The Basics of Islamic Forex Trading
Forex trading is the exchange of one foreign currency for another. The term Forex is derived from the two words foreign and exchange. It is basically the simultaneous buying of one currency and the selling of another. These exchanges take place in pairs of currency. A Forex broker who handles your Forex account usually handles these exchanges.
The basics of Islamic Forex trading are a little different from other Forex trading. In order to stay within the Shariah laws, you must follow some simple rules. There are never any swaps allowed in Islamic Forex trading. Your Islamic Forex trading account must be free of interest fees and cannot accrue other charges on the trades.
Whether you are a beginner at Islamic Forex trading or a seasoned veteran, it is always a good idea to find a Forex broker who can set up Islamic Forex accounts that do comply with Shariah laws. You can find many brokers who offer this service to Islamic Forex traders. I would suggest doing a great deal of research to find the Forex broker who suits your very specific needs.
To comply with Shariah laws you must understand the basics of Islamic Forex trading. You must eliminate any Riba or unlawful gain from entering into your exchanges. This requires strict and watchful guidelines which must be adhered to. You are not allowed to do swaps or make trades that cannot be completed the day of the trade. You cannot defer the trade to a future date. Roll over charges do not apply in the basics of Islamic Forex trading. That would violate the Shariah laws governing Islamic Forex trading.
Islamic Forex trading has become increasingly popular in countries where it was formerly forbidden. The current Forex market is one of the largest financial markets in the world. In order for Muslims to participate, new rules had to be established. Forex traders will offer Islamic Forex accounts to their clients and charge a flat fee for their services. Most brokers reserve the right to discontinue the accounts if they feel they are being abused. The brokers are familiar with all the ins and outs of Islamic Forex trading.
In order to start learning the basics of Islamic Forex trading you should do some research to become very familiar with the practices that comply with Shariah laws. You will save yourself a lot of time if you contact a Forex broker who can instruct and guide you through your first trades. There are also websites that allow you to do “practice trades”. This will get you started and since you are not using real money in the Forex trades you will not lose or gain any real money.
The basics of Islamic Forex trading are a little more complicated than in other Forex trading, but you should take time to learn all you need to know in order to be in compliance with all Shariah laws. Learn all you can and get started right away in Islamic Forex trading.