While trading is considered Haram in Islam, Muslims can still trade. The key is to find a broker who offers a swap-free Islamic account for traders of the Muslim faith. This article will discuss everything about Islamic trading accounts and how to open one. An Islamic Forex account is simply an alternative for Muslim traders to engage in Forex trading. It enables them to practice halal trading, owing to their respect for the Quran.
Islamic Forex accounts, also called swap-free accounts, differ from regular accounts in several ways. Sharia law prohibits payment and receipt of interest rates, so Muslim traders cannot trade through regular Forex accounts. Thus, Islamic Forex accounts were created to offer Muslim traders an opportunity to trade swap-free.
Basic Principles of Halal Forex Trading:
- Islamic finance is based on four basic principles:
- Restriction of payment and receipt of interest
- Prohibition of betting and gambling
- Instant execution of trading activities
- Equal distribution of risk and benefit
These principles don’t fit into regular Forex trading accounts. Thus, to respect these principles, “Islamic accounts” are used. These accounts are apt for those who wish to opt for halal Forex trading.
Permissibility of Islamic account:
Since the popularity of Forex is increasing every day, it has led to a debate among Islamic scholars as to if it is fine for Muslims to participate in Forex trading. However, the availability of the swap-free trading account means that Muslim traders can actively engage in Forex trading while complying with their religious beliefs at the same time.
Can Non-Muslims Open Islamic Trading Accounts?
A significant feature of Islamic trading accounts is that non-muslims can benefit from them. The account greatly helps traders who want to trade differently and do not want to be charged with daily swaps.
Which Brokers Offer Islamic Trading Accounts?
Many Forex brokers today have started to offer swap-free accounts as a part of their product offerings to Muslims. They can access the same range of products as normal trading accounts; they do not have to pay swap fees. Rather, some additional administration charges are levied upon Muslim traders.
What To Look For When Looking For A Broker Offering A Swap-Free Account?
It is important to check that the broker meets the following criteria when looking for a broker that offers a swap-free account:
- Full access to all trading assets
- Leverage should be offered according to the Hiba policy
- No interest is charged for keeping positions open overnight
- No hidden fee
Conclusion:
An Islamic or swap-free trading account is a type of trading account that follows the Islamic Shariah principles. In this account, no interest is applied for opening a position overnight. Muslim traders tend to benefit from the swap-free account. These accounts comply fully with Islamic rules so that Muslim traders can trade without breaking their faith and staying true to their ethics and morals. Islamic accounts are based on the principles of fairness and transparency.