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Islamic Ruling On Prop Firm Account
السلام عليكم!
I hope you are doing well. I would like to seek guidance regarding the permissibility of Prop Firm Account trading in Islam.
A Prop Firm (Proprietary Trading Firm) allows traders to use the firm’s capital to trade financial markets. Typically, a trader pays a fee to take an evaluation or challenge, and if they pass by meeting specific profit targets and risk management rules, they receive a funded account where they can trade. The firm then shares a percentage of the trader’s profits (e.g., 70-90%), while losses are absorbed by the firm, up to the agreed limits. Also at the end they get their initial fee back along with profit that the participant makes.
Things to be noted here:
The proprietary firm does not allow participants to trade in a real market account. Instead, all trades are executed in a demo account on the firm’s own server. Even after passing the challenge, the Funded Account is still a Demo account and not a real trading account.
Given this structure, if a trader is not engaging in actual market transactions but is instead operating within a simulated environment, where the market data is real, but the trades are not executed in the live market, the evaluation process seems to be more of an assessment of analytical skills rather than actual trading.
In this context, one could draw a comparison to a person playing a shooting game: while real-life shooting has clear ethical and religious prohibitions, a simulation does not carry the same ruling. Similarly, could it be argued that since the trading activity in a prop firm challenge is purely simulated, the associated earnings would not fall under the same prohibitions as real-world trading?
I would appreciate your insights on this matter.
Thank you.
جَزَاكَ ٱللَّٰهُ خَيْراً کثیراً.
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Islamic Ruling On Prop Firm Account
updated 3 months, 2 weeks ago
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All business transactions are valid except for the ones which involve deception and harm. If there is no deception or harm intended there, one can adopt it.
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