Why is it stated as Islamic way of trading would bring more profit? Actually, the foreign currency market structure is highly competitive and complex. You should have the ability to learn it in the proper manner and also, you should have the ability to grab the information quickly. When you are trading in the market there are chances for you to face rough situations as well, but in such situation maintaining your discipline is a must.
So back to the point, what is the connection between Islam and earning more profits? Actually, Islamic traders tend to remain in the market when compared to the non- Muslims. The reason is the Islam teaches Muslims to maintain the balance mind. If they cannot maintain balanced mind they will not be able to trade at rough times. At times you may face continuous losses but will that stop Muslim traders from trading the Forex market? No, because Islam teaches the Muslim traders to stay firm while they face losses. But Islamic trading has its unique rules and regulations which are solely based for Muslim traders. So let us discuss Islamic Forex.
Forex Islamic accounts
The Islamic religion is strict regarding the interest. The financial market has introduced different rules, accounts and etc. to Muslims because the religion has strict rules related to finance too. The interest is prohibited in Islam because it is a burden to one party and it will cause so many difficulties too. Likewise, Forex trading also has introduced Forex Islamic accounts for the ease of Muslims. The Islamic Forex accounts are introduced targeting the Islamic community and to meet their needs since they cannot trade using the ordinary account. The ordinary accounts will include interest that is ‘Riba’ so Muslims can open Riba free accounts.
The prior reason for introducing Islamic Forex accounts is because Muslims need to earn halal income so the only way to earn halal income in Forex trading is by ‘swap free accounts’. As we stated above if you trade Forex in Islamic manner you can earn more profits but then why aren’t everyone opening swap free accounts? There are certain downsides for swap free accounts such as hidden costs, lower leverage, and hard rules. The downside of swap free accounts may have led others to adopt regular accounts.
How to find Islamic brokers
If you are a Muslim and if you want to find Islamic brokers you should find it by searching thoroughly, reading Forex reviews can be one of the ways. You should also compare and contrast the brokers who offer Islamic accounts before you pick one. If you search thoroughly you will be able to find the best broker offering swap free trading account to the Muslim traders.
What do scholars say about Islamic Forex Trading
There are certain issues in trading with mt4 platform for Muslim traders since opinions vary from one person to person but all the Muslim the scholars’ have come to a conclusion saying that the Islamic accounts are the solutions for all the issues. But the main factor is anything related to interest is prohibited in Islam. As long as the Muslim traders avoid interest they will be able to trade the Forex market. Since there is no interest associated there is a high chance for the traders to earn more profit.
Forex is halal or haram in Islam
There are always arguments related to Forex trading. Some scholars say that the Forex trading is halal, if interest is not associated and some say that even if the interest is not associated it’s categorized as haram. But the ultimate ruling is that to trade in accordance with Islamic rules the trading should adhere to following conditions such as the sale or purchase of the currencies is done on the spot without any delay, the currency should be transferred to the accounts of the two parties, the total of the money is paid without installment basis, and important condition is that all the transactions are based on interest free condition.
Actually, interest is prohibited in Islam because Muslims should give in the sake of giving not to get something in return. When we analyze the concept of interest it has the logic because paying interest is a hard task for one party which is not appropriate in trading. As Muslims, they live for the world of hereafter (their belief) so for them obtaining or giving interest will not help them in the hereafter.
What are the fees which are omitted in the Islamic accounts?
While using the swap free trading account the fees related to interest are excluded and you can also see that there is no or zero swap to your running trade in the mt4 platform. For your ease, we can suggest an example as rollover fee i.e. the payment made when a trader leaves the position open overnight. So in the Islamic accounts, the rollover fees are waived because of the interest associated.
We made it clear to you about most of the things related to Islamic Forex and now you will be able to understand the reason behind Muslim traders gaining more profits.
Summary: Trading the forex market can be extremely intimidating especially if you are relatively new in this industry. If we consider about the Muslim traders, they tend to earn more profits than the non-Muslims because of the practice in their life. What do they practice in their life? Actually, Islam teaches them the disciplinary life which is the core factor of trading the Forex market. When you trade the Forex market it’s obvious that you will be facing losses and profits so the trader should have the ability walk forward by bearing the losses. In Islam, there is a specific teaching regarding the losses and the profits when doing business, so the Muslim traders have the mindset ready to face losses because of their religion’s teaching and it paved them the greater path.