The theory and practice of finance according to Islamic principles are called Islamic finance. Islamic principles determine the objectives and the operations of Islamic finance. No matter who says it, one thing is certain, and that is that the Islamic Forex market is growing. More the internet becomes accessible to those who previously did not have it, the more new retail traders enter the market. One thing is clear though if these new retail traders are of Islamic background, they often find themselves asking whether Forex trading is Halal or Haram.
Online trading platforms operate 24 hours a day and allow people to choose from a large variety of instruments – foreign exchange, commodities, shares, bonds, ETFs, currency options and more. Some of the positions opened by traders are done for day trading – positions opened for a few hours. Other traders, however, employ trades with a longer scope and wish to keep their positions open for more than 24 hours. Keeping positions opened for over 24 hours is accompanied by a special fee called a SWAP. This special fee is a type of interest, and therefore creates a problem for Muslim traders following the Sharia law, which forbids certain financial transactions, mostly ones accumulating interest.
An Islamic Forex trading account means that a broker doesn’t charge or pay interest. This is according to the laws of the Islamic faith. Some people look to exploit these brokers, however, and they try to open an account, even if they are not of that faith. I believe that is wrong. Many of these brokers do charge a commission instead of interest, so be sure that you find out if they do this before opening an account. It might not matter if the commission is small enough. When performing deals using the Swap-free trading account for any currency pair, in transiting the position over midnight the trader does not gain or lose any amount, regardless of the position volume.
The recent trend has offered great support to Forex trading. If you are willing to make a profit, then you should join the Forex market as soon as possible. Certainly, the profit-making strategies with the involvement of interest rates restrict some of the communities (religions) to join Forex. In this case, one can open Forex Islamic account and start with interest-free trading. This trading account is also termed as ‘swap free trading account’. Among several Forex brokers, you can find Islamic brokers who support to open Forex Islamic accounts. This stands out to be a great concept of profit-making by Islamic people.
The key to any kind of successful Forex trading is to trade responsibly and intelligently. Making rash, an uncalculated decision is not the way to make a profit from Forex trading. In order to make the right choices, you must understand the characteristics of your account and use them to your advantage. If you decide to make the transition to an Islamic Forex account make sure you understand the meaning of these two terms: No Riba means that the regular fees that have to do with interest are not charged as they are opposed to Islamic law. Swap free Forex account – A swap free Forex account is an account where rollover fees are not charged.