What is Riba and what is its ruling in Islamic law?
According to the principles of Islam and the laws of Islamic law, making an unjustified amount of profit by borrowing or lending is a sin (Riba). A Muslim must avoid engaging in any kind of Riba in his business or trade or any type of monetary transaction. The two parties who participate in the process of lending (the lender) and paying the interest (the borrower) participate in this sin (Haram).
If you are trading Forex, CFDs, or cryptocurrencies in an interest-focused manner, this is considered Haram trading in Islam and is strictly prohibited. According to Islamic law – Doing any business that involves commissions, interest, or unjustified profits is a sin in Islam.
It came in Surah Al-Baqarah (Surah 2 – Verse 275):
الَّذِينَ يَأْكُلُونَ الرِّبَا لاَ يَقُومُونَ إِلاَّ كَمَا يَقُومُ الَّذِي يَتَخَبَّطُهُ الشَّيْطَانُ مِنَ الْمَسِّ ذَلِكَ بِأَنَّهُمْ قَالُواْ إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا وَأَحَلَّ اللّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا فَمَن جَاءهُ مَوْعِظَةٌ مِّن رَّبِّهِ فَانتَهَىَ فَلَهُ مَا سَلَفَ وَأَمْرُهُ إِلَى اللّهِ وَمَنْ عَادَ فَأُوْلَـئِكَ أَصْحَابُ النَّارِ هُمْ فِيهَا خَالِدُونَ
Islam has permitted all kinds of trade, but not Riba. As the world is going digital and investment options are also changing, trading became a major concern due to Riba being included in the trading transactions.
But don’t worry, we have researched everything about Riba and trading. We are a group of traders who are committed to the teachings of Islamic law. So here at Halal Trading Brokers, we only guide you to Halal brokers that you can trade with without any Riba transactions.
How do you know about haram trading brokers?
In online trading, many brokers offer a trading account in which you need to pay interest for holding a position on a trade overnight. In this case, to reap profits from the value of the financial asset, you raise the interest (Riba). This operation is completely forbidden and considered Haram in Islam and Sharia laws.
The Haram broker will charge you for every profit you make on your trade. If you are new to online trading, it becomes difficult to know which broker is haram and which broker is halal.
But, don’t worry, we provide comprehensive reviews of all brokers around the world to suggest to you only the halal broker that offers Riba-free trading accounts.
So it is always better to stay away from haram brokers (who offer trading accounts with interest), you should not open an account with them. Because if you are trading with a forbidden broker, you also need to pay recurring commissions in the form of rollover fees which will reduce your overall profits. For this reason, you should not register with an unverified haram broker.
We are here to guide you with Halal trading brokers offering Riab-free Islamic accounts all over the world. Leave your contact details below and Halal trusted broker ToTradeGlobal.com will contact you soon.
What is an interest-free trading account?
With an interest-free account, you do not need to hold, receive or pay any kind of interest (Riba) with the broker. With this account, your overnight positions are not tied to taxes or additional broker interests.
The term swap (overnight) is used for the adjustments made to the interest that occurs to hold the position overnight.
In the interest-free account, the broker will not deduct any interest from your Islamic account. This way, the prices of the financial assets will depend only on the closing price for that day. In this way, you completely ignore Riba and trade in a Shariah-compliant way to earn money online.
If you are just starting, we recommend that you do not fall into the trap of joining Haram brokers who offer various temptations like discounts and welcome bonuses on their platforms.
At Halal Trading Brokers, we will help you get started in an Islamic way with an approved halal broker.
Halal broker and Islamic trading account
Online trading is becoming the fastest growing and most popular trend to invest money smartly. However, it is very important to make sure that you are trading with the right broker. Since the market is full of scammers, you need to be very careful about online trading. Many brokers offer various bonuses for joining them, but you should ignore them.
At Halal Trading Brokers, we conduct comprehensive and continuous research to find the best Halal trading brokers around the world. If you are new to investing online, we are here to help. We introduce you to the best halal broker to start trading on an Islamic account without interest. Leave your contact details below and Halal trusted broker ToTradeGlobal.com will contact you soon.
FAQs
Is leverage haram or halal in Islam? Leverage is just a practice of using debt either in purchasing something or investment strategy. Leverage itself is fine if the instrument used is Shariah compliant. If the debt instrument is halal, then there is no reason why the leverage is not halal.
