible or forbidden is a phrase that comes on the minds of many who think about entering into currency trading and find themselves confused about their matter, and when browsing many religious sites, he finds himself lost between the differences of knowledge about the ruling on currency trading, whether it is permissible or forbidden, and without any prior knowledge of methods Forex trading.
First, let’s know what Forex is and how it works? Is Forex permissible or forbidden? And why do you find so many many jurisprudential differences in the rule of Forex trading.
What is Forex?
Forex trading is foreign exchange trading through a brokerage company on the stock exchange, and the forex market operates 5 days a week throughout the day, and the market value on which the currency market revolves is more than 5 trillion dollars on a daily basis.
Foreign currencies, commodities, stocks and digital currencies can be traded through a trading platform provided by the brokerage company for traders, and it offers many facilities and advantages that allow the investor to trade in forex comfortably.
When starting to trade Forex, you must be able to trade with confidence, and we at the Arab Trader website provide all the necessary tools to start a successful trade from the courses and strategies and offer the best financial brokerage companies that agree with the Arab trader.
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Is currency trading halal or haram?
The first thing that comes to the mind of the Arab-Islamic trader in currency trading a dream or forbidden, and here we will answer this question, which has questioned many observers and the fatwas of the people of knowledge diverged in it.
The forex market is modern in terms of the techniques and financial methods that it approaches, and as Western countries are the forerunners to such a system, it would be courteous to present the financial matters in the forex market to Sharia.
Through the presentation and the concept of each one about forex, we found different concepts for traders and the way of public posing the question is marred by a lot of deficiency in understanding the mechanism of forex work, and through that, we found that there are many trends in the opinions and fatwas of people of knowledge.
Currency trading is permissible or forbidden in the Sharia
In order to judge currency trading, whether halal or forbidden, you must read the legal prohibitions that you can avoid by creating an Islamic account in the brokerage company:
What it included of explicit usury, represented in the increase in the amount of the loan, called (delay fees), because it is from the forbidden usury
Not taking possession of what is required to be paid, such as selling currencies, gold and silver, and this comes under the heading of riba.
Excess over rolling fees
All these matters were discussed in our previous topic with analysis and evidence about the forex rule in Islamic law, with study and further clarification.
Ruling on trading shares on the stock exchange
A correct understanding of the operations of trading in the stock market (the stock exchange) and what the purchase of shares represents in terms of the purchase of shares or shares in the joint-stock companies makes the operations of trading in the stock exchange mainly like halal trading operations that have nothing on it, which is what most Muslim scholars have agreed. In fact, even the most strictly strict in these doctrinal issues (such as Saudi Arabia) has a stock exchange and it is permissible to simply buy and sell shares. However, for the sake of the integrity of the offer, we must also mention two conditions that many legislators and researchers in Islamic economics have put in place in order to ensure the permissibility of trading in shares:
That the field of activity of the company whose shares you buy is from areas that are not forbidden in Sharia, so it is not acceptable for you to buy shares in a liquor company, for example.
The second condition is that the financial dealings of that company are not usurious.
Thus, if these two conditions are adhered to, you will ensure that your transactions in trading equity indices are in compliance with the provisions of Islamic Sharia.
Ruling on currency trading in the forex market
The issue of the ruling on currency trading is one of the issues around which a lot of controversy has arisen, and rumors and opinions differed over it. Because currency trading, although not forbidden in the first place, but many of the details through which Forex trading takes place are among the issues in dispute. Among these details, for example, leverage, rollover fees, and other benefits and commission rates, which many religious scholars have forbidden to trade forex. This is because some of these commissions, on top of which (rollover fees) are considered usury, which is forbidden in Islam. Rollover fees are those fees or commissions that are calculated on open operations in the account if their duration exceeds one day. This is the major problem that faced the scientists’ authorization of currency trading operations. But the issue did not end there.
