Islamic Forex Account

This article will examine the principles of Islamic finance and solutions for halal Islamic trading. To make sure that your trading actions are halal, you can ask a religious authority that can take into account your personal situation.

What is an Islamic forex account?

It is a halal trading account that is brought to clients who respect the Quran and wish to invest in the Islamic stock market according to the principles of Islamic finance.

Also called a swap-free account. Traders with Islamic accounts do not pay or receive interest rates. In addition, transactions in accounts based on Islamic finance must be executed without delay, so currencies must be transferred from one account to another directly, and transaction costs must also be paid at the same time. This kind of trading account is not promoted by brokers.

The principles of Halal Forex Trading

Islamic finance has 4 basic principles:

    Banning of payment and receipt of any interest rate (Riba)

    Direct exchanges in the context of trading operations

    Banning of gambling

    Distribution of risks and benefits

These accounts are presented to clients who want to do halal Forex trading without having to separate their investment activity from their religious principles.

How to open an Islamic forex account?

To open an Islamic Forex account, Muslim customers must register and open an account, and give the necessary documents to open a halal trading account.

You can request a withdrawal of your incomes or funds at any time through your online account.

Commissions on Islamic trading accounts

Islamic trading does not make any swap interest. The swap is an interest paid or received by the trader when he leaves an open position overnight, which makes currency trading haram. Islamic currency trading accounts remove the interest to let Muslims trade in the halal stock exchange. 

All Muslim clients who use an Islamic trading account pay the margin, commissions, and administrative fees, which are not the interests of Riba Haram.

Is Forex trading halal or haram?

This is a question that often arises between Muslim investors who want to invest in financial markets. Actually, Islam allows the search for the improvement of your situation, especially financial, but doubts continue about the stock market in Islam.

Forex trading can be considered halal and not contrary to the basic principles of Islamic finance. And Forex trading is progressively accessible and the potential for fast profits is attracting more and more traders every day. 

Forex Riba

A standard trading account is a haram because its operation includes interest payments, but the Islamic trading account is halal, removing the payment of these swap interests.

In the Islam account, it is allowed to take money from someone to invest for profit and then repay this interest-free loan to the creditor. The Islamic trading account without swaps crosses the riba barrier.

Risk and reward in halal grading

One of the biggest concerns about trading is the element of shared risk is regulated by principles such as:

1-Bai al inah (sale and repurchase).

2-Bai salam, Mudarabah (profit sharing).

3-Bai muajjjal (credit sale).

4–Bai bithaman ajil (sale with deferred payment).

– Murabaha and Musawamah.

When you are investing in an asset. If this asset raises in value, you get a profit. However, if the asset loses value, you get a loss. Consequently, you share the benefits and risks of conducting business well. 

Can shares be purchased according to Islamic finance?

Purchase of shares is not haram because you buy a percentage in a company. However, you must make sure that the company in question does not act against Sharia law.

Companies that work from an Islamic perspective can be divided into 2 categories:

Activities coming from halal practices: 

-Sea transport.

– Manufacturing.

-Clothing.

– Medical equipment, etc. They are free of haram practices or transactions.

Activities formed on haram practices: Any company that works with alcohol, gambling, riba banks, etc. It is not halal. 

If 10% of the company’s profits resulting from alcohol, you would give 10% of your profits to a charity.

What can I trade with an Islamic account?

All the financial markets mentioned are halal, except 2: bonds and futures.

Bonds are considered haram because they are based on an interest rate.

Futures contracts are haram because of the deferred nature of the exchange of goods, after the “signing” of the purchase or sale agreement. It is not immediate.

Raw materials are halal because the good is metals or agricultural products.

Day trading in Islamic accounts

This kind of trading consists of opening positions that will be closed in the sessions before the markets close at the end of the day.

The profit of this kind of operations in the same session is the fact that the open positions are not kept at night, the payment of swap commissions is avoided, and, therefore, the benefit rates, even if you are not operating in an Islamic trading account without a swap.

Advantage of having an Islamic account?

Sometimes a trader starts a position in the morning, to close it at the end of the day, but at the end of the session the position is making a benefit and the trader anticipates that the movement should continue.

 If the trader has an Islamic account, he takes full advantage of this chance, but if the trader has a standard account, he will have to give up this potential earn to respect the principles of Islamic finance and not pay interest rates.

Scalping in Islamic accounts

Scalper aims to open several small positions by getting only a few points in each of them.

The advantage of it is that, as with intraday trading, as positions are closed quickly there is no benefit rate payment since the position will close after a few seconds or minutes. An Islamic scalper can use a standard account and is not restricted to the use of an Islamic trading account.

With intraday trading, if the scalper wants to manage a position for a longer time, and this position will become a long-term position to pack more attractive potential benefits, he will have to use an Islamic account.

Swing trading in Islamic accounts

It consists of opening positions for many days or weeks. A swing trader who regards the basic  principles of Islamic finance must work with an Islamic account.

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