Islamic Forex Accounts & Swap Free
The Islamic religion has precise rules and regulations in the matters of finance. Islamic finance according to the Shari’a Law or Islamic Law differs from conventional finance, used commonly all over the world. According to Islamic financial principles, the following conventional financial practices are prohibited:
- Interest called as riba
- Extreme risk called as gharar
- Gambling and speculation
The generally risky forex trading, when it is practiced in accordance with the Islamic finance principles is called Islamic forex trading.
The Islamic forex accounts facilitate practitioners of Islam to engage in forex trading, without breaking the laws of the religion.
Islamic forex trading accounts are more commonly known as swap free trading accounts in the forex market. These allow you to trade any pair of currency, carry trading overnight, without procuring any withdrawal or reward.
To be compliant with Shari’a Law, the Halal trading accounts allow you to hold open positions for long periods, without any interest. With Islamic forex trading accounts, your profit or loss depends entirely on the movement of currencies.
In addition, the Halal accounts have minimal risks because Islamic finance prohibits excessive risk. Any interest based fee is waived in Islamic forex accounts.
Forex Trading – Halal or Haram
The Islamic community is divided on whether forex is Halal or Haram. Making money and exchanging currencies are allowed in Islam because an individual has the right to improve his financial condition.
While some agree that forex trading adhering to Islamic principles can be considered as Halal, some forbid it entirely.
To absolutely ensure that your Islamic forex trading account is Halal, always choose a forex broker, who performs operations approved and permitted by Shari’a Supervisory Boards (SSB). In general, the following rules are applied to make forex-trading Halal:
- Buying and selling is done on the spot, without any delay
- Transaction currency is transferred to accounts on both sides
- Entire money for the transaction is paid without any installments
- Transactions are completely interest-free.
The gaining popularity of Islamic forex trading has encouraged many forex brokers to offer Islamic forex trading accounts.
The