Forex trading is the buying and selling of global currencies. Is this Halal? should we be buying and selling fiat currencies instead of tangible assets?
As I understand, there’s nothing persay wrong with buying a currency at one price, holding it, then selling it to make a profit. This is the general case.
But they issue is that Forex trading itself introduces a series of mechanisms that as I understand makes forex trading impermissible due to, if I remember correctly, the ownership not being transferred over to you during the trade. Thus making it Haram
I don’t know however if this is different given that we live in a time where fiat currencies are depegged from gold or any underlying asset. As per Sheikh Haithams fatwa
Forex trading is in fiat currency which can put you in debt and goes against Islamic principles.
It is considered to be leveraged because you are using your own money and levering it up which results to making huge returns. You cannot guarantee where the money is coming from which therefore makes it haram as it can be seen as a loan
You’re buying and selling something that you do not own. You are not the sole owner so whatever gain or loss there is, it’s haram
I don’t see why forex trading would be haram so long as you’re trading live rates and not estimations.
On the other hand, Forex trading can be haram based on the interest that you pay. They lend you the money and then earn fees from the transactions of the borrowed money. And in Islam you cannot have a load or a trade in the same transaction as it’s classed as a type of riba.
Is it Not possible to not use leverage? Like when for example you buy stocks or crypto. You can choose not to leverage
Is the interest always there?
I will start by showing you guys a video on forex trading. This should give an insight insha allah to what forex trading is and if it is halal.
Yes, I have heard similar statements, forex trading, from what I know, has been impermissible depending on what type. There are so many new things coming out, hard to keep up!
Ahhh yes, the underlying issue, selling something you do not own. It is crazy how that is so common nowadays. But yes, I have heard this too, hence why it is iimpermissible.
Does anyone know if this issue of not owning also applies to banking apps like Revolut or Starling? They’re so convenient when travelling abroad and often have better than local exchange rates
I’m wondering if this issue is more to do with trading in general
Like for example day trading stocks is also impermissible as I understand in the majority view. Because for stocks it takes up to 1-2 working days I believe for the stock to be transferred into your ownership when you make a purchase. So if you sell before that point- as a day trader would - then you’d be selling something you don’t yet own
Forex trading is considered to be haram and advised to stay away from because you’re buying and selling something that is a derivative
Additionally, forex trading can also been seen as a form of gambling, one of many reasons can be that you are at risk of losing money
I’m not entirely sure but can imagine that you don’t actually own and not trading in real time because that’s how they do their cryptocurrency trading
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I heard something like this a while back- that ownership is key. Without it, one cannot be conducting trades