This is an extremely difficult question to answer and it may be one that should be discussed with your own religious leader rather than being decided base on an internet article. So how does a swap free trading account work?
Is it Halal or Haram for Muslims to trade forex?
Is Forex Trading is allowed in Islam. Forex Trading is Currency Trading on Internet where you trade on margin and leverage mechanism.. Is this king of trading or any income from this allowed by Shariah? Is there any halal way of trading forex or commodities? On my search I found some forex market agents that claim to provide halal way of forex trading and they do not deal with interest is this correct? I have recently did trading online but later on going through their terms and about sections I realized that they categorize this kind of trading as margin spread betting or gambling trade, also at end of the day when price roll over to next day the agent charges the interest on invested amount which is clearly not allowed in Islam.
Here my questions are: However, we then must go on to say that gambling is strictly forbidden by Islamic law, even as a form of recreation or entertainment when undertaken with small monies which the gambler might be said to be able to afford to lose.
In measuring these two competing elements, it can be said that it is the method of speculation that makes the difference. One author has examined the subject and stated that speculation on the basis of fundamental analysis is permissible, but technical analysis is not, and an interesting reasoning is given: However, this argument can certainly be criticized as spurious as related to market realities.
For example, is a speculator who believes that the U. Dollar will rise against his Euros due to economic fundamentals bound to simply make the trade immediately, and forbidden to take any action to time the trade entry to a psychologically opportune moment?
A stronger argument could be made that a Muslim has no business speculating on the currency markets unless he or she has a firm basis upon which to anticipate success. This would mean that trades must involve either some element of fundamental analysis or technical analysis which the trader actually has a firm reason to believe in. There is no question that currency exchange is permissible in Islam, provided that there is no interest element, that it is made hand to hand though this phrase can be translated in multiple ways , and that the exchanger has a valid reason to anticipate a probable profit based upon an analysis that does not rely upon the psychology of gambling.
As we have seen, there are certain grey areas within this qualification that must be investigated deeply in good faith and conscience by anyone wishing to begin halal Forex trading with a Muslim Forex account. As evidenced in the research presented here, there are certainly many people who believe that in the right circumstances, Islamic Forex trading is permissible.
If you are interested in researching more on the issue or considering how each Forex broker implements their Islamic Forex system, we recommend that you evaluate our top Islamic Forex brokers and speak to their teams if you have any questions or concerns about how their practices relate to Islamic law.
There is a consensus that forex trading with swap free accounts is halal due to the fact that there is no interest applied, and commerce and trading has always been an activity that has been encouraged by Islam.
These laws cover all aspects of how a Muslim should live and governs how a Muslim should conduct himself in society and in commerce.
In Islam, a Muslim has always been encouraged to be selfless and be generous and make sacrifices to those who are less fortunate than them in life.
For example, if a person in need was to approach a Muslim for loan, the Muslim is obliged to provide the loan without charging any interest on the loan. As you can see, the Islamic way of life is completely different to the modern way of life where personal benefits and self interest reign.
The differences also extend to the modern banking system and the Islamic banking system. In Islamic banking, there is interest involved and banking transactions are conducted using 2 types of arrangements known as Mudharabah and Musharakah. Essentially, both the depositor investor and a bank enters into a profit sharing arrangement where the profit from the transaction is shared based on a mutually agreed formula.
As this form of arrangement is regarded as a partnership, the investor is also liable for a portion of the losses should the investment transaction fail. In short, the Mudharabah banking arrangement permits Muslims to loan out their money for a share of the profits in a similar fashion to where conventional banks pays out interest to depositors.
So what a Mudharabah banking arrangement does is to extend the concept of an ordinary business partnership to cover the relationship between the depositor and the bank. With the Musharakah arrangement, the bank enters into a business relationship with an individual who is regarded as the investor. Under this arrangement, profits are divided based on the capital contribution.
The Musharakah arrangement is normally used when an individual wishes to take a mortgage for the purchase of a property. For mortgages under the Musharakah arrangement, the property is actually purchased by the bank in return for a share of the rent that the property would earn from the occupier of the property.
The Musharakah arrangement works just like a normal mortgage arrangement where all the terms and conditions between the parties are clearly defined.
Once the buyer has fully paid up his loan, the arrangement between the buyer and the bank will end. As retail forex becomes more popular over the years, it has triggered a debate among Islamic scholars as to whether it is permissible for Muslims to participate in it. The availability of swap free trading accounts means that Muslim traders can still participate in forex trading while fulfilling their religious obligations at the same time.