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Thread: Forex Trading In Islam (Permissible or Not)

  1. #1
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    Forex Trading In Islam (Permissible or Not)

    Hello Friends,

    I don't know if it is the right section, because the section's name is Trading from A to Z, so I am pretty sure that my thread comes in the same category. The purpose of opening that thread is: Knowledge to inform you and getting yours information in my knowledge, so I may know what you have and you may know what I am saying.

    Well, in past years when people were very concerned about FX, they went to some of the online scholars asking that whether is it okay to go ahead with marginal FX trading or not, and most of the time, there used to be an answer that No, marginal trading is not permissible. At that time, there were no swap-free accounts but now, large number of brokers offer this swap-free account including RoboForex.

    We must realize that there are many grey areas which most people (even scholars) are unable to understand. No wonders that some scholars, who are well in finance world suggests to go with it.

    Let me give you the example of Dr Zakir Naik. Dr Zakir naik is a stocks trader, and i watched his video on the internet regarding stocks and he mentioned there that: "Margin trading is halal as long as no interest is charged"

    What is annoying me is the fact about leverage in Forex which is not mentioned anywhere in the internet.

    Difference between the marginal trading (leverage) in stocks and marginal trading (leverage) in Forex:

    I hope that you are aware that, in stocks trading, you will not be able to get enough leverage from your brokers or even banks. Why? Did you ever thought about this matter? Use your brain to think about it. Its because in stocks, they are lending you REAL money instead of just contracts, so that you could buy and sell your shares, and the main point is to control the debt.

    Don't you wonder that in these days, there are brokers providing high leverage? (No problems with that), but what is the difference? If the leverages like 1:1000 can be given for currencies trading then why it cannot be given in stocks trading? where the risk is less than the risk in Forex!

    The truth is, margin trading in Forex doesn't means that someone is lending you, it seems essential that it is trading on discounts that government orders the banks to charge no more than 2% in USA for their orders, that's 1:50 leverage. So, the currencies belongs to the country and country belongs to its governor, then to whom the currency belongs indirectly? the currencies belongs to the government. So, if the owner is saying that, do not charge more than more or less than 2% for their orders (most likely, less than 2% for their orders) then what it is? A discount? or lending?

    Let me ask you a simple question. Do you think that brokerage firms are that much rich to lend you billions of dollars on every trade you make? Lets say that if the broker have a order of 1000 standard lots (1000 customers, 1 lot from each) at a time, it means that all customers have 1,000 USD and having the leverage of 1:100, then do you imagine what would be the amount of so called lending procedure? It turns to 100 Million Dollars, How the hell 100 Million Dollars could even be printed in just a day. Even banks lack such kind of funds for immediate delivery, brokers are far from that.

    I have done enough research on leverage, and with my understanding, I am at the conclusion that leverage in FX doesn't means lending, it means, discount trading in terms of Forex. Think about the customers, most of the brokers have 100,000 of customers and they order the minimum of 0.5 lots at some time which means 50,000 standard lots (just for an example), then where the amount will go? Will not it turn into billions?

    I think, what they do with the FX trading is, they just note that for example "A trader purchased 100 lots at such price, TP and SL". Its just a matter of electronic paper works. Its their system where orders take place (of-course in a bank's system). I don't mean to say that trades are not executed, trades are executed but its a rule of financial market that you can pay 1% now and remaining 99% after the delivery which in the matter of Forex, delivery of spot FX takes place in 2 days.

    Why you extend your positions by giving swap? That means, you want to keep using the discounts and do not have other 99% to pay, so you are delaying the transactions by giving interest (which is obvious Riba).

    Well, the main question remains same. If the FX trading is permissible or not. And, do you think that leverage is a discount or you still think that its lending/borrowing of funds. If you think that its lending/borrowing, please write why, and if you think I am right, then also write why!

    We're looking for the peace in both worlds. It is unfair that we dis-respect the orders from our God and just care about this temporary world? How much time we can live in this earth? for 100 years at most? Okay, 120 years at most. The avg is 60 years. Do you want the paradise for eternity OR paradise in this world for averagely 60 years and then hell-fire for eternity. The reason I am saying is that, I want you to think seriously and answer the question because it is the matter of Riba. Even I am not yet confirmed if dealing in Forex is okay or not. So, I thought that asking from you here will be a good idea.

    The main question remains same. It is just the information I thought to give you about leverage because it is the first reason your scholar will give you to say that it is impermissible. Information is given so that you could think enough about whether it is okay to go ahead or we should leave this profession.

