Is Future Trading Haram in Islam? - Scholarly Write-ups (2024)
The world is in transition. Many new financial models and modes of earning are evolving with the passage of time. They have made earning much easier for us as it involves less physical effort. One such model is forex trading, especially future trading. With easy access to the internet, anyone can easily benefit from these evolving models. By investing some amount, one can start trading. But, is future trading halal? If not, what makes it haram? Let us discuss this in this write-up.
I (the author) have done a lot of research on future trading. Not a single fatwa is available in favor of it. I will be as brief as possible in summarizing the arguments forwarded against future trading.This subject is so debated and unsettled. Youngsters are found asking this question frequently on different platforms. If readers have any solid arguments in favor of future trading, please mention them in the comment section.
Future Trading is Haram – Reasons
Future trading is like betting on future prices. If your bet goes right, you win and earn. If it goes wrong, you lose. So, it becomes a sort of gambling. Gambling is strictly prohibited in Islam. Thus, future trading becomes haram in Islam.
“They ask you [Muhammad] concerning wine and gambling. Say: ‘In them is a great sin, and some profit, for men; but the sin is greater than the profit.’… Thus does Allah make clear to you His Signs, in order that you may consider.”
Many would argue that they open future trades after performing a thorough fundamental and technical analysis of the market. So, it is unfair to call them gamblers or future trading gambling. Okay! Let us for now accept their argument.
The thing is they cannot trade on the thing they do not own or possess. In future trade, you do not have cryptocurrency, stocks, or assets in hand. You merely speculate on the prices. Here again, Islam does not allow it.
Then there is the “interest” factor that also makes future trading haram. Exchanges or brokers provide you leverage for trading. It is simply a loan paid to traders for trading. If you lose you lose; they do not share your loss with you. However, if you win, you have to pay interest to the exchange or broker.
In future trading, many become millionaires or billionaires in weeks; many become bankrupt in hours or days. Islam cannot allow such practices that involve high risk based on mere speculations.
On the other hand, we have spot trading. In spot trading, we actually buy crypto or assets; we wait for their price to increase and then simply sell them out in the market.
Although spot trading does not make you earn as quickly as in future trades, it is safe and free from speculation and interest.
In short, three factors i.e. Gambling, Trading on assets we do not own, and Interest make future trading forbidden in Islam.
If you have arguments in favor of future trading, please mention them in the comment section.
Therefore, all forward and futures transactions are invalid in Shari'ah. Secondly, because in most of the futures transactions, delivery of the commodities or their possession is not intended. In most cases, the transactions end up with the settlement of difference of prices only, which is not allowed in Shari'ah.
Futures trading is considered haram (forbidden) in Islamic finance and law (Shariah) for several reasons: 1. *Speculation*: Futures trading involves speculating on the future price of an asset, which is considered a form of gambling (Maysir).
Options trading in the stock market is subject to collecting fees called “premiums” for promises that are not permissible under Sharia law. This ruling applies to both call and puts options. Therefore, Muslims are strongly advised to stay away from options trading.
Visiting and making use of the “services” of fortune tellers is prohibited to Muslims. The Quran clearly states that only Allah (SAW) knows the unseen (6:59, 27:65). Using “fortune tellers”, in my opinion, is a form of shirk.
The permissibility of forex trading in Islam hinges on adherence to Islamic finance principles. In Islam, forex trading is considered haram when it involves interest payments, high uncertainty, or speculative practices resembling gambling.
There's one key element that sets futures trading apart from gambling: you. The individual determines the rules of the game ― not the casino. Futures furnish you with the ability to assume risk, identify rewards, and develop strategies on your own terms.
Future trading involves betting on future market movements without actually owning the underlying asset. This type of speculative trading is like gambling, and it's strictly prohibited in Islamic finance.
It also pointed out that the sharp increase in retail investor participation in F&O trading is likely driven by humans' gambling instincts. "Derivatives trading holds the potential for outsized gains. Thus, it caters to humans' gambling instincts and can augment income if profitable.
Commodity trading in items like gold, silver, or agricultural products can be considered Halal (permissible) under Islamic law, provided the transactions adhere to Islamic principles.
Astrology , fortune-telling and predicting the future come under the heading of actions of jahiliiyah (ignorance) which Islam came to put an end to and explain that they come under the heading of shirk (associating others with Allah), because of what they involve of believing the fortune tellers and soothsayers who ...
Even in conventional theology, the future in the Qur'an is not singular but plural. The Qur'an provides guidance to 'people of faith' and prepares them for the akhirah – the final future or the Hereafter, next world and other world as Muslims repeatedly translate and understand this term.
It is not permissible for the Muslim to long for the things that lead to zina, such as kissing, being alone, touching and looking, for all these things are haraam and lead to the greater evil which is zina.
Forwards and futures allow buyers to resell the goods or set the contract obligations before actual delivery. According to Shariah, physical delivery of the object must happen before resale or settlement. For sure, it violates the possession-and-delivery (qabdh) criteria of Islamic law.
The Quran states in aya 2:275 that "Allah has permitted trade and forbidden usury." But not all trade is allowed in Islam. The Qur'an prohibits gambling (maisir, games of chance involving money).
Yes, dropshipping can be considered halal if practiced transparently, honestly, and with fair pricing. 3. What should I consider when dropshipping to ensure halal practices? Ensure transparency with customers, maintain fair pricing, and avoid deceptive practices.
Answer. Praise be to Allah. There is nothing to prevent a person from making plans and estimating what he will need in the future, and thinking of what he hopes to achieve, or saying, 'I will do such-and-such tomorrow,' or next week, or next year. ' But when he does that he has to say 'in sha Allaah (if Allaah wills).
Halal is an Arabic term meaning “permitted” and stipulating that: Transactions cannot involve “riba” (interest). Investments must not be made in “haram” (unlawful) assets or commodities such as pork products, alcohol or military equipment, among others.
The Islamic view on fixed-time trading (FTT) is not universally clear-cut and may vary depending on interpretations. Some scholars consider FTT as haram because it bears a resemblance to gambling, while others may argue that if performed responsibly and ethically, it can be permissible.
Yes, dropshipping can be considered halal if practiced transparently, honestly, and with fair pricing. 3. What should I consider when dropshipping to ensure halal practices? Ensure transparency with customers, maintain fair pricing, and avoid deceptive practices.
Introduction: My name is Stevie Stamm, I am a colorful, sparkling, splendid, vast, open, hilarious, tender person who loves writing and wants to share my knowledge and understanding with you.
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