Thetopic ofForex trading prohibition inIslam is vast andcontroversial. Many points ofview exist ondifferent aspects ofonline Forex trading, including: spot trading, futures andoptions trading, margin trading, overnight interest, etc. Themajority ofIslamic jurists agrees that Forex trading can comply with Sharia only if it is spot trading (while futures andoptions are considered toearn Riba) andif it doesn't involve any overnight interest (orinterest hidden bycommissions, though Muslim traders should know that not all commissions are tohide overnight interest).
One ofthemain point ofdebate lies inmargin trading (almost every transaction inForex is based onmargin) andhedging (it is compared tofutures trading usually). Dr. Mohammed Obaidullah ofIslamic Research and training institute (located inSaudi Arabia ) discusses this topic inhis article— Islamic Forex Trading. It is awell-grounded article covering every aspect ofForex trading andproviding references tofundamental Islamic sources. Among other things, Dr. Mohammed Obaidullah proves margin Forex trading tobe legal forMuslims, aslong asit doesn't involve any Riba (unlike some other Islamic jurists who look atmargin Forex trading asforbidden activity). Inthis article, Forex hedging is also analyzed andis seen asasource ofRiba income. It isstrongly recommended to read this article if you consider yourself a Muslim trader or if you only plan tostart trading Forex while remaining alawful Islamic believer.
It is also recommended to look atthelist ofForex brokers that offer Muslim-friendly trading accounts with no overnight-interest applied ontheopen positions.
Islamic thought doesn't stand still and as Forex trading is a point of contention for scholars, and things change quickly in this field. For example, InFebruary 16, 2012, theNational Fatwa Council ofMalaysia (nation's supreme Islamic legal body) announced that spot Forex trading performed byindividual traders (contrary toauthorized dealers) is considered haram (sinful). Technically, it restricts all Muslim residents ofMalaysia from participating inonline foreign exchange trading. It is important toadd that no other Muslim fatwa institution inother countries has issued similar prohibition. Onthecontrary, the National Sharia Board ofIndonesia had previous issued afatwa (thelink is inIndonesian) stating thelegality ofForex. Apparently, thesituation with Islamic Forex trading still remains quite unclear.
Andwhat do you think about legality ofcurrency trading forIslamic believers? You can share your thoughts or ask your questions on our Forex forum.
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FAQs
In Islamic finance, spot forex trading, involving the immediate exchange of currencies, is generally considered permissible as long as it adheres to the principles of avoiding interest (riba) and ensures immediate settlement.
Is forex trading haram mufti menk? ›
It's forex creating haram in Islam. According to an article I found in Islamic Q&A com, forex can be considered gambling, and we know gambling is not permissible in Islam.
Is my forex funds haram? ›
Yes, Muslims can participate in Forex trading if it aligns with Islamic finance principles. This involves avoiding Riba (interest), Gharar (uncertainty), and Maysir (gambling).
Is day trading in forex halal? ›
Interest-based transactions: Day trading may be considered haram if it involves interest-based transactions. Ethical conduct: Day trading can be considered halal in Islam if it is conducted ethically and does not involve interest-based transactions.
Can Muslims invest in trading? ›
Buying stocks is not haram in general. As long as the company's shares are per Shariah principles, Muslims can invest in that stock. When you are a stock owner, you own a small percentage of the business. However, it is essential that you need to make sure the company in question is aligned with Shariah rules.
Is trading forex gold halal? ›
Fiscal or monetary policies do not affect gold prices. Gold will always be worth something, unlike currency that might be nearly worthless due to uncontrolled inflation. Over the years, there has been an increasing trend in gold investment, particularly among new investors. Gold trading is permissible (halal) in Islam.
Which platform is halal for trading? ›
Zoya - #1 Halal Investing App | Shariah Compliant Stocks & ETFs.
Which broker is halal? ›
Our Opinion: HotForex is a well-established broker with a strong reputation and a commitment to providing a halal trading environment for Muslim traders. Their competitive trading conditions and dedicated support make them a popular choice among traders.
Is forex trading like gambling? ›
Forex trading vs. gambling: Forex trading may appear similar to gambling, but there are key differences. While gambling relies on chance and randomness, forex traders can use strategies and tools to tilt the odds in their favour. Importance of self-control: Successful forex trading requires discipline and self-control.
Is forex halal or haram hanafi? ›
In essence, forex trading is considered halal within certain guidelines, including: No Interest-Based Transactions: Forex trading must avoid any involvement in interest-based transactions. This includes refraining from charging or paying interest on positions held overnight.
According to Islamic law, something is considered forbidden or “haram” based on the guidelines of the Holy Quran. The forex-related prohibited activities include charging interest and gambling. While Islamic forex accounts operate without charging interest, the gambling factor is partially up to the traders themselves.
Is digital currency trading halal or haram? ›
Is Trading Futures Halal? Trading futures in cryptocurrency is generally considered haram in Islamic finance. This is due to its speculative nature, likened to gambling, and the involvement of uncertainty and risk, which contradict Islamic principles emphasizing risk-sharing and avoiding speculation.
Is bitcoin haram in Islam? ›
Is cryptocurrency halal? For many Islamic scholars, the answer quite simply is yes. Shariah principles can be applied to modern crypto analysis and digital currencies as they are based on social justice, accountability and ethics which transcend all forms of financial transactions.
Why does Allah allow profit in trade? ›
Allah has permitted the exchange of goods and services (ba'y) not only to enable individuals make livelihoods but also because human needs are interdependent. Merchants engage in trade transactions to make profit.
Is dropshipping haram? ›
Some scholars argue that dropshipping can be considered halal as long as the seller adheres to the principles of honesty, transparency, and fairness. Others express concerns about the potential for deceptive practices and lack of ownership, which could render it haram.
What kind of trading is allowed in Islam? ›
A Muslim can trade in those goods and commodities only the use of which has been declared to be Halal (lawful). There can be no trade and traffic in things the use of which is proliibited by Islam. For example, there can be no trade in wine, swine, dead bodies of animals and idols.
Is forex trading a form of gambling? ›
Forex trading vs. gambling: Forex trading may appear similar to gambling, but there are key differences. While gambling relies on chance and randomness, forex traders can use strategies and tools to tilt the odds in their favour. Importance of self-control: Successful forex trading requires discipline and self-control.
