Islam frequently views trading as haram, but it is still possible to engage in trading. Finding an Islamic Forex account that allows Muslim traders to trade without incurring swap fees is key. We will briefly explain why Muslims must use Islamic accounts to trade forex in this article.
Forex Trading – Halal Or Haram?
Islamic finance is based on four fundamental tenets – Riba, which forbids the payment and receipt of interest rates; also prohibits immediate exchanges within the context of trading operations; gambling; and the distribution of risks and rewards.
In order to respect the four principles of Islamic finance, specific trading accounts have been developed and are often referred to as “Islamic accounts.” These four principles do not always fit into the Western banking and trading tradition.
These accounts are made available to customers who want to engage in halal Forex trading without having to compromise their religious beliefs. These accounts resemble traditional trading accounts in many ways; only a few particular aspects have been modified to comply with Islamic finance’s core values.
In general trading, for holding a position overnight, a forex broker will charge an investor a fee known as a swap commission. The swap commission is frequently regarded as interest or an interest fee. As a result, it is forbidden (haram) for Muslim investors.
Islamic Accounts – An Absolute Necessity For Muslim Traders
A halal trading account called an Islamic Forex account is made available to customers who respect the Quran and want to invest in the Islamic stock market in accordance with Islamic financial principles.
Islamic trading accounts, also referred to as swap-free accounts, are distinct from conventional Forex accounts in a number of ways. Trading with Islamic accounts does not result in the payment or receipt of interest rates because Sharia law forbids the accumulation of interest. Furthermore, Islamic finance-based accounts require immediate currency transfers between accounts as well as the payment of transaction fees. These transactions must be completed without delay.
Even though halal Forex trading has existed for some time, Admirals is one of the few swap-free brokers to provide Islamic accounts.
Since they can occasionally be less profitable for brokers and the number of clients who request them is quite small, brokers frequently do not promote this type of trading account. Admirals, on the other hand, gives Muslim customers the option to open an Islamic trading account.
As a result, Muslim traders can engage in Halal Islam Trading using Islamic trading accounts. Islamic traders who trade in non-Islamic accounts run the risk of forgetting their rules and engaging in prohibited trading. Be aware that halal trading will partly depend on your actions and partly depend on the broker you select.