I was looking to get into this. Haven't actually done anything yet but just watched a few videos on babypips.com Anyway, a friend told me that it is haraam but he didn't really explain why, so I'm looking for answers on the rulings of foreign exchange trading. Thanks.
ٱلسَّلَٰمُ عَلَيْكُمْ وَرَحْمَتُ ٱللَّٰهِ وَبَرَكَٰتُهُ Before I get into the main question, I just want to clarify the reason I'm asking for individual views, is because this is supposedly a "grey area", and that means there will be a lot of difference of opinion, and of course, with these things everyone will have their own opinion on it based on their research. Now I've done a fair amount of research, asked those who do it for a living, Muslim and Non Muslims, some of those Muslims are not practicing, some of them are, some of them are even Hafiz, so I would say I've asked a rather broad spectrum. The reply I get from almost everyone is along the lines of "if you know what you're doing, it's like any other business, similarly if you jump in blind without any knowledge or experience, then it becomes no different to gambling". Another point people raise is, "if it was Haram then why do brokers offer Islamic/Shari'a compliant accounts?", and "it's not classed as gambling by law in any country, that's spread betting (which is untaxed, where in the UK it is taxable income as it's not seen as gambling)" The reason why I'm asking now personally is because I've spent a lot of time and money working on/with algorithms, tested and trialed a lot of different methods to remove this "gambling" connotation as much as possible, and feel like I've achieved a satisfactory result. However, I've recently seen videos where it mentions that since there are no tangible assets behind this, and it is just purchasing contracts for whether this currency/stock will rise or fall, it becomes Haram. So where does that leave me and the other Muslims who have been depending on this for a living for many years? Have we been earning Haram all this time? I have constantly prayed for Allah to grant me success and wealth (since we're not a well off family by any means at all) mainly so I can help my parents. Now that I'm starting to see success and progress I don't know how to handle it Islamically. is this progress and income a blessing from Allah? Or am I just thinking that it is when I have been wasting my time. For further clarification I have not been earning any interest, and have been giving regular donations to charity and the local Masjids. Jazakallah Khayr.
So I wanted to get into Forex but came to understand that it is haram. Then I came to know about options trading and also came to know that it is haram. Any other investing/trading methods out their that is halal for me to do? Methods such as swing trading or day trading come to mind, are they halal as long as I am not investing in shady companies that sell alcohol for example. I know that long term investments is okay as well and that's another option. But I want something to do almost day to day so I am not sure of another other trading methods that are halal?
The rough guide to the Islamic Investment world (in South Africa)
So this is my rough guide to Islamic investments within the South African Universe (it can apply globally, except my examples is all South African based). Hope it is informative and encourages halal investing. Suggestions welcome
Section 1: Investment Universe
Islamic Bank fixed deposits
About: Invest your money for a fixed period (1 month up to 5 years). Get profit when period is completed Pros: Reliable profit , Low financial risk, low Islamic risk : covered by a board of Shariah scholars Cons: Low profit rates.
FNB Islamic Fixed deposit.
Absa Islamic Fixed deposit
Standard Bank Islamic Fixed deposit
Unit trusts
About: Collective investment - managed by investment company, protected by SA law, typically invests in equities, sukuks and property Pros: Plenty of choice, Provided by registered Financial Service Providers, Sharia Boards , diversification Cons: Typically High fees, .
Old Mutual Albarakah equity fund
Oasis Cresent Equity Fund
Kagiso Islamic Equity Fund
Many options: only a few examples listed.
ETF
About: Collective investment Pros: low fees, Provided by registered Financial Service Providers, Sharia Boards , diversification Cons: only one option in SA, heavily weighted on Resources
NewFunds Sharia top 40 ETF
Shares
About: Pick your own stocks off the exchange Pros: High profit potential, Cons: Very Risky, No Islamic oversight (hence need to do your own screening)
Platform: Easy Equities (low fees platform available in SA. NO Leverage/Margin, Remember to buy/sell whole shares only).
Lazy guide to choosing "Sharia stocks" : Get the constituents of islamic unit trusts, invest in those.
NB: Remember to do dividends purification
Property
About: Tried and test property Pros: Stable Asset, Tangible, Straightforward, Zakah benefits, Cons: High capital outlay, expensive legal costs (transfebond registration) , Not very liquid,
Banks for islamic loans:
FNB (Islamic bond)
Albaraka Bank
NB: Zakah
paid on rental income , not on property value (if intention is to invest)
paid on property value: if intention is to sell property in near term (refurbish/fix and sell, etc).
NB: Interest
Interest is Haram. No two ways about it. Luckily we have two banks that can provide Islamic loans (or at least as close as possible)
Custom Wealth Solutions
About: Customized Wealth management and investments Pros: Professional advice, custom solution Cons: Available exclusively to high net worth individuals, Investment advise appears to be fee based
Side note - I do not have any experience/knowledge. Would be great to hear if anyone has any experience here.
