Is Forex Trading Halal or Haram in Islam?

Is Forex trading halal or haram under Sharia law (Islamic law)?

For our non-muslim friends, haram refers to forbidden behaviours that are considered indecent and sinful in the Islamic faith. Conversely, halal refers to behaviours (and objects) that are acceptable.

From my research, it seems that the answer to this question boils down to two main points.

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First Point: Are You Gambling?

Gambling is clearly haram. Few people would dispute this.

So if you’re gambling in your trading, it’s haram.

If you’re trading for excitement, it’s haram.

However, if you take the time and effort to methodically analyse the market, have a detailed trading plan and carry it out in a disciplined manner, then it’s not haram.

Another clarifying factor is whether you treat trading like a job, or like a game. If you’re just trading for fun, it’s likely to be haram. But if you put in serious effort and treat trading like a job, then it’s likely to be halal.

Your trading mindset also matters. If you have a frivolous mindset towards your wins and losses, your trading is likely to be haram.

On the other hand, if you’re learn from your mistakes and are serious about improving, it’s likely to be halal.

Second Point: Do You Pay or Receive Interest?

Regular Forex trading accounts have a swap component that requires you to either pay or receive interest on trades that are held overnight.

According to Sharia law, this is categorised as Riba, which is the arabic word for “interest”. And since Islam forbids financial transactions that involve interest payments, trading with regular Forex accounts is considered haram.

In recent years however, Forex brokers have introduced Riba-free accounts that do not charge or pay interest. If you trade with such non-interest bearing accounts then your trading is likely halal.

Further reading:
http://www.forexislamic.net/islamic-forex-faq

The Bottom Line

So… is Forex trading halal or haram in Islam?

There is no universal answer that applies to all Muslims, as it depends on a number of factors, especially those mentioned in this article.

If you're still in doubt, please consult your spiritual leader.

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