    Again, the major reasons which scholars give when they say that it is impermissible:

    - Possession of currencies (We get ownership rights but only some scholars understand electronic rights)
    - Use of margin. (Scholars say that it must be 1:1, but even if that is the case, then what about long/short issue which gonna remain same even with 1:1, short (sell) means, we are borrowing one and purchasing other, in Forex, we don't borrow actually but if scholars insist on it, then tell them that even with full payment, the matter of borrowing will remain same. Without borrowing, no chance of business.) Remember that I don't think borrowing of funds exists. Specially when it is interest-free? Sigh. impossible.
    - Hand to hand. (It is an advanced world now and electronic systems are now our hands)

    I hope that you aren't bored with those details, also, I bear no responsibility if my thoughts are 100% correct (because after all, they are just thoughts)

    Best,
    PrinceWahaj

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  2. #41
    Trader shambca7's Avatar
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    Quote Originally Posted by Yayami View Post
    as Muslims, we can run with the forex trading business is lawful. however, but we should not benefit from the swaps or futures interest when we do trading. that is why it is advisable for each client to create applications that Muslims create or open an account islamic that freely from swaps (both negative or positive), but cut the commission per transaction opened. if we do this, of course we will not do anything that is haram because we've been running a primary requirement.
    Yes its good to know that muslims have that kind of facility in robo forex broker and they can do trade with any swap charges, I am not a muslim so I have to pay swap charges for my trades. But as we know that those are not much higher to pay so a trader can manage his trades with swap accounts also. It will be more better if all trader's will get a swap free accounts it will help a lot to all long term trader's.

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  3. #42
    Trader Sascha's Avatar
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    perhaps for more accurate information regarding this question, we can ask directly to some Muslim's scholars because as far i know that as long as we choose an Islamic account to trade which will delete the swap requirement per day as long as we hold the position, this forex trading is Halal to do. i don't know the very details information like you've described in your thread with long explanations, but i know that what i'm doing is right and it's legit, legally in law and not prohibited in Islam. i'm Muslim too, that's why i was able to write those as my thoughts.

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  4. #43
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    there are reasons how you can work these market these is to work with what has been allowed in your country these is why most muslims their trading is really offered to all sourced to work for the good issues that markets can be well leveled in so many ways we are all sourced to understand the different values

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  5. #44
    Trader layigold's Avatar
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    I see forex trading exactly the same way I see any other business that can be done for the purpose of making profits and I do not see anything religiously wrong in it. If you put your money in bank over a period of time, you will be given interest because the bank must have traded with your money and part of the profits made is given back to you inform of interest. It all depends on the way you view it from religious point of view. If you are not well disposed to the issue of interest , you can therefore request for an Islamic (swap free ) account.

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  6. #45
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    i think in islam this is acceptable,i have searched on internet, there was many posts blogs and videos, mostly they said this is halal in islam, actually this is business not gambling so there is no problem in islam, binary options can be prohibted but this is not in islam. i am also doing this from one year

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  7. #46
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    trading forex is a legitimate business, there is no shady dealing whatsoever in it, i will like us not to bring religious matter into it , forex is a business and investment, and when you invest your money or resources , you definitely hope to get reward , the reward that we have trading forex is the profits that accrue to our capital , when we trade with gains , what we have after our invested capital is our gain , oyr income, our profits, there is no religion in the world that forbid legitimate business void of unrighteousness, but if you feel guilty as muslim ope n islamic swap free account and trade it , that will be fine.

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  8. #47
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    Quote Originally Posted by fxconsultant View Post
    trading forex is a legitimate business, there is no shady dealing whatsoever in it, i will like us not to bring religious matter into it , forex is a business and investment, and when you invest your money or resources , you definitely hope to get reward , the reward that we have trading forex is the profits that accrue to our capital , when we trade with gains , what we have after our invested capital is our gain , oyr income, our profits, there is no religion in the world that forbid legitimate business void of unrighteousness, but if you feel guilty as muslim ope n islamic swap free account and trade it , that will be fine.
    Yes same here, Religion and Forex are different, Forex is skill based and not religion based. Even there is no prescribed amount of investment that is necessary to invest in forex. But at least the amount must be sufficient enough to recover of any unforeseen losses during trading. If we are experienced $5000-$1000 should be consider good investment.

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  9. #48
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    Quote Originally Posted by komalam View Post
    Yes same here, Religion and Forex are different, Forex is skill based and not religion based. Even there is no prescribed amount of investment that is necessary to invest in forex. But at least the amount must be sufficient enough to recover of any unforeseen losses during trading. If we are experienced $5000-$1000 should be consider good investment.
    Forex is business and not any religion. It will very harmful if i do trade and mix it with religion or emotions.. cause if i do trade with such feelings then i can not give my concentration on my trading. i can not apply my trading strategy. so it will very harmful if i make mistake.

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  10. #49
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    Quote Originally Posted by silentsaumya View Post
    Forex is business and not any religion. It will very harmful if i do trade and mix it with religion or emotions.. cause if i do trade with such feelings then i can not give my concentration on my trading. i can not apply my trading strategy. so it will very harmful if i make mistake.
    This is not a religion truly, but there are some practices that some business will adopts that some religion will not permit. I do not wnat to talk deep on this issue, but i know that what you are respecting is worth to be preserved, while some traders will have to choose between religion or the trading that will give you money and better your life.

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  11. #50
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    Quote Originally Posted by silentsaumya View Post
    Forex is business and not any religion. It will very harmful if i do trade and mix it with religion or emotions.. cause if i do trade with such feelings then i can not give my concentration on my trading. i can not apply my trading strategy. so it will very harmful if i make mistake.
    It does not matter how much investment we have to invest in forex, its also does not matter how much you have learned about forex in books and or in demo trading account. Forex trading is very harmful when trader's don't have proper control on their emotions. Emotional trader's can't concentrate properly on their business due to losses and those losses can be only recovered through the proper correction of our mistakes.

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