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In Islamic law, the procedure of currency exchange is halal and permissible, but there are conditions for it. The reason is that there is a dispute about these conditions. With these conditions, forex trading can be reliable, but first, we must know what the Quran and Hadith say about forex trading. And according to them, is Forex halal or haram in Islam? To understand the concept of forex trading in Islamic law there are only two sources for if.

Both the sources gives the complete code of Islam and also tells the activities which are permissible or prohibited in Islam. Hence, most of the Islamic scholars considered forex trading haram. So the question is forex halal? The prohibition of interest led away to create the Islamic banking system.

In the case of forex trading, there is also the presence of some forex businesses which offer Islamic forex trading. It is confirmed that forex trading involving interest is haram and prohibited in Islamic law. But with some exceptions, it is halal. Now new can see the standing of forex trading according to Hadith. Forex trading is halal when there is no interest or riba. The Holy Prophet SAW says that:. If these classes differ, then sell as you wish if payment is made hand to hand.

However, many Muslim scholars passed a number of fatwas in support or against forex trading. Generally, forex trading is considered Halal, and Hadith proved it, but some exceptions are considered halal. As we see the Islamic law explains the forex trading viability in Islam. For the question, is forex halal? The answer is yes, but there are some conditions for it.

Following are the terms under which forex trading is permissible:. Eventually, the market creates a space for Muslim forex traders with the considerable involvement of forex trading globally. Although there is no solid evidence of its reliability over time, it makes a spot in the trading market, yet the question is still alive is forex halal?

Now we talk about what is meant by Islamic Forex Trading? Some forex brokers offer interest-free forex trading to Muslims. Now understand what they do?

We present views from IslamQA, Seekersguidance, and Islamweb, then our resident expert Mufti Faraz Adam presents his views, and finally IFG present a commercial perspective on the matter. If the Forex system involves leverage or margins, then it is haraam, because this is combining payment in advance and brokerage. This has already been discussed in the answer to question no. If it involves margins and rollover fees, then it is even more emphatically haraam, because it is combining payment in advance and brokerage with riba-based loans.

Please see the answer to question no. If the transaction is free of the things mentioned above, and a person deals with his own wealth only via the Internet, then that is permissible, subject to two conditions:. See the previous reference, and the answers to questions no.

The Islamic Fiqh Council in Jeddah, no. an agreement between two parties, who are usually referred to as the purchaser and seller, the value of which is based on the underlying asset for example, the stock index, stock or futures contract at the end of the contract, or when the parties concerned decide to close the deal. At that point, the seller pays the difference between the current price of the underlying asset and its price when opening it for the purchaser.

That applies if the value of the underlying asset has risen. In the event of the opposite, if the value of the underlying asset has dropped, then the difference between the current price and the original price is negative, in which case the purchaser pays the difference to the seller.

This is in addition to the fact that the Islamic Forex account on the website includes leverage, so it is haraam, as noted above. In and of itself, currency exchange sarf is permissible, as long as certain conditions are met, such as the transaction be done hand-to-hand without delay.

However with respect to forex trading in particular, Mufti Taqi Usmani — leading contemporary Hanafi scholar and Islamic finance expert — believes it to be impermissible, due to various problematic elements associated with this form of trading. It is not permissible for you to invest the money in these companies that you mentioned in the question because of the forbidden matters in their dealings, like the Mudhaarib i.

the one who manages the investment conditioning a percentage from the capital money and not from the profit, and conditioning guaranteeing the money of Mudhaarabah. In addition to this, currency trading via the internet includes many prohibitions. For more benefit, please refer to Fataawa , and In my view, majority of the retail forex trading platforms do not satisfy the Shariah compliance requirements and are therefore not Shariah compliant.

Retail conventional Forex trading, where individuals are merely speculating on currency pairs, is non-Shariah Compliant. What is more important and crucial to determine is whether there is actual trading and exchange of currencies in Islamic FX products. After reviewing dozens of materials and speaking to a number of Forex brokers, I am of the view that retail forex practiced by private investors and speculators is a form of non-deliverable trading agreements, where delivery of the currencies never takes place.

In speculative trading, nobody actually wants to do the currency exchange, so at the end of each day, to avoid the exchange in two days, they offset their open position, and then re-open to start the new trading day. The carry is the difference between what you pay on the loan and what you receive on the deposit. When you close out your trade you reverse the process.

Some brokers handle carry separately, while some incorporate it into the position rollover. Thus, in retail forex, there is no actual trading of any currency. The entire industry is speculative. There are multiple products offered by conventional brokers in non-deliverable FX trading such as:. There is gross Gharar uncertainty in forex trading. The outcome of the open position where money has been staked is subject to Gharar.

This Gharar is in the interim of a transaction and a component of the actual trade. This is different to purchasing shares, as one actually purchases a known subject matter. The transaction of purchasing shares is therefore free of Gharar. Uncertainty in shares is therefore ex-post, whilst in FX trading it is ex-ante and during the trade. Further, an FX trade does not involve any valid Shariah compliant commodity. One is taking a position on the movement of a currency pair.

This is a Qimar gambling transaction as one is staking his wealth against his broker. The one who speculated correctly makes a profit at the expense of the other. In futures transactions, because neither counter-value, is present at the time of contract, it is a mere exchange of promises. Futures trading, where both counter-values are deferred, is exchange of one debt for another, i. The deferral of both counter-currencies results in a deferred transaction.