Banks such as FNB provide Islamic Private banking, with financial advisors (but they tend to push unit trusts, endowment policies, etc).
Section 2: Definitely not halal
Margin based investing: Margin = interest = haram. Also very risky
Futures contracts: Shorting, going long, all CFD's and futures contracts are impermissible. Because a condition for a halal investment is that the underlying asset must be owned
Forex: Or at least forex based on CFD's and margins. Buying dollars to travel should be perfectly fine.
Stocks/Equities that primarily deal in haram activities: Gambling, pork, etc
Section 3: Grey Areas
Crypto ( Bitcoin ,etc) : In theory these should be more "halal" than fiat currency (what all money in the world is) however there are differences of opinion.
Shares : There are grey areas : Most companies has an element of haram income (interest, etc). Scholars have devised ratios to to filter out "islamic stocks" from haram stocks (30-33% max debt, max 5% haram income, liquid ratios, etc). It is for this reason these stocks requires dividend purification.
However you should be aware of this before venturing into to stocks as you might not be comfortable with that thought (This also affects EFTs, Unit trusts, etc). 3 Easy Equities: Easy equities makes it cheap and easy to own equities. However I would at all times buy/sell only whole shares and not fractional shares. Fractional shares are done as a CFD (a bit different from a forex CFD). You get all the benefits of ownership such as dividends and capital gains on a pro rate basis. But you do not actually own the CFD until you buy enough CFD to get a real whole share. That being said, it is still grey, best to avoid fractional shares entirely 4. Halal Forex Accounts: Somehow these are marketed that way. Here's a link to (Islamic Finance Guru) who has a bit more knowledge on this. (Note: I am not affiliated in any way or get any benefit)
Section 4: Conclusion
I sincerely hope this helps , and encourages to invest in the Islamic world. Any ideas, inputs and suggestions welcome. Disclaimer 1 : Corrections welcome, I am not a learned scholar, this is not financial advice, you bear the responsibility & consequences of your own decisions/investments Disclaimer 2 : At some point FNB Sharia board quit , they subsequently hired a new board. They don't however make it easy to find who is in the board from their website. However the information can be found in news websites.
Hey guys, I was thinking about getting into this forex trading thing but I’m muslim and I was thinking if forex is halal or haram? I heard of swap free islamic accounts but..is that it? Is that whole forex trading thing haram or halal? Thank you!
Hey everyone! Sorry If I am posting this in the wrong area but as a non-Muslim I am curious about Forex trading in the Islamic world. What should a forex broker do to ensure that its activities comply with Shariah law, and what features should trader’s accounts have in this connection? Do Halal accounts give brokers any advantage over competitors? I know there is a lot of discussion on this and how it is Haram or Halal and I just wanted to learn more about it.
Hey everyone! Sorry If I am posting this in the wrong area but as a non-Muslim I am curious about Forex trading in the Islamic world. What should a forex broker do to ensure that its activities comply with Shariah law, and what features should trader’s accounts have in this connection? Do halal accounts give brokers any advantage over competitors? I know there is a lot of discussion on this and how it is Haram or Halal and I just wanted to learn more about it.
Hey everyone! Sorry If I am posting this in the wrong area but as a non-Muslim I am curious about Forex trading in the Islamic world. What should a forex broker do to ensure that its activities comply with Shariah law, and what features should trader’s accounts have in this connection? Do halal accounts give brokers any advantage over competitors? I know there is a lot of discussion on this and how it is Haram or Halal and I just wanted to learn more about it.
Forex is Halal if you are not gambling and have your end goals distinguished. 1-As a Forex trader you need to have a reason to take action in the market (sell or buy); 2-You can not gamble on the trend direction but analyze the market; 3-You can not trade for the sake of excitement. Treat the market as a real business, trade for the potential ... Halal Forex Trading, otherwise known as Islamic Forex Trading, is a formidable sector of the market aimed at members of the Islamic faith. If you have only just heard if this style of trading, and you need a little more information, this beginners guide is just for you. Understandably there is much uncertainty surrounding Halal Forex Trading, and many question if it even exists. Islamic forex trading halal Trading Forex is Halal because trading is a business where an entrepreneur risks his investment with the expectation of making money later. Forex trading is not gambling and there are no loans in this business (no repayment with interest) so this business does not violate Islamic religious laws. As per Islamic law, Forex trading can only be permissible or halal if the transaction or currency exchange is performed hand to hand.The Prophet Mohammed thought of exchanges of different types of commodities that would be made between two parties, recognising that this was a natural and just aspect of commerce. When the stock markets and currency markets were operated face to face, there was ... Is Forex trading halal or haram? With a quarter of the Muslim world and the development of online trading, the issue of the stock market in Islam is increasingly raised. This section will examine many points of view and sources to answer the question of whether trading is halal or haram.
Currency Trading: Buying Foreign Currency and exchanging ...
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