Fundamentally, trading in Forex (foreign exchange) in the online market is not allowed in Islam. It is often regarded as a controversial issue since forex trading has something to do with price speculation which some scholars believe to be an indirect form of gambling.
Although the underlying concepts of forex trading are on price speculation, there is some leeway in Islamic laws that allow forex trading to carry out. This is because forex trading involves many areas and not merely on price speculation alone. In includes spot trading, margin trading, overnight interest and futures and options trading.
In nature, forex trading can be seen as to comply with Syariah laws if one only uses the spot trading concept and where it does not incur any overnight interest. This means that as long as the trading does not incur any Riba, it is allowed.
This ultimately means that Riba in any form of exchange contract must be eliminated. Under Syariah regualtions, Riba is referred to as any unlawful gain or profits that are derived through the quantitative inequality of counter-values of any sort of transactions that are intended to affect exchanges between 2 or more species.
In today’s open forex market, it must be noted that there are a wide variety of choices when it comes to trading. One can easily be encouraged to open an account with any online forex brokerage firm with ease, using a minimal amount and start trading almost immediately.
It must be noted however, that the situation is very different if one is a Muslim and intends to adhere to the Syariah regulations of the religion. Therefore, it would be best to find one which provides the resources and services that are intended for Muslim traders and follows the regulations of the faith.
There are in fact many Islamic brokers and Forex Fatwa that can educate Muslim traders on how not to break the rules of Islamic Forex trading. Brokerages like AVAFX, eToro, Markets.com, Forex Place and BForex are among the many in the market that offers Islamic Forex Accounts. Such brokerages ensure that your trades are not ‘haram’ under the Muslim laws.
Communities are available that will provide insights and explanations of any doubts you might have when using Islamic Forex sites. This must include offering of interest-free trading environments while you will be able to trade in the open forex market with the ease of mind of a true Muslim.