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Forex CFD Trading
I need clarification regarding trading gold with the broker Exness. When I asked them about trading XAUUSD, they informed me that:
Neither I nor the broker own any physical or digital gold.
No actual buying or selling of gold takes place, and no gold is ever delivered into the trader’s possession.
The trading is done through CFD (Contract for Difference), which means no asset is owned; profit or loss is only based on price movement, not actual ownership or transfer of gold.
All transactions are real-time, but the underlying asset is never owned.
Exness also told me that they act as their own liquidity provider in these trades.
I use a swap-free (Islamic) account, so no interest is charged, and I always use leverage in my trades.
My question is:
Is trading gold in this form (CFD with no real ownership or delivery, and the broker acting as its own liquidity provider) halal or haram?And does the ruling change because it is swap-free, even though leverage is used?
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10 Replies
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Forex CFD Trading
updated 1 week, 3 days ago
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1). Islam does not say that one can only do business on the assets which one’s own and possess. Islam says to not devour others’ wealth via unfair means (as per Quran 4:29). While applying this directive, Prophet (sws) prohibited many transactions which had an element of deceit and damage in them, including selling of something before its possession is taken. While many scholars consider it to be an absolute directive, we consider it an applied directive based on economic environment of that time. Current economic transactions need to be reviewed in the light of current economic environment; and if the legal environment and industry standards have eliminated or significantly reduced the element of deceit and damage from a particular transaction that was otherwise declared prohibited, then there is no need to consider such a transaction prohibited in today’s time as well.
Therefore, the condition of physical possession for conducting a trade is not an absolute requirement according to Javed Ahmed Ghamidi Sahab. Prophet Muhammad (SWS) suggested it in the context of physical items in order to minimize any chance of misrepresentation. There is no prohibition for trading non-physical items in Islam. If it can be ensured that the business is conducted in a fair manner and there’s no deceit then it can’t be deemed as prohibited.
Please see for details on this point:
2). Regarding using leverage for CFDs:
Specific loan given for a specific purpose with certain conditions do not make it Riba on its own. Riba is the amount charged on loan as a profit. If swap free accounts provide a way to eliminate the risk of Riba then it is recommended to opt that option.
Also In Ghamidi sahab’s understanding of Islam, lending money on interest is strictly prohibited, however, it’s not impermissible to borrow money on interest. Please refer to the following discussion for details:
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For comments of Ghamidi Sahab, Please refer to the video below from 23:37 to 25:47
https://youtu.be/Oh55zJDO970?si=Vht2LU2BOih7sSA6&t=1417
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Assalāmu ‘Alaikum wa Rahmatullāhi wa Barakātuh,
I seek clarification regarding the ruling of Contract for Difference (CFD) trading.
In CFD trading, there is no actual buying or selling of any asset. It is only a contract based on price difference, where profit or loss is settled in cash according to the movement of the asset’s price. The trader does not own or receive the underlying asset at any point. There is only price difference. No asset buying takes place, its just the price difference we are getting after closing the trade.
Kindly advise whether such a transaction is considered a valid bai‘ (sale) in Shariah, or if it falls under gharar or maysirdue to its speculative nature.
JazakAllahu khayran for your guidance.
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If there is no element of deceit or unfairness, then a transaction cannot be considered prohibited merely due to the absence of physical possession or ownership. The permissibility of such arrangements should primarily be determined by the parties directly involved or by qualified professionals in the field. Based on available information, Contracts for Difference (CFDs) are not inherently prohibited.
Speculation is distinct from gambling. Speculative trading is generally a short-term strategy that relies on technical and sentiment analysis, aiming to benefit from price fluctuations within a limited timeframe (much like how market forces determine prices in a general market economy). In principle, all forms of trade are permissible (halal) except those that involve immorality or injustice. As long as such aspects are avoided, speculative trading is not objectionable.
Gambling, by contrast, is based purely on chance and typically involves two or more participants, where one party’s gain is directly tied to another party’s loss. In such cases, the winning party has no legitimate moral right to the money obtained, which makes gambling fundamentally different from speculative trading.
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Assalamualaikum,
In your last reply you said
“Gambling, by contrast, is based purely on chance and typically involves two or more participants, where one party’s gain is directly tied to another party’s loss. In such cases, the winning party has no legitimate moral right to the money obtained, which makes gambling fundamentally different from speculative trading.”
Is not CFDs structure itself is one where two or more people are involved, and Ones loss is directly tied to another’s profit?. Resembling your definition of Gambling?
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It is according to our understanding not a game of chance that could be categorized as gambling.
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So as per your understanding, the Zero-sum structure of any contract or a transaction itself is not a problem and is not haram?
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Zero-sum structure is not, in itself, a ground of prohibition. But let me state it precisely, because “zero-sum is fine” would be too loose.
Zero-sum symmetry is neither sufficient nor necessary for a transaction to be haram in this framework.
Insurance is bilaterally zero-sum in the starkest way — either you pay and receive nothing, or the company pays out far more than you paid in. The odds are known, and they favour the company. Yet Ghamidi Sahab calls it “an extraordinary institution.” Currency exchange is zero-sum. So is every sale of an asset that later appreciates: the seller “lost” precisely what the buyer gained. He permits all of these. In each case there is a moral ground on which one party may gain another’s money at the other’s loss, because none of the transactions were entered with the sole intention of gaining from the loss of another party. Gambling, by contrast, being a pure game of chance being played with the sole intention of loss to the other party and gaining from that loss, loses that moral ground — hence its prohibition.
And a criterion that is neither necessary nor sufficient is not the criterion. Zero-sum is a symptom that often accompanies qimar, not the defect itself. What makes a wager haram is the conjunction: pure game of chance + one party’s loss as the compulsory intention and outcome + no moral title to the money. Zero-sum-ness carries none of that weight on its own.
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“The Last question for my notebook”
So using this understanding and methadology, Assuming you understand order handling models of different brokers, not even a broker with a B-book trading model can be labelled Haram!?
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Iam getting confused with these two objections.
1.B-BOOK BROKER( Broker is your Direct Counter party)*
Using your established understanding and methadology, Assuming you understand B-book model of brokers, we can conclude that even a B-book Broker model is permissible if no deceit or fraud is involved.
2. CFD vs Sports Bet*
In Sport bet, we analyze the Data & probabilities, Transaction is Zero-sum aswell and the outcome is not based on random chances like a conventional games of Dice and Roulette wheel,
Whereas we do All this in CFD trading as well!, how can CFD trading be Permissible if Sport betting is not? Or alternatively is the Sport Betting also permissible in your criterion ?
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