Is leverage trading allowed in Islam? ›
Is leverage haram or halal in Islam? Leverage is just a practice of using debt either in purchasing something or investment strategy. Leverage itself is fine if the instrument used is Shariah compliant. If the debt instrument is halal, then there is no reason why the leverage is not halal.
What is financial leverage in Islam? ›
Leverage is considered haram in the Islamic capital market due to the increased risk of financial distress, limitations on obtaining additional capital, and potential violations of Islamic principles. Leverage is prohibited in Islamic capital markets due to interest-based debt being forbidden.
What is the ruling on trading in Islam? ›
A Muslim can trade in those goods and commodities only the use of which has been declared to be Halal (lawful). There can be no trade and traffic in things the use of which is proliibited by Islam. For example, there can be no trade in wine, swine, dead bodies of animals and idols.
Is leverage trading halal in islamqa hanafi? ›
Avoiding interest, gambling, CFDs, leveraging, short-selling and so forth are essential as these are not permitted in Sharia. However, there are more fundamental questions that relate to trading in general, and the financial instruments and strategies you are hoping to utilise.
Can I trade with leverage? ›
Leverage can be used across a variety of financial markets, such as forex, indices, stocks, commodities, treasuries and exchange-traded funds (ETFs). As an example, leveraged stock trading is an appealing choice for investors that don't want to pay the full value of the share upfront or take ownership of the asset.
Is it haram to trade on margin? ›
How and why margin tragding is haram? As with short-selling, it involves borrowing at interest, which violates riba laws, according to Dr Faleel Jamaleldeen, Executive Director and Assistant Professor at Geneva School of Business and Economics, and author of Islamic Finance for Dummies.
What is the rule of financial leverage? ›
You can analyze a company's leverage by calculating its ratio of debt to assets. This ratio indicates how much debt it uses to generate its assets. If the debt ratio is high, a company has relied on leverage to finance its assets. A ratio of 1.0 means the company has $1 of debt for every $1 of assets.
Is leverage trading gambling? ›
Since exchanges offer up to 100x leverage, several new traders use it as a gambling mechanism to either win big or lose it all. Doing this is a quick way to lose the entire capital. Successful traders don't gamble; they have strategies and execute them dispassionately.
Is stock trading haram in Islam? ›
Bottom Line. Stock trading can be Halal under the right conditions: buying the stock directly rather than through a derivative or CFD and avoiding companies whose main business is considered Haram (e.g., gambling and alcohol).
Investing in stocks of companies that operate in compliance with Islamic principles is generally considered halal. This involves selecting companies that avoid involvement in industries such as alcohol, gambling, and pork, aligning with ethical and Sharia-compliant business practices.
Which type of trading is halal in Islam? ›
Commodity trading in items like gold, silver, or agricultural products can be considered Halal (permissible) under Islamic law, provided the transactions adhere to Islamic principles.
Why money trading is prohibited in Islam? ›
This is because interest-based transactions are considered to be usurious, and are prohibited in Islam. Forex trading should not involve speculative trading, which is essentially gambling.
Is forex trading halal or haram by Mufti MENK? ›
Forex trading is haram because it involves buying and selling derivatives. It's not actually buying and selling money, but a figment of your imagination of contract. It's leveraged, meaning you're not buying and selling 100 for 100 pounds. The money you're levering up is not permissible.
Can I trade without leverage? ›
Minimal Risk: Trading forex without leverage does not mean no risks are involved. In fact, you can lose your money, but it is less risky than when you are using leverage to trade. Offers Trading Comfort: So long as you have set a good margin when trading with no leverage, you can stay in one position for a long time.
Which option trading is halal? ›
Is Options Trading Halal in Islam? . Yes, Trading options is considered halal so long as it's far carried out with a reputable broker this is regulated via a good frame. It is essential to recognize the 2 varieties of options, call and placed options, earlier than beginning to change, as they've precise variations.
Are leveraged stocks halal? ›
Islam prohibits interest and excessive speculation, both of which are fundamental to the structure of leveraged ETFs. For these reasons, leveraged ETFs should simply be avoided.
Is futures leverage haram? ›
Futures trading is considered haram (forbidden) in Islamic finance and law (Shariah) for several reasons: 1. *Speculation*: Futures trading involves speculating on the future price of an asset, which is considered a form of gambling (Maysir).
Is leverage trading illegal? ›
Yes, US traders have access to leverage when trading certain financial instruments, such as futures contracts, options, and margin accounts offered by regulated brokers.
Are leveraged tokens haram? ›
Leveraged Tokens are not Shariah compliant as they are rebalanced with ongoing futures trading.
