Trading is haram or not?

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HazemTrader

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Hi, I’m Hazem, a Muslim by religion. I have read a lot about Islam and it’s somewhere written that forex and binary options trading can be Haram. I do trading and have several accounts on different brokers. Especially i like short-term options trading. But i once argued with one of my colleagues about it: he said it’s Haram. I use SWAP free accounts and Islamic Trading accounts (as it was written on brokers’s sites). I asked a question to the tech support of one of the broker and got the answer:

‘Chat operator: Rashid Iqbal
Good afternoon! Thanks for your interest in our company and asking your question. We understand it can be confusing so let’s look at some points:

  1. The worldwide spread of such a religion as Islam was largely obtained through worldwide trade.The Islamic world was always connected to trading - as we all know, Muhammad himself was a trader.
  2. According to the Quranic declaration: “Allah has permitted trade and forbidden riba [usury].” Our company don't take commissions at night, do not take commissions for prolonging a trading position, and do not write off or charge interest for the presence of funds or trading activity. We are focused on working in Arabic speaking countries for over 10 years and all of our accounts are Islamic.
  3. Gambling addiction is haram. But trading is not haram if you are not addicted to trading like gambling and if you apply technical analysis, research the global economy, and practice financial planning.
  4. Another good example to see the difference: a car may be used for both good and harmful purposes. You can break traffic rules because you’re driving an ambulance and need to save lives or because you’re driving a car and want to crush a crowd of people. Your income from trading can be used for both good and bad purposes. The car itself cannot be haram, as well as the trading platform.
  5. Speaking about trading in our conpany, we are providing binary option tranding services means no risk of losing more than allocated in the trade. In the binary trading mode the amount of possible profit and loss is known in advance.
  6. Binary option trading refers to the practice of an investor selling/buying a trading instrument that he does not possess at the moment of sale. He sells/buys them with the belief that the price of those instruments will changed, allowing him to profit by repurchasing them at price change. So, a binary option is a contract that gives the buyer the right, but not the duty, to purchase a certain underlying at a specific price and on a specific date. As a result, it just grants you the right but not the responsibility. And it is more like making a down payment on a car or house with no obligation to purchase it. The buyer has the option to decline to purchase the underlying and forfeit the down payment. If you had the right to buy a house, but in a month the price of this house fell 2 times, why would you use the right to buy this house at the old, higher price? Agree that such rights and actions are not haram in everyday life, and in the same way it cannot be haram in the field of online commerce.

I’m curious: as Muslims, are you satisfied with this answer? Or does this broker manipulate the facts to deceive me? What is your opinion?

I want to continue trading because i get profit and earn money but i want to be sure.
 
I can make an argument for and against the question you ask? You need to follow your own belief and heart. Do not follow ignorant people with limited perspectives on life and our modern world to which their ears, eyes, heart and soul are blind.

You have to ask yourself what is usery? I would make the assertion every boss entrepreneur or trader in the globe is at fault. They use your labour, pay you a sum of money and try to keep as much profit for themselves as possible. Carl Marx made this point very well. Whilst true in his observation, he was wrong in his interpretation, failing to forecast the outcome of events as a consequence.

Human civilisation is based on trade and this indeed is a basic human drive to produce and sell output from one's effort for a profit (some may call it greed subject to the level of profit one makes).

If you ever do get to run or manage your own business, employing staff you may come to understand what usery is. It is not just based on the interest one may charge for money lent. As a crude summary, usery can be the taking of abnormal profits where competitive markets are lacking. In other words, the abuse of resources applicable to land labour and capital (technology or money).

So with respect to trading stocks and shares and derivative markets, options and futures etc., the non-thinking uneducated will tell you, that you are making money without any effort. You are not actually producing any goods or products. They will largely ignore the fact you are providing a service, liquidity to markets where people can work their capital by various means. They do not understand these markets and thus will label it with all sorts of interpretations based on their level of ignorance.

Others may call it gambling like tossing a coin but if you read and research the markets before taking a point of view then it becomes an investment. All activities in life have some element of risk. If you carry out your risk assessment then make a decision, well it's not really a bet is it. Yes there is the unknown but that's where your judgement plays a part.

