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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. #61
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    Quote Originally Posted by elena View Post
    I think forex trading is halal for moslem, because there is swap account that they can used. So many friends of mine who trades in forex, and they certain that this business is halal in their religion. Because i think forex trading is similar with other business, but we only buy and sell the currencies not things or service
    If what you said is so true, whey are Muslims trading the forex? I do not think this is bad, that is why they have to create the Islamic account for them. I believe that this is a business, and we shsoudl not even put the religion into this, and those ones that think that this will affect them in any way shoudl quit the business.

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  3. #62
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    Islam are very specific in their trading or in their financial institutions, be it banks and so on and so forth so they always have special banks for them and special trading forex account, these most of the time are swap free, they dont believe in gambling

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  4. #63
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    Quote Originally Posted by princewahaj View Post
    Hello Friends,

    I didn't expected that my thread will not get Muslim active members here, as I can see that there are a lot of Muslims in robo forum and of-course Forex trading is a serious issue, not little.

    We must work together, to find out whether we can go ahead or we should leave it. To me, its a more serious matter as I am a professional trader and I would have to leave if it is not permitted but if it would regard as permitted according to sharia laws, then I don't intend to look back because right now, I am researching on that matter very seriously.

    Also, I am planning to go to some scholars, telling all the things in detail to them and ask as I know some scholars personally.

    Best,
    PrinceWahaj
    It is contradictory matter and I think we should get the help from the scholars regarding this matter. I am also Muslim and I am also worried about the this matter whether it is permissible in Islam or not. Dear if you will get any news about this matter then my request is that you should share with all the Muslims.

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  5. #64
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    I see forex trading as a pure business, I don't see why any religious should be against it in any way and I got surprised seeing that there is something like the Islam account in forex trading. I actually do think that forex trading is just like the common buying and selling normal trade which we do every now and then. So forex trading is just a normal business.

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  6. #65
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    In my opinion and the knowledge that i have the forex trading and the knowledge that i have the Islam that the forex market is halal business because the Islam is prohibited form the business but Islam say that risk is be clear and in the mind of the trader any thing is not hidden so in the trading business ever trade know the risk and also know they techniques how to manage the risk factor in the trading.

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  7. #66
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    This is so bad to see if any country or relegion is going against the forex trading market, in my country I don't have this kind of problem and I also believe that every country should be free to join forex trading business as we know that a lot of muslim countries have problem with govt rules, and there are so many other cutom and war problems are also going there. Forex trading is our own business, and its a reliable profession for traders so there should be a full permission to join it.

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  8. #67
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    many people said that in islam trading is not halal, but people who have knowledge about islam and trading they have sense about it, actually this is not against of islam here we have good earning chance and also we have risk, so it is not gambling some people said it that this is gambling, in gambling we depend on luck but here we depend on experience and practice and knowledge, so this is not gambling and haram in islam

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  9. #68
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    there are many muslims around the world trade in forex and this means that forex is legal and allowed, but there is some restriction rules for trading and they trade with islamic account that has little difference than the other types of the accounts, so i think forex is not prohibited in islamic countries and allowed and the traders can trade freely.

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  10. #69
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    Quote Originally Posted by Khimi234 View Post
    This is so bad to see if any country or relegion is going against the forex trading market, in my country I don't have this kind of problem and I also believe that every country should be free to join forex trading business as we know that a lot of muslim countries have problem with govt rules, and there are so many other cutom and war problems are also going there. Forex trading is our own business, and its a reliable profession for traders so there should be a full permission to join it.
    there is no religion against trading forex, but in islam , traders need to follow the rules where they have to trade clearly, there is no usury or something else like it, so why some brokers will give swap free accounts, or if not , we can use others account and close the orders before touch a night for charges.then, there is no problem to be a trader

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  11. #70
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    yes its posible to trade as an islam there are special accounts for the same we have to really and its always right to understand that islam have lows to do with money, they are serious in what they do they are always suppose to understand certain positions that we know for when you trade forex we have to reall trade forex

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