There are many different opinions about trading on the Islamic Forex market, so it is difficult to give a definitive answer. Is Forex trading halal?

What is an Islamic Forex account?

Forex Islamic Account is a halal trading account offered to clients who respect the Koran and want to invest in the Islamic stock market in accordance with the principles of Islamic financing.

Islamic transaction accounts, also called swap-free accounts, differ in several ways from regular Forex accounts. Because Sharia law prohibits interest accumulation, Islamic traders do not pay or receive interest rates. In addition, transactions on accounts based on Islamic finance must be carried out immediately, so currencies must be immediately transferred from one account to another, and transaction costs must also be paid at the same time.

Although halal Forex investments are not the last financial innovation, there are very few swap brokers who offer Islamic accounts such as Admiral Markets.

Trading rules for Halal Forex

Islamic finance has four basic principles:

  • Prohibition of payment and receipt of any interest rate (Riba)
  • Instant exchange in the context of commercial operations
  • No gambling
  • Risk-benefit sharing

These four principles do not always fit into western banking and trading tradition. To comply with Islamic finances, special trading accounts, commonly referred to as “Islamic accounts,” were created.

Is Forex trading halal?
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These accounts are offered to clients who want to make halal transactions on the Forex market without having to separate their investment activities from their religious principles.

In general, these accounts are quite similar to traditional trading accounts, only some specific elements have been adapted to meet the basic principles of Islamic finance.

Is buying shares halal?

It is generally accepted that buying shares is not a haram. This is because you simply have a percentage in the company. However, you must ensure that the company in question does not behave in a non-Islamic way. Companies such as Guinness (alcohol) and Ladbrokes (gambling), for example, would not be allowed.

You can divide companies from an Islamic perspective into three categories:

  • Shares from permitted practices – shipping, production, clothing, medical equipment, real estate, tools, furniture, supplies, etc. Are free of haram practices or transactions such as cheating and borrowing based on riba (unreasonable loans). These companies are also known as “clean” companies.
  • Actions based on prohibited practices – Any company dealing in tourism, alcohol, hotels, nightclubs, pornographic materials, riba-based banks, commercial insurance companies, etc. is not allowed. Under these circumstances, the stock exchange is haram.
  • Actions based on partly haram practices – Although most work may be allowed, some practices are haram. Transport companies, for example, have interest-based bank accounts and are often financed by fish-based loans or natural persons through inventory. These types of companies are known as “mixed” companies.

 

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