Deliverable Forex, which is open to companies and big firms, is different. In deliverable FX, there is actual trading of currencies. Deliverable FX has the potential to be Shariah compliant if other requirements of Shariah are fulfilled. We have previously written extensively on forex here and here. This writing is shaped by experience of working with forex companies as clients during our previous careers as lawyers.

We would strongly advise against getting into forex for Muslims, but also for non-Muslims due to the deep risks attached to it. Forex is at heart a financial instrument as opposed to dealing in the currency itself and for it to be worthwhile there is leverage involved.

Most people who engage in forex lose money — and they lose it to people like eToro and other providers who can make money off losing trades. If you would like to learn more about each investment and how to structure your investment strategy - check out Halal Investing Course here. AsalamuAlaykum, I was just enquiring about Vantage FX who claim to offer Islamic Forex accounts and are SSB Approved. In regard to Vantage FX, I had discussed this matter with them and their Shariah board a few months ago, they gave me the following reply:.

The Vantage FX products have been certified by the Shariah Board and headed by Sheikh Hasan Qamra from Kuwait. With regards to your specific queries, we can confirm all the laws and principles of Bay al-Sarf are applied to all transactions including that of Milkiyyah and Taqabudh. This is done via actual liquidity providers through operational mechanism approved by the Shariah Board.

Vantage FX serves as the agent Wakeel on behalf of the traders to manage the actual liquidity provided by the liquidity providers and such funds are segregated in a specific bank account. All the trades are executed in real time and have a direct effect on the real market. That is a matter for you to consider. Jazakallah for the reply.

From what they have mentioned in their Q and A, does it appear to be Sharia compliant? I have been enquiring alot from vantage FX about what they offer but due to my ignorance in this field, I am unable to judge weather it is permissible or not. I believe more transparency is required on how things actually work.

The processes are still obscure somewhat. That is not due to doubt in the Shariah scholars at all, but just that the level of curiosity is very high in this structure and therefore Vantage should provide as much as transparency as possible.

and I would love to hear your opinion regarding whether you think his method is considered shariah-compliant or we should solely focus on the AAOIFI standard or other well-known standards. I researched a broker called fp markets very deeply and talked to them, and they gave me the following answer:. According to Islam, gambling is prohibited but trading forex and other financial instruments can be considered an educated game of chance which involves the buying and selling of assets based on forex market analysis and using a variety of concepts and trading strategies.

Usually, when a trader holds open positions at the close of a trading session, FP Markets charges a swap commission linked to an interest rate which is in turn related to the fact that traders receive an indirect loan through leverage. This leverage usually results in profit for the forex broker and therefore why a standard trading account is classified as haram given it includes interest payment whereas an Islamic trading account would be halal as it does not feature payment of these swap interest rates and therefore satisfies the riba threshold.

One of the principal concerns about trading is the element of shared risk. Interest ensures a reward for the lender and the borrower is the one who incurs the risk.

Excessive or a high level of risk gharar is prohibited in the same way that excessive gambling is. Financial activity must also be seen to promote social and economic activity and justice as well as happiness. With an Islamic trading account, all interest charges are waived. In times gone by this meant face-to-face but in the modern world and with the advent of online trading and e-commerce, which involves an almost instantaneous transaction between broker and trader executed in seconds, is considered halal under Shariah and is therefore permissable.

what is your opinion? is it forbidden for me to trade here? Fatwa: Is forex haram or halal? A comprehensive fatwa compilation Islamic Finance Fatwa. This is iA the most comprehensive resource for this question on the internet. Forex trading permissible with halal broker. Thoughts regarding Shariah compliant trading accounts. FP markets Forex trading. They have a FAQ towards the end of this link explaining why it is permissible.

I would appreciate it if you would look into this and clarify. Assalaamu alaykum, we pray you are well. In regard to Vantage FX, I had discussed this matter with them and their Shariah board a few months ago, they gave me the following reply: "Wassalamu Alaykum Respected Mufti Faraz Adam, The Vantage FX products have been certified by the Shariah Board and headed by Sheikh Hasan Qamra from Kuwait.

You are welcome to contact us should you have any further queries. For more information on Forex, kindly see:. Assalaamu alaykum, I believe more transparency is required on how things actually work. Assalamu aleyküm is vantage forex trading halal? is it allowed to open leverage or short positions? I researched a broker called fp markets very deeply and talked to them, and they gave me the following answer: About Halal Forex Trading - Halal Trading with Islamic Forex Accounts Islamic finance is guided by four basic principles: 1 Prohibition of gambling According to Islam, gambling is prohibited but trading forex and other financial instruments can be considered an educated game of chance which involves the buying and selling of assets based on forex market analysis and using a variety of concepts and trading strategies.

Assalamualaikum in one word please answer me in Islamic view Forex halal or haram? Conventional, retail, non-deliverable Forex is not Shariah compliant.

Are exporters of frozen boneless buffalo meat products having an experience of more than Or is it prohibited according to Islamic law? Thus, in retail forex, there is no actual trading of any currency. I would appreciate it if you would look into this and clarify. Forex trading permissible with halal broker. The national futures association and the commodity fu. In the event of the opposite, if the value of the underlying asset has dropped, then the difference between the current price and the original price is negative, in which case the purchaser pays the difference to the seller.

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