Islamic Trading Accounts: How are they Different?
Have you ever heard of the Islamic trading account? Whether you are an experienced forex trader or just beginning your trading career, it’s essential to know and understand the Islamic forex trading account.
In recent years the forex and blockchain industry has flourished. Many people worldwide have become interested in cryptocurrencies, tokens, and platforms, little known to them until then. The real craze for doing one of the most profitable online businesses of today has begun.
That is why the famous Islamic trading account became highlighted. This led to more and more people starting to use it daily. However, while trading in the Islamic world is haram, it’s still possible to trade.
An essential thing to do in this case is to open an Islamic forex trading account. The reason for that is that this type of account offers swap-free trading for all Muslims worldwide.
We will discuss the principles of Islamic finance and what are the best solutions for Islamic halal trading. However, don’t forget that if you wish to be sure whether your tradings are halal, consult a proven religious authority that can take into your trading account your case.
Let’s begin with the explanation of the Islamic trading account and all its essentials!
What is an Islamic forex trading account?
An Islamic Forex trading account refers to a halal trading account offered to all interested clients who respect the Quran and are eager to invest in the Islamic stock market, including principles of Islamic finance. It’s a special kind of account known as a “swap-free” account. It differs from a usual Forex account in several different ways.
Note that Sharia law prohibits the accumulation of interest. Therefore, all traders who have Islamic accounts don’t pay nor receive any interest rates. Besides that, transactions in these accounts fundamentally based on Islamic finance must become finalized without delay.
That is why all the currencies must transfer from one account to another right away. Costs of moving should be paid immediately. Even though halal investment in Forex is not an innovation in finance, few swap-free brokers have Islamic accounts in their offer.
Very frequently, the Islamic trading account isn’t promoted by any brokers because they are less profitable. Also, the number of requests for them from clients might be minimal.
How to get an Islamic forex trading account?
To get an Islamic forex trading account, it is essential to understand an Islamic account in trading. It’s a regular account for forex trading, excluding any fees in the form of interest. All Muslims cannot give or take an interest in any activity. That’s what the Islamic trading account is created for.
Here is how you can get an Islamic forex trading account in three simple steps:
- Your account should be verified by sending all the relevant documentation.
- Fund your current trading account.
- Once you have managed to fund your account, make sure to apply for an Islamic account, which operates under Sharia Law. The relevant department will forward the request for review and approval.
Requests become processed within one to two business days.
Register and open a Trade.MT5 account
Many forex brokers require their Muslim clients to register and open a Trade.MT5 account. These customers need to provide all the documents required to open a halal trading account.
Once you get a confirmation that your Islamic trading account is open, you can make your first deposit with the help of your preferred paying method. After making your first deposit, you can start trading on the Halal exchange.
It’sIt’s possible to request a withdrawal of your funds or previous earnings through your online account. To trade without any risk, experts recommend practising with a demo Islamic trading account to avoid potential money losses. With a demo account, you will have access to actual market conditions.
Is Forex trading haram or halal?
Recently, one of the most essential and popular questions among traders is whether Forex trading is haram or halal. The biggest issue of the stock market in Islam is raised progressively with online trading in the Muslim world.
If we speak of Forex, futures, commodities, currencies, and stocks, the biggest question remains the same. So, is it all investing in the stock market, haram or halal? It’s one of the essential things that Muslim investors are eager to know.
By its definition, Forex trading is halal and not opposed to all the fundamental Islamic finance principles. It’s no secret that Forex trading is very accessible. There is a great potential for quick profits, which attracts new traders daily.
It may seem that it is a halal investment opportunity in the first place since it is concretely about purchasing and selling money. Nevertheless, some things must be considered and examined.
If you buy the Euro against the Dollar and later sell it when the Euro currency has appreciated much against the Dollar, we are speaking about the halal transaction.
Get to know more about Islamic finance
It’s well-known that in Islam, gambling is strictly prohibited. However, Forex trading can be considered a haram game of chance, and here is how. Trading consists of buying and selling assets to earn profit by increasing or decreasing the price of an investment.
That’s why traders must attempt to predict this, which is based on their analysis. Therefore, trading isn’t considered a game of chance. Trading became regarded as an investment based on market analysis. Thus, making it halal.
To analyze the market adequately and successfully, it is necessary to learn many strategies and concepts.
Here are the four essential principles of Islamic finance:
- Prohibition of payment and receipt of the interest rate (Riba)
- Prompt exchanges in the context of trading operations
- Prohibition of gambling
- Distribution of benefits and risks
It’s very crucial to respect the principles of Islamic finance. These Islamic trading accounts are offered to everyone eager to do halal Forex trading without the need to separate their investments from the central tenets of their religion.
The conclusion is that all these accounts are very similar to the traditional trading accounts. Nevertheless, some particular elements have been adapted to meet all the fundamental principles of Islamic finance.