Forex trading in islamic perspective

Is Forex Trading Allowed in Islam | Halal or Haram | DailyForex

 

forex trading in islamic perspective

Jun 01,  · In Islamic law, currency trading should be hand-to-hand, and on-spot, and therefore should not be delayed for 1 or 2 days as is standard in the industry. However, given the degree that this T+2 convention is now established, it is something institutions have to live with if they are to participate in the institutional forex market – which Reviews: 6. ⭐️⭐️⭐️⭐️⭐️ Forex Trading In Islamic Perspective Reviews: If you're looking for Forex Trading In Islamic Perspective. Get Cheap Forex Trading In Islamic Perspective for Best deal Now!!/10(K). Get Cheap Forex Trading In Islamic Perspective at best online store now!! cookbook. Forex Online Shopping. Forex Online Shopping Reviews: Best Price!! Where I Can Get Online Clearance Deals on Forex Online Shopping Save More! How The Large Institutions Operate In The Forex Market/10(K).



However, I believe it is not as clear-cut as I previously thought, and there are some quite complicated concepts to tussle with along the way. I am going to assume you know the basics of modern retail foreign exchange e. Brokers are the counterparties The first insightful thing to note in retail forex is that pretty much all the forex trading in islamic perspective brokers in this space will act as your direct counterparty.

Most brokers will have similar terms, forex trading in islamic perspective, which say that they will act as principal i. However, brokers will monitor how you do, and if you start improving and forex trading in islamic perspective a large percentage of successful trades, then they will still be your counterparty, but they will hedge their positions into the institutional market so that economically they are not exposed to any risk — whatever happens to the trade you placed.

The result is obviously neutral. When you close, they will close. Now the only profit they are making is the brokerage commission they charge for each trade. What really is a currency pair? The second insight I found useful was looking at what equivalent economic activity would be required to replicate the effect of the currency pair.

You have simply held an exposure to an amount over a few days, before selling. This means that for those days you will have got paid rollover interest as well. Upon closing the trade you get paid the profit back into whatever currency your account is denominated in with your broker. This means that each day you need to pay the interest on the JPY you borrowed, and each day you get paid interest on the USD you lent out.

Eventually you get the USD back and convert it back into JPY, and then give it back to the interbank market where you borrowed it in the forex trading in islamic perspective place. Under such an account, you are gaining exposure directly to holding the money not to the interest of holding the currencies. Therefore you are in effect achieving the above economic transaction pattern but without the interest elements.

One could therefore argue that such forex trading in islamic perspective are Sharia compliant. However the problem with this analysis is that the broker is the one who is extending that liquidity and also brokering the exchange. Islamically, you are not allowed such a contract where what is actually happening is you have two contracts in one. Ask yourself this: would the broker give you the interest-free loan if you were not going to use that broker for your trade?

But that is trying have your cake and eating it. Either a we say a currency pair is a synthetic product not analogous to any real-life economic activity, or b it is analogous to real-life economic activity. If it is a synthetic product not related to real-life economic activity then forex trading in islamic perspective is best characterised as just like any other zero-sum derivative e.

That is, to provide instant access to the currency market in a cheap and efficient way. Under this analysis, if forex is just a modern, better, way of going to Travelex, then we should overlook any modern developments as wrinkles, rather than anything that fundamentally changes the nature of the activity.

Thus the fact that the broker is often the counterparty to the trade and that the trade is on margin, should be overlooked.

However, this could arguably be a quirk of the international financial plumbing we have in place today as well as an increasingly globalised world. Institutional Forex Market The institutional forex market is made up of large financial institutions, where trades are between such financial institutions as opposed to the broker and youwhere margin is not used most of the timeand where the primary driver of these trades is necessity rather than forex trading in islamic perspective. Yet other companies will need to hedge their currency risk though these are separate topics in themselves.

In Islamic law, currency trading should be hand-to-hand, and on-spot, and therefore should not be delayed for 1 or 2 days as is standard in the industry. Banks have established debtor-creditor agreements between themselves, forex trading in islamic perspective, rather like margin accounts that retail traders will have with their broker, so one could argue that this is a form of margin.

However, this need not concern the institutional participant for two reasons. But the fact that actual currency goes from one person to another supports the idea that institutions are trading in currency because of a genuine need, as opposed to pure speculation. But pure speculation is not in my view wrong either. But if you do want to speculate, then the only way you can do so efficiently is by participating in the retail forex market. The alternative of using Travelex is not viable, as there would be no margin involved and currency movements are tiny from day-to-day.

The argument would therefore be, forex trading in islamic perspective, that as a retail trader you can only speculate using retail forex, with a margin account, and as fundamentally currency speculation is halal, trading on a margin account is halal as that is the only way available.

However this is a flawed argument too. Running such a business is halal. So the only thing stopping me from doing the halal business is money. Therefore I can borrow that money. The only way that I could see would be a government profit-free trust set up to lend to Muslim retail forex traders for the purpose of allowing them to trade forex.

But that seems like a rather frivolous use of government currency, forex trading in islamic perspective, and one that no government would ever seriously consider. I look forward to hearing your thoughts on this, particularly if you disagree with me! Please also remember to subscribe to our website if you would like to keep in the loop with more articles like these.

Two excellent resources I stumbled across:.

 

 

forex trading in islamic perspective

 

Jun 01,  · In Islamic law, currency trading should be hand-to-hand, and on-spot, and therefore should not be delayed for 1 or 2 days as is standard in the industry. However, given the degree that this T+2 convention is now established, it is something institutions have to live with if they are to participate in the institutional forex market – which Reviews: 6. FOREX TRADING IN ISLAMIC ECONOMIC PERSPECTIVE Author: Samsul Maarif1 Abstract Today, investment trends Forex Online Trading (FOT) are rampant. Online Forex Trading is a trading currency or foreign currency with others that do not involve physical the trade, but only worth only one internet platform. The question as to whether Forex trading is permissible according to Islamic law is a difficult question to conclusively answer. Although Islamic authorities certainly agree that currency exchange under certain conditions is halal (i.e., permissible according to Islamic law), there is some dispute regarding under exactly what izobufux.tk: izobufux.tk Team.