Why online forex trading is not allowed under Islamic law | New Straits Times (2024)

FAQs

Why online forex trading is not allowed under Islamic law | New Straits Times? ›

According to Islamic law, usury, or any contract or business dealing that involves charging interest (riba) is strictly forbidden. In standard Forex trading, online brokers tend to charge or pay the interest differential between the two sides of any currency pair whose position is held overnight.

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.

Therefore, the ruling on Forex Trading is that it is not Shariah compliant, especially when conducted in currencies managed by conventional companies, as they certainly do not maintain this condition because most forex trading conducted by conventional institutions is 'Forward FOREX' or Forex that uses 'Value forward' ...

Forex trading is haram because it involves buying and selling derivatives. It's not actually buying and selling money, but a figment of your imagination of contract. It's leveraged, meaning you're not buying and selling 100 for 100 pounds. The money you're levering up is not permissible.

Because forex trading does not fit within the SEC's regulatory framework, it's not allowed in the US. Forex trading can be complex when it comes to taxation. In the US, forex traders must report their profits and losses on their tax returns, which can be challenging to calculate.

Islam emphasises fair trading in all business transactions and discourages dealings that have a negative impact on either party. As we have established, you can exchange currencies and make a profit. This is considered permissible.

In essence, forex trading is considered halal within certain guidelines, including: No Interest-Based Transactions: Forex trading must avoid any involvement in interest-based transactions.

This type of trading is prohibited in Islam, as it is considered to be based on chance, and not on actual economic activity. Forex trading should be conducted with a specific purpose in mind, such as hedging against currency risk, or facilitating trade and investment between different countries.

Although forex trading is legal in Saudi Arabia, the Capital Markets Authority and the Saudi Central Bank do not mandate forex brokers to obtain their licenses. Consequently, Saudi forex traders often opt for brokers regulated by reputable international authorities that oversee forex brokerage activities.

If the Forex market is based in a manner that uses leverage or margin, then it isn't always halal. This is due to the fact combining increase charge with brokerage creates a state of affairs in which riba, or usury, can arise.

Is Binance trading haram in Islam? ›

"Crypto in general is halah to buy, sell or keep as an asset, but for binance (or any other exchange) only spot trading is halal, so margin trading, futures, staking, defi staking, earn services, loans, dual investments, borrowing ALL are Haram, and binance in particular even for normal staking gives you the rewards + ...

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Any profit earned from such trade is permissible. online forex exchange where people buy and sell different currencies online without actually acquiring physical possession is not allowed and is called as haram by many scholars.

The two MetaTrader apps were banned on Apple's App Store in 2022 for their alleged use by fraudsters targeting the US citizens and residents.

Yes, forex trading is legal in the United States. However, it's subject to the National Futures Association (NFA) regulations.

The CFTC is the Federal agency with the primary responsibility for overseeing the commodities markets, including foreign currency trading.

In conclusion, Forex Trading can be gambling if you treat it like gambling. If you have no plan, no strategy, or no systematic approach to the market, and you rely solely on luck, then the outcome will always be a loss because you are trading against the big guys.

As long as there is no illegal activity, then trading or investing in crypto should not be deemed to be contrary to Shariah principles. There has been some discussion amongst Muslim scholars around the use of cryptocurrencies for illegal activities such as gambling, drugs, and money laundering.

In Islam, e-business is a permissible means of doing business provided it is performed in the boundary of Shariah Islamiyyah. More importantly, Islamic e-business provides services as permitted in the religion of Islam, in which they are deceit-free transactions and also free from gharar in a business transaction.

For example, the fatwa website IslamQA declares dropshipping is halal “if you turn it into profit-sharing or if you act as an agent in return for a fee.” The site is supervised by Islamic scholar Shaykh Muhammad Saalih al-Munajjid.