Forex trading, is it compatible with Islam
If trading is so unpopular with Muslims, it’s not because this community is less fortunate. On the contrary, Muslims have a lot of rich people, and the latter make their fortunes in many financial sectors.
Having said that, regarding trading, they face a major problem, which is none other than Islamic Sharia, posing the question is Forex trading halal. Indeed, it imposes several conditions on them, and it is not easy for Muslim traders to generate profits without going against their religious precepts. To help those who need a Forex trading account, we will show you, here, how to trade Forex while respecting Sharia laws.
How do you define an Islamic trading account?
The word Halal means to respect Islamic law.
If you’ve been trading online for some time, you’ve probably noticed that a lot of brokers offer Islamic accounts. These platforms exist with the objective of never breaking Islamic laws. If you open an Islamic account, you are not going to earn any interest. Indeed, this form of income is strictly out of law in Islam.
Moreover, this element forms the basis of the difference between traditional trading accounts and Islamic accounts. In other words, any form of gain in value that comes from a delay in time is considered Haram or sin. Also, bear in mind that other forms of income are prohibited by Sharia. These are profits on margins and profits on currency conversions. For the Islamic banking system, gains on transactions are particularly prohibited.
The trading solution for Muslims:
Before diving into details, you need to grasp the basic principle of Islamic trading. When an Islamic trader wishes to enter the market, it is important that he respects the following three rules:
Never start taking risks (like playing games of chance for money, which is strictly prohibited in Muslim laws).
Never earn interest, regardless of the conditions.
The transaction must close instantly. If the Muslim trader’s asset gains in value because of an involuntary delay, a trader must resell it at the price that would have been allocated if the delay had not occurred.
Yes, these conditions may seem too strict to you, and you are probably wondering how it is possible to trade without breaking them. However, the world of trading provides interesting and extremely practical solutions, which make Islamic trading just as accessible as traditional trading.
Halal trading accounts:
Choosing a Halal trading account will allow you to avoid the risks associated with trading that do not comply with Islamic precepts.
To enjoy the benefits of Islamic trading accounts, you will have to look for brokers who offer a Halal alternative in their accounts. That said, not all of these brokers will offer the same offers and the same level of flexibility. Even in this context, there are also grey areas that you can implement to your advantage. Or you can avoid it altogether to stay safe. Once you have found a decent broker, all you have to do is go to their official website and register there.
The broker will ask you for verification. And to provide certain documents, such as a copy of your national identity card or passport. And he may ask you for proof of direct debit. Finally, you just have to finalize your registration and start trading after choosing the Islamic trading account. All the transactions you can carry out on this account will be 100% according to Islamic laws. Moreover, to make your deposits into the account, the best Forex brokers will only offer you the methods that Sharia accepts.