Ruling on trading currencies using leverage
To make big profits during the day from small price movements, you need to invest large sums of money, thousands, if not hundreds of thousands of dollars. Therefore, to alleviate this problem, Forex brokers offer you leverage. That allows you to actually invest $ 50 against $ 2000. You can now take much bigger positions and increase your profits. However, this is actually a loan. In Islam, it is permissible to borrow from someone for the purpose of investment to make a profit and then return the loan without interest to the creditor.
However, with Forex brokers, they are lending you money with the sole purpose of taking a commission. Effectively, they will make a return on every trade. Many scholars consider this a form of interest, which makes the ruling on currency trading forbidden. But if the financial broker offers you the right to use leverage within an Islamic trading account free of interest, then this matter does not entail you paying money or fees in exchange for using these funds at all, so the ruling on trading currencies here is permissible.
Fortunately, Islamic Forex brokers have responded by providing day traders with an alternative. You can now have forex accounts that will not charge you standard interest payments. To remain profitable, they charge increasing commissions on spot forex trades. While some suggest this is just an item of convincing interest, many scholars are satisfied with this new method of facilitating deals. Any “regular” forex trading offered by brokers without overnight fees can remove the usury hurdle.
The rule of trading currencies over the Internet
What does Islam say about the ruling on trading currencies over the Internet? Islam understands that people have to earn, that every trade is accompanied by a certain level of risk, and currency exchange is like the rest. When Muslims face many opportunities to earn, they will look to the experiences of people who have shared those opportunities in the past and do research before making decisions.
There are some people who say that currency trading is allowed when using the right type of analysis. When traders are able to predict when a currency will increase, another currency will decrease and there is no speculation that they are not behaving like gamblers, so currency trading is a good thing for Muslims to participate in.
However, traders who time to trade in order to obtain the best results can be considered as people breaking Islamic law as there may be some speculation that they are doing. This is where there are concerns and some Muslims may prefer to steer clear of currency trading altogether. However, more than 90% of Islamic traders use interest-free Islamic accounts based on the latest research in Saudi Arabia.
Halal shares and the rule of speculation in shares
There are many questions that the Arab trader searches for in the ruling on shares according to Islamic law, what are halal shares, and what is the ruling on speculation in shares. The answer to the ruling on trading shares is a very difficult matter. We have conducted deep research in order to answer these questions, and we are here to help you understand the concepts of stock trading in a better way so that you do not fail to follow the provisions of Islamic Sharia. The closer you to the fatwa, the closer you to the fire. We do not want you to take our research as a legitimate fatwa, but rather we try to answer these questions by relying on Islamic Sharia laws.
Stock trading is one of the most popular investment options people seek. However, a clear question comes to our minds whether the ruling on trading shares is permissible or forbidden. According to Islamic law, investing in stocks under some special conditions is permissible and is not considered a sin. If you are new to this investment platform and are interested in it due to our Islamic rules, we are here to help. We’ll give you a quick recap of this – anything you trade without knowing its end results and goals is forbidden. If you put your money in anything and try to visualize the results based on your desires then it is a sin according to Islamic law.
But, if you are trading stocks by examining ongoing trends, calculating their results, and understanding the full flow of the market, then you are doing an honest job. When trading stocks, you own a portion of the company that issued the shares. Since you are part of the company, you are not gambling.
According to the rules of Islam, in any field, if you do not take interest from a business, then this trade is permissible. Usury can be defined as any portion of profit that cannot be justified by your action. Usury in Islam is strictly prohibited.
The rule of foreign shares in Islamic law
Ruling on shares is a completely permissible process, and we have done our deep research to provide you with the best explanation. All our examples were about the legitimacy of US stocks because they are the subject of demand for many legitimate traders. When you trade stocks, you become a part of that organization by purchasing a certain percentage of that company in the form of shares. In Islam, it is permissible to own a part of any business.
When you buy stocks, you are not gambling but doing your honest duty as a member of that company. However, it is very important that you understand the fact that you are only trading with a halal broker who follows all the religious Islamic rules to support you from failing by any principle.
