Islamic Law: Is Forex Trading Halal or Haram?

The Arabic word “halal” means “permissible.” Anything that violates the precepts of the Holy Qur’an is considered “haram” or banned in Islamic law. Gambling and riba, commonly known as interest or usury, are two things that the Holy Qur’an forbids. There are many arguments as to if forex trading is halal or not. In this post, we’re going to answer “Is Forex Trading Halal or Haram?” read through to find out.

Is Forex Trading Haram?

When a position is held overnight, most forex brokers operate by paying or charging the interest difference between the two components of any currency pair. Swap commission is a term used to describe the charging of interest. But it is apparent from the aforementioned grounds that Islam forbids such interest rates.

Is Forex Trading Halal?

In Islam, speculating on an event without having much control over the result is known as gambling. They have a bleak future, to put it another way. Make sure the odds are always in your favor if you want to avoid gambling. The following factors determine whether forex trading is halal:

Gambling or investing is involved.
Interest is assessed.
It’s beneficial to society.

Islamic Forex Trading

Forex companies created Islamic Forex trading to make it profitable for Muslims. Brokers who operate in an Islamic environment permit investors to keep securities overnight without incurring interest or a swap commission. According to Traders Union, By eliminating the usury barrier, these swap-free Forex accounts make it possible for Muslim investors to engage in forex trading. Additionally, the typical spot Forex trading accounts have no overnight interest fees and are for immediate buying and selling. They also take away the riba component from forex trading.

Islamic forex accounts let traders keep their activity kosher while engaging in trading without paying interest. The Musharakah (to share) Arrangement, used by brokers, ensures that both parties profit from gains and losses on trading. Each financial party will profit in this manner without contravening the “riba” norm.

Conclusion

Islam permits all forms of currency transactions, including forex trading. However, forex trading is only permissible under two conditions; else, trading is completely prohibited. It must be done hand to hand and in the same sitting and there should be absolutely no interest. Today’s brokers are not halal. However, you can make it halal with the Islamic Forex Trading brokers like etoro, cfd, avatrade, fbs, skilling, pepperstone, and so on.