The futures market for commodities allows farmers to secure fixed prices for their outputs. Prices are set so they can manage their business. The ability to buy and sell options is much the same providing a service establishing a pricing value of sorts for future outcome of events.

There is no coercion in financial markets. In theory, perfect efficient markets provide information available to all participants. (Insider trading and withholding of information always take place but such is life).

So being a student of economics I would strongly recommend you make full use of whatever instrument or platform you find as long as you are well versed with how it operates and conduct your risk assessments and strategies for engaging those markets. Do not listen to snake oil salesman or preachers telling you their limited interpretation of what is right and wrong based on narrow and specific viewpoints.

Having said all that - I should add I am an atheist and do not believe in any notions of God or super something that created us. I believe in science and education. If the science and proof isn't there - throw it out or set it aside until it is proven.

I find all religions remarkably archaic and fallaciously incorrect in prescribing anything of value. On the contrary religious so called pious people manipulate and contrive facts to tell a story with no substance or fact based purely on belief and subject to false promises that can not be delivered. Talk about manipulation - they take the biscuit. :)


All the best (y)
 
HazemTrader said:
Hi, I’m Hazem, a Muslim by religion. I have read a lot about Islam and it’s somewhere written that forex and binary options trading can be Haram. I do trading and have several accounts on different brokers. Especially i like short-term options trading. But i once argued with one of my colleagues about it: he said it’s Haram. I use SWAP free accounts and Islamic Trading accounts (as it was written on brokers’s sites). I asked a question to the tech support of one of the broker and got the answer:

‘Chat operator: Rashid Iqbal
Good afternoon! Thanks for your interest in our company and asking your question. We understand it can be confusing so let’s look at some points:

  1. The worldwide spread of such a religion as Islam was largely obtained through worldwide trade.The Islamic world was always connected to trading - as we all know, Muhammad himself was a trader.
  2. According to the Quranic declaration: “Allah has permitted trade and forbidden riba [usury].” Our company don't take commissions at night, do not take commissions for prolonging a trading position, and do not write off or charge interest for the presence of funds or trading activity. We are focused on working in Arabic speaking countries for over 10 years and all of our accounts are Islamic.
  3. Gambling addiction is haram. But trading is not haram if you are not addicted to trading like gambling and if you apply technical analysis, research the global economy, and practice financial planning.
  4. Another good example to see the difference: a car may be used for both good and harmful purposes. You can break traffic rules because you’re driving an ambulance and need to save lives or because you’re driving a car and want to crush a crowd of people. Your income from trading can be used for both good and bad purposes. The car itself cannot be haram, as well as the trading platform.
  5. Speaking about trading in our conpany, we are providing binary option tranding services means no risk of losing more than allocated in the trade. In the binary trading mode the amount of possible profit and loss is known in advance.
  6. Binary option trading refers to the practice of an investor selling/buying a trading instrument that he does not possess at the moment of sale. He sells/buys them with the belief that the price of those instruments will changed, allowing him to profit by repurchasing them at price change. So, a binary option is a contract that gives the buyer the right, but not the duty, to purchase a certain underlying at a specific price and on a specific date. As a result, it just grants you the right but not the responsibility. And it is more like making a down payment on a car or house with no obligation to purchase it. The buyer has the option to decline to purchase the underlying and forfeit the down payment. If you had the right to buy a house, but in a month the price of this house fell 2 times, why would you use the right to buy this house at the old, higher price? Agree that such rights and actions are not haram in everyday life, and in the same way it cannot be haram in the field of online commerce.

I’m curious: as Muslims, are you satisfied with this answer? Or does this broker manipulate the facts to deceive me? What is your opinion?

I want to continue trading because i get profit and earn money but i want to be sure.
Click to expand...
I am not a Muslim but do have very lengthy associations with Muslims and can tell you that The sort of trading we do such as Futures , Forex, CFD's , trading with leverage say 50:1 or 20:1 or 100:1 is Gambling and Haram unless you trade stocks with your money or in Futures you Take Delivery of the Commodities :) :D ! Fooling around with overnight charges or not or Islamic Accounts is self deception because they get you to pay for it in another way .......O K ?
 
bullfrog said:
I am not a Muslim but do have very lengthy associations with Muslims and can tell you that The sort of trading we do such as Futures , Forex, CFD's , trading with leverage say 50:1 or 20:1 or 100:1 is Gambling and Haram unless you trade stocks with your money or in Futures you Take Delivery of the Commodities :) :D ! Fooling around with overnight charges or not or Islamic Accounts is self deception because they get you to pay for it in another way .......O K ?
Click to expand...