You need to pay attention to the fact that you are only trading with a zero-interest account. The interest-free account is a special Islamic account that allows you to trade in an interest-free manner. In an interest-free account, you do not have to pay or receive any type of commission or renewal fees to hold a stock position overnight. This way, you and the broker follow Islamic law and only trade at the current share price.
Most people make the mistake of contacting a forbidden broker and end up opening a regular trading account.
The ruling on trading shares is permissible and the legitimacy of US stocks, but there are some points that you must keep in mind in the ruling on shares:
- A stock broker must be a halal broker registered in a country that recognizes Islamic law and strictly follows all Islamic rules.
- You must have an Islamic interest-free account to start trading stocks.
- Ensure that you do not receive or offer any type of commission or renewal fees. Dealing with usury is completely forbidden in Islam and it is sinful.
List of halal stocks and legitimacy of US stocks
Prohibited products include alcohol, drugs, gambling, companies that work on renewed interests, fashion companies that deal with tattoos (since tattoos are not allowed in Islam). Likewise, if you are planning to buy a stock and looking for the rule of shares in Islam, make sure that the company does not participate in any of the Forbidden standards in Islamic law.
There are some rules that determine whether a stock falls under the list of halal or forbidden stocks. The company you invest in must be socially responsible and not engage in any type of prohibited product. To find out the legitimacy of US stocks, check the religious Islamic rules for choosing a company to invest in halal stocks:
The company must not sell any prohibited products including alcohol, drugs, pornography and other similar products and services.
It is advisable to invest your money in socially responsible companies that engage in charity, provide affordable treatments to those in need, etc.
Even if the company is affiliated with an organization that deals with prohibited products, you should avoid investing your money in that company.
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US Halal stocks are on the list of Halal stocks
We need to pay attention to the fact that we only invest in halal stocks. You don’t have to search for it, we have already searched for you. We have carefully selected the best halal stocks that are free of interest. Check out the list of halal stocks below:
- Air Products & Chemicals Company share
- Sanofi shares
- Prologis Inc stock
- Rio Tinto stock
- Salesforce stock
- Canon shares
- Texas Instruments stock
- Merck & Co.
- Exxon Mobil stock
- Saputo Inc stock
- Adobe Inc stock
- Johnson & Johnson stock
- Canadian National Railway stock
- Magna International share
- Pfizer Stock
- Pembina stock
- Dupont Corporation Stock
- Abbott Labs stock
- Chevron Corporation shares
- BHP Group Limited share
- Novartis stock
- Gildan Activewear shares
- Intel Corporation shares
Aside from these halal stocks, you can easily invest in other halal US stocks by verifying the company from the above criteria.
How to buy halal stocks
- You must open a trading account to start investing in the halal stock market
- Download the MetaTrader trading platform (you can get the MetaTrader platform for free by clicking here).
- Enter your trading account number and password.
- Buy or sell back to your analysis to invest in halal stock.
Upon performing the previous steps, you will be able to start the process of investing in halal stocks, if you are a beginner and need additional help and information, experts will provide you with all guidance and support by communicating with a financial advisor. Register with us to contact a financial expert.
How to find the best halal stock brokers
If you are new to stock trading, and are looking for a share rule or a speculation rule in halal stocks in the US market, you should start investing in halal stocks. As the world is moving rapidly towards digitalization, forms of investment are also changing. Trading halal stocks in the US market is among the fastest growing platforms to diversify your portfolio in the right Islamic way.
We have helped hundreds of Muslim traders by finding a halal stock broker for them using our community network. Trading halal stocks is not forbidden if you do it in the right way. We are here to help you grow in the right direction. Join the biggest investment opportunities in halal stock trading with us. However, trading halal stocks requires a lot of practice as is the case with any investment in the stock market. Test the performance of the halal stocks you want to trade on using a risk-free free demo trading account on the best trading platforms MetaTrader 4 or MetaTrader 5, it will provide experts give you all the support, guidance and education you need to start the process of investing money in Halal US stocks.
