Why Forex Trading Is Haram – Assalamualaikum, my brother and sister, today we are talking about Halal currency trading?; What is? What does Islam have to say about this? You know you have forex brokers that offer these Islamic accounts. What is it about? Are they really Islamic and also important? Is it a good investment? Even if it is Islamic,
In general, there are two ways to trade forex in terms of time frame: short-term intraday trading and long-term overnight trading.
Why Forex Trading Is Haram
If you trade on a short-term basis, you will not be subject to interest charges simply because the interest rates of individual currencies are adjusted the next day.
Why Forex Is Haram?
However, if you trade overnight and keep your trade open for more than a day, you will have to pay/receive the interest differential. If the interest rate for the purchased currency is higher than the sold currency, the broker will pay you the difference, but if the interest rate is lower for your currency, you will have to pay the exchange.
In this article, we will tell you what the basic rule of trading is, what Islamic scholars say about forex trading and the correct way to trade forex in Islam.
If you are interested in options trading, it is important to know if it is considered halal before you invest.
So forex is easily available online and you also see a lot of ads for brokers; in short, the idea is that you make money by buying and selling a currency, so if any currency goes up, you make a profit. Nothing embarrassing about that, so for example.
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If you buy five thousand pounds of dollars and that dollar goes up, and you make six thousand pounds back, you’ve made a thousand pounds, no problem. However, there is a bit more to it than meets the eye, and forex is not necessarily what we just described in the first place. The most important difference is that currencies only move a tiny fraction every day, so you have to invest a huge amount of money to take advantage of that movement on a daily basis.
Currency trading is allowed as long as the exchange takes place in the same session where the contract was made. It is allowed to sell euros in dollars as long as the exchange is carried out at the same time as the contract. But when the contract involves the same type of currency, such as selling one dollar for two dollars, it is forbidden because it is a type of riba.
In this case, they should be equal amounts and the exchange must be done in the same meeting where the contract is for one type of currency.
The proof of this is the report narrated by Abada bin Al-Samit (may God be pleased with him) who said: The Messenger of God (peace and blessings of God be upon him) said: “Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, salt for salt, like Similar, the same, hand in hand. If the types are different, sell as you wish, as long as it is hand in hand.” By Muslims, 1587.
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Some say the coin is halal and others haram. It is halal if it is in the same session, which means you are buying or selling local currency; In Forex this means a market order. However, it comes to Haram, if you use the forward/future concept, you analyze the market price as 1.1190 and then expect it to drop slightly to $1,100 before rising back to $1,200. So you place a “buy limit” on a pending order at $1,100. So is this pending order considered haram?
Because in Malaysia it is almost halal if you buy / sell locally. But the pending order is not really clear whether it is classified as forward/future.
Generally, any high-risk business is similar to gambling, so many Quranic scholars consider forex trading haram, just as gambling is considered haram. Moreover, regular stock trading is also questionable from a halal/haram point of view – it depends on which stocks you invest in and whether you Use stock trading to invest or speculate.
In forex trading, the investor owns the currencies, which is acceptable according to Islam. However, some investors work on derivative contracts where the investor does not own the underlying assets. According to Islamic law, this is prohibited and considered gambling.
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Most of the debates about the luxury of currency in Islam are only about resolved conflicts, not ongoing conflicts. In fact, things like interest, exchange, immediate execution and transfer fees have been covered by most brokers, but some things are still there and they are important.
The concept of Halal and Haram in Islam related to currency depends on your methods. It depends on the intentions and behavior of the investors.
The same condition that you cannot accept a purchased coin makes it illegal. Moreover, to the best of my knowledge, there are other factors that make this transaction illegal in Shariah, such as forward selling, short selling, etc. Multiply, currencies are originally a medium of exchange and should only be exchanged for personal use in other countries. Commodifying them just to make a profit also goes against the basic principles of Islamic economics. That’s why I wouldn’t suggest you get into this business.
So how does this Islamic account work? The Islamic account is generally the same in most of its offers compared to other live trading accounts.
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To put it as simply as possible, the Islamic account is one of the main accounts that allow Muslim traders to trade overnight without welfare subsidies. And almost all forex brokers offer this to their clients.
Islamic accounts are non-exchange accounts. Exchange is the broker’s commission on the positions transferred to the next day. But in case of Islamic account, this fee remains Rs.0. So basically, with Islamic accounts, you don’t have to pay turnover fees.
It is allowed to exchange currency, buy and sell, but it depends on manual exchange if the currencies are different. Suppose a person sells Libyan currency for American, Egyptian or any other currency. In that case, there is nothing wrong with it, like if he buys a dollar in Libyan currency from hand to hand, exchanging it in one round, or he buys Egyptian or English currency, etc. There is nothing wrong with that.
But if there is a delay, then it is forbidden, and if it was not replaced in the same meeting, it is forbidden because then it is considered a kind of riba transaction.
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So the exchange must take place in the same session, hand in hand if the currencies are different. But if they are of the same nature, two conditions must be met: they must be equal and the exchange must take place in the same room because the Prophet, peace and blessings be upon him:
The ruling of the currency is as stated above; If they are different, the amounts can be exchanged, as long as the exchange is made in the same meeting. If they are of the same nature, such as dollars to dollars, or euros to euros, then the exchange must be in the same place and they must represent the same amount. And Allah is the source of power.
In such a case, they should be equal and the exchange must be done at the same time as the contract if one type of currency is exchanged. The proof of this is the report narrated by Abada bin Al-Samit (may God be pleased with him), who said: The Messenger of God (peace and blessings of God be upon him) said:
“Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, salt for salt, like for like, like for like, hand in hand.” If the types are different, sell as you wish, as long as it is hand in hand.” (Narrated by Muslim, 1587).
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The proof of this is the report narrated by Abada bin Al-Samit (may God be pleased with him) who said: The Messenger of God (peace and blessings of God be upon him) said: “Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, salt for salt, like Similar, the same, hand in hand. If the types are different, sell as you wish, as long as it is hand in hand.” By Muslims, 1587.
It is allowed to exchange currency, buy and sell, but it depends on manual exchange if the currencies are different.
The person sells a Libyan coin for American or Egyptian or any currency, there is nothing wrong with that, such as if he buys dollars for a Libyan coin from hand to hand, exchanges it in one round or buys an Egyptian or British coin, etc. .
So the exchange
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