Why are trading in futures, forex or movement in the underlying price of shares allowing the ability to short to hedge positions haram? It is not covered by usery or hording of wealth.

Leverage which is more to do with risk management and nothing to do with usery or hording of wealth.

I would be interested to know why they say it is haram?

Also, ask them if they pay 2.5% of their wealth as zakat. ;)

Alternatively, what they do with their wealth? :rolleyes:
 
Atilla said:
Why are trading in futures, forex or movement in the underlying price of shares allowing the ability to short to hedge positions haram? It is not covered by usery or hording of wealth.

Leverage which is more to do with risk management and nothing to do with usery or hording of wealth.

I would be interested to know why they say it is haram?

Also, ask them if they pay 2.5% of their wealth as zakat. ;)

Alternatively, what they do with their wealth? :rolleyes:
Click to expand...
Very perceptive of you , I will pass on the message and see what they say .
 
Don't know about that, but I know some trading accounts are based on Islamic sentiments.
 
CameronPatel said:
Haram is a word in Arabic that means ""forbidden."" According to the teachings of the Holy Qur'an, certain activities are prohibited, including drinking, eating certain foods, gambling, and earning interest.
Charging interest is also condemned, which brokers charge as a “swap fee” for holding positions. So, yes, forex can be Haram. But there are Islamic accounts that traders can sign up for which prohibits accumulation, collection, and payment of interest fees.
Click to expand...
Why the double quotes?

So what do muslims do with their accumulated wealth?

Can I be your friend?

I'll take your savings off you so you don't have to commit haram and I'll take your sins on myself and earn interest.



Thanks (y)
 
The mind boggles! :oops:

Who gets to say what constitutes law and what doesn't?

Iranians and Saudis can't even agree on who is the more upright muslim with all their shady freaking interpretations of what is permissible and what is not over women and some people here want them to pass laws over financial instruments as well.

Women and Finance are probably the two most complicated creations on earth and one asks how he/she should pussy foot around the subject referring to elderly gentlemen who read nothing but a 3000 year old book. REALLY? What is permissible and what is not you ask?

I think it's BLOODY criminal marrying a 12 year old girl to a 60 year old goat herder in Afghanistan but some turban head will tell you it's ok by the book.

You then ask that same turban head if it's okay to trade in complex derivative instruments and swaps?

Go figure!
 
Last edited:
The problem is that there is not universal agreement on what Islamic law says. So its going to be very easy to argue something is both haram and halal, but very hard to bring the argument to a conclusion. Same applies in other matters in society too - even in fully Islamic nation states, there is wide variation in legal frameworks. Because the argument can't be resolved, it makes the debate pointless.
 
I was wondering (I haven't an answer or stake in this question as I'm not a Muslim) but can Muslims bet on a football team's performance?
 
Entelechy said:
No, many of my Muslim friends are trading forex, and I’m sure they wouldn’t do anything that is not permissible in Islam. Trading isn’t haram, but the rollover fee that is levied by brokers is where the problem lies. But, that was fixed with the introduction of swap-free accounts. The thing with swap-free accounts is that the brokers charge handling charges for holding currency pairs overnight for more than 3 consecutive nights.
Click to expand...
I fail to see the difference. So they still pay but are told it is a holding charge?

That's oil right then.
 
tomorton said:
I was wondering (I haven't an answer or stake in this question as I'm not a Muslim) but can Muslims bet on a football team's performance?
Click to expand...
If you change the word 'bet' for something more palatable probably yes.
 
It is considered Haram because brokers charge swap fees or interest, which is considered illegal or against the religious belief of people. But it's not something to fret about. There are Islamic accounts designed preferably of Mulims for this purpose.
 
Some consider it Haram, some not. My muslims friends trade with Islamic accounts because they are suitable for their needs and beliefs.
 
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