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Forex Trading And Islam
Aoa, I have a question regarding Forex Trading. I’ve been researching on this topic for a couple of weeks now. Forex and financial markets have interested me for a very long time and now i feel that I’m old enough to start learning about it and pursue my interests and also learn a good valuable long term skill that can be beneficial for me Financially. I also plan to trade XAUUSD, XAGUSD (GOLD, SILVER) and Currency Pairs.
My broker would be Exness and I would use MT5 as my trading terminal to execute my trades. However this haram/halal debate on this topic has created a doubt and hesitancy in me to start working on it with my full heart, even though i really want to do so. This is what leads me here.
What I’ve concluded so far is that forex is a grey zone area. There’s scholarly arguments on both sides of it with their own reasonings. People consider it haram due to reasonings such as leverage, interest, speculation, CFDs, etc.
Leverage however instead of a loan can be seen as a facility provided by the broker just the same way banks provide facilities and services to their customers. If leverage was truly a loan, the amount would have to be returned to the lender (broker in this case) but if you blow the account for instance, the broker doesn’t chase you asking for it.
Speculation is something i don’t support but what if we actually learn trading, have proper analysis before entering a trade. Use Smart money Concepts/ICT and orderflow concepts and have genuine reasoning and technical analysis for entering a trade, how is it haram?
Riba (interest) is also an argument, but however if you have a swap free account on a broker such as exness which is an islamic account and avoids overnight interest in a trade even if you hold it overnight. If we follow this way is it halal?
CFDs the biggest argument of scholars who don’t allow retail forex (currency pairs, gold, silver). They view cfds as a bet on price difference and the absence of physical possession of an asset is unacceptable to them and most people quote a saying here of Our beloved Prophet Muhammad (P.B.U.H):
“Gold for gold, silver for silver… equal for equal, hand to hand. If these types differ, then sell however you wish, so long as it is hand to hand.”
and
“Do not sell what you do not possess.”
However this is the way modern financial structure works, A cfd is also a proper agreement between you and the broker which is regulated with a clause. There was a time when forex was not digital and back then everyone could do it and now because it has become digitalized are Muslims actually prohibited from doing it or its a misunderstanding or conflict of opinion?
There also some final things i would like clarify :
1) ikhtilaf: When qualified scholars genuinely disagree on a ruling, both positions are legitimate and a Muslim may consciously follow either
2) ibahah: Everything in Islam is permitted unless explicitly prohibited, this is a foundational principle of Islamic fiqh.
3) Ijma: There is no ijma prohibiting forex trading. Scholars are genuinely divided, meaning no settled prohibition exists.
How valid are these reasonings in the case of forex? And Is trading Forex on a live account or using a Prop firm (funded account) the same or they have different verdicts? If so I’d appreciate both verdicts if different. Also apologies for such a long message, but i hope to get a response from you soon, which InshaAllah will help and guide me. Jazakallah in Advance!
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2 Replies
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Forex Trading And Islam
updated 12 hours, 8 minutes ago
2 Members
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Replies
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Please go through the discussion on this topic on our forum.
One of the links is given here
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Thanks for your response, i have gone through the discussion you had mentioned. It mainly focuses on cfds and doesn’t cover other points thoroughly such leverage, speculation, and Riba. Also i had a question regarding few Islamic principles and if they are valid in the case of Forex such Ikhtilaf, Ibahah, and Ijma, which were also not mentioned in the discussion. The discussion also dates back to 2 years earlier and I’d also like to know that the same verdict still stands. I’d appreciate a detailed response pls which i know is upto date and also tales my points, arguments and reasonings into account.
Jazakallah.
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