Halal trading and Islamic account conditions
Halal trading is one of the areas of trading that a large segment of traders is looking for that is in line with the standards and rules of Islamic law. Halal forex trading, known as Islamic forex trading, is a huge and strong sector in the market targeting a large number of traders who follow the Islamic faith, and we will review In the following points, more information about halal trading, the conditions of the Islamic account, as well as how to find the best Islamic trading company among all the major companies that work in this field.
The concept of halal trading?
It is known that there is a lot of ambiguity surrounding the concept of halal forex trading, and many wonders if it exists, how it is done and what are the conditions, and are there halal or Islamic trading accounts? and what is halal trading? In fact, of the matter this type of trading does exist. And it has rules and conditions.
The practice of lending money in Islam is considered forbidden, especially when it lends with high interest (usurious), which is immoral in Islam, but when it comes to Forex trading, the problem is that the term usury takes a much broader form, which then conflicts with what is permitted. By Islam.
To overcome this and to ensure compliance with the rules of Islam, traders need to practice a halal forex trading method, and with a little creative thinking, Islamic forex brokers and traders, using Islamic Forex accounts, have come to make their trading profitable by earning and receiving commissions based on their trading and through the practice of spot trading that eliminates overnight interest payments.
Best Islamic Trading Company
Due to the popularity of Islamic trading, and the increasing demand for investment in trading in Arab countries in recent years, many major trading companies have added Islamic trading service to their various offerings and platforms.
Finding the best Islamic trading company is not difficult at all, it has become one of the basic benefits that can be enjoyed from the very first moment of opening a trading account.
There are a large number of halal trading companies that have appeared in recent years due to the popularity of Islamic trading, and the list of the best Islamic trading company includes a large group of companies such as:
Q8Trade, AVATrade, ICM, Adss.
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What is an Islamic account?
Halal trading has boomed in popularity in the forex industry, and since Muslim traders were concerned about how their trading would affect their faith, they resorted to choosing a so-called Islamic trading account, or an account without swapping, and with these accounts, there are no swap fees and no trading interest fees. Overnight for those trades that the trader will hold.
Traders using these accounts should bear in mind that there will still be administration fees charged for their account for open positions.
What are the terms of the Islamic account?
The Islamic trading account is easy to set up, and several can be created in 3 easy steps:
First, it is necessary to find an Islamic broker or trading platform that supports this type of account, and you can then create a forex account and verify that it really belongs to you, by providing all the necessary documents.
The next step will be to fund your account and once this is done, you will need to apply for an Islamic account, and an application for such an account is usually approved within a day or two of submitting the application.
Through halal trading accounts, or an Islamic account, Muslims can benefit from forex trading while adhering to Islamic law, and halal trading accounts may not impose swap fees or interest swaps in the forex market.
The open centers may need to impose some administrative fees, and to understand halal forex trading, it becomes necessary to understand the principles of finance in the light of Islam. Unlike traditional financing (for the revenue motive), Islamic finance depends on ethical considerations and objectives. There are two basic principles of Islamic finance, which are as Follows:
The philosophy of sharing risk between the borrower and the lender, getting the interest promises to reward the lenders and the borrowers bear the risks.
The monetary activity must enhance the economic and social activity, and the main objective of finance in Islam is related to promoting happiness in worldly life, and that finance becomes an integral part of society and life, and accordingly, Islamic finance encourages social and economic neutrality.
Areas of halal trading
As an Islamic trader, you will have access to all the major markets that other traders frequent, and this means that you will have open fields for you to trade Forex, CFDs on stocks and CFDs on indices, and CFDs on commodities.
For an Islamic trader, there are many exciting methods that they can take in their trading, such as speculation, day trading and swing trading are all possibilities. Islamic traders have the advantage that they can leave long positions open for a long time without paying fines, which can involve the risk of reducing profits. Traders will also have another advantage, which is that they can easily avoid the costs associated with making the swap.