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Forex Trading Halal Or Haram
Aslam o Alikum;
My Question is regarding online forex trading which many brokers offer with an online plat form. They offer different pairs on which you can invest, for example gold vs usd, EUR vs USD etc. Where the traders take a position at a certain point either by buying or selling the pair, once the price moves in their favor they close the trade and take profit, otherwise then incur loss.
Brokers call this a “Contract for Differences” here we don’t actually buy any asset, but get profit or loss based on movement of the price of asset. an example of the broker which offers this is Exness.
We submit a certain amount with broker, based on which broker allows to make a trade, broker also offers leverage e.g. if you deposit $100 with a leverage of 1:10 you could open a trade of $1000, and then based on the moment of price you either get profit or loss. Brokers earn through the spread, e.g. of the current price is 100, and we want to buy , broker will sell us at 101 and earns $1 on opening the trade. Also in general when we buy, broker is selling it to us, and opens an apposing position, so any loss we make will be his profit, and any profit we make will be brokers loss. Some brokers also earn money if a traders holds the trade overnight they charge interest on the loan (leverage) they have provided, however many brokers have stopped doing it to attract Muslim traders.
Traditional scholars call this practice speculation and say that it is Haram. They say since there is no real asset and its possession involved in this transaction, it is not allowed.
I will be grateful if your team can do some research and provide some guidance, can a Muslim use this kind of trading or not?
Kind Regards
Asim Dar
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Forex Trading Halal Or Haram
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