As forex trading has gained popularity with the masses, it has become important to make the trade acceptable among people who have different religions that might frown upon the business of forex trading. One such religion would have to be Islam. Islam does not Muslims to charge or pay interest, meaning that Muslims could not possibly engage with ordinary everyday financial institutions. The good news is that there are now forex Islamic accounts. These forex accounts to not charge interest on positions which have been rolled over for the night. As such, these forex accounts have enabled forex traders to engage fully in forex trading, without having to worry about not conforming to their own individual religious practices.
What does Islam says about interest payments and charges?
According to the Quran, any form of gambling is expressly forbidden to those who claim to be proponents of the Islamic faith. It also says that all followers of Islam cannot trade in risk. To the best of their ability, Muslims must avoid these two activities. This is why it is very difficult for Muslims to engage in certain types of trade (like trading in financial instruments), due to the risk level attending the said activity. The situation in which Muslims find themselves in (the position of wanting to engage in financial services but being unable to do so due, in part, to the tenets of their faith.
How Islamic forex accounts help Muslims conduct trades
Forex Islamic accounts do not charge interest on overnight trades. Interest payments on overnight trades are known as swaps or RIBA. This is expressly forbidden in the Quran. This means that, irrespective of the volume of the position of the trade, there will be no gain or loss incurred after midnight.
Other Important things to note about Islamic forex accounts
It is also important to note that Islamic forex trading accounts do not allow one to use leverage in order to improve their positions. This means that it is not possible to increase the returns on the amount of money you have invested in this particular way. When you opt for an Islamic Forex account, you will have to look for other legitimate ways of increasing your returns.
Another gem in Islamic forex trading is that the profits and losses that will be generated during the trading must be shared between the investor and the broker who have joined hands to work together. This is due to the fact that, in accordance with Sharia law, all profits and losses arising from the activities of a joint venture must be shared between the parties which have come together to do business. The good news is that the rate at which you will share all losses and all profits can be set and agreed to before actual trading takes place. This will help in minimizing the amount of money you would have to pay your broker if you made a really big sum of money from forex trading. It would also help the broker by reducing the amount of capital that the broker would have to give up in order to pay for a loss that was not his.
In addition to all the above stipulations, the owners of Islamic forex accounts must also make a contribution to charity or religion each and every year. You do not have to be a Muslim so as to be able to enjoy the benefits that an Islamic forex account is able to give you. By being able to exploit the no rollover fees, the no minimum deposit and the no premiums benefits of Islamic forex accounts, you will be in a unique position to make the most out of low cost forex trading.
