1. Is Forex Trading is HALAL or NOT

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DISLAIMER:

Speculating is a problem, as it is very similar to gambling. However, if you invest without speculating, that is fine (i.e. you don't just guess, you do lots of research in the direction of the company you are investing in, and not just throwing money because you have a good feeling that the company will do well).

Thus, if a person were to find a lost camel, and he tried to sell it without notifying the owner, this would be haram, or against Islamic law. But these scholars argue that dealing with currencies is not the same. They argue that a trader is not really selling something they do not have as in the case of the lost camel.

He is charged a small fee by the broker, which essentially involves paying fees for delaying the deal. Scholars who believe FX trading is halal believe that this move by forex brokers breaks down the haram argument surrounding this specific issue. Third of all, Islamic law forbids usury and taking advantage of another person in economic dealings. Many scholars are concerned that spot FX trading in a forex account can be labeled as such due to the fact it is a zero-sum game.

This means that when a trader closes out for a winning trade, the only way he has profit is by another trader having a loss. In Islamic law this is seen as immoral and not to be done; therefore, many scholars see this point as haram. However, the other side of the argument is that not every trader on the other side of your trade is losing money. For example, if you a trader is in a long position and needs to close it out by executing a short position, the trader that is short may be in a lot of profit as well, but he may just have a longer-term or shorter-term position he is managing.

Thus, it is not necessarily true that an FX trader only makes money when another trader is losing money. Thus, many scholars argue that this point is further evidence that FX trading is in fact halal. As you can see, the debate whether FX trading is halal or haram is very debatable. Very respected scholars in Islam are pitted on both sides of this argument. This guest post was contributed by Bryan Sayers. He is the editor of Forex Fraud , a site is designed to help protect investors from forex scam, commodity fraud, and other investment scams.

The views expressed in this post are the author's own and not those of Sharing Risk. The way it works is that, for example, you buy gold or euro at a price from the current market and later sell it for a higher price if the price goes up. Now, you predict the market and think that euro may rise against dollar or vice versa, which may or may not happen.

Detailed answers with authentic references are appreciated. The comments to this question convinced me that it was Halal, until I read the following on eToro. Both FX and commodities are traded in the spot market for 24 hours. With an Islamic account we make sure that there is no Riba in any form throughout the duration of the contract. In the FX market, if you don't close the trade before 5: However with an eToro Islamic account, all your positions will be closed at 5: If the client chooses to reopen a trade immediately, the client will not pay any usurious interest.

There's no doubt that currency trading is one of the most difficult dilemmas in Islamic jurisprudence Faqih. On the one hand, it requires the simultaneous exchange of currencies, which makes it a kind of hand to hand exchange. On the other hand, contemporary scholars consider the record of money transferred to or from a bank account as delivery. To resolve the issue, several decisions and fatwas have been issued. According to these decrees, the conditions for trading currency are:.

The currencies needs to be transferred from the account of the seller to that of the buyer and vice versa. No interest on trades. In the case that there is any usurious interest, the contract will be invalid, void and Haram.

As you know already interest is haraam, I probably don't need to provide any hadith or quranic verse to prove that. If I do need to prove this first, please let me know as it won't take long. Based on your research, I can clearly see that you think the stock market is very difficult for muslims, and you're right, it is!

The company must not have a product which is forbidden in islam, alcohol, interest based loans etc etc. The company must not be using money from shareholders and sticking that money into an interest based account and earning interest on it.

However, you can still find companies through which you can still get into the stock market in a halaal manner. For example, they have scholars who monitor the funds and make sure they are halaal. As soon as they are found to be haraam, a particular stock from a fund is removed. Plus anything related to interest is automatically removed from the funds and given to charity. For more info, check out this link: I don't know how many of these types of companies there are around the world, this is the only one I have found with a little research.

Assuming the definition of riba is not derived from ra-ba-wa to grow as hinted by Allah SWT at The abuse of ra-ya-ba to the point of harming others is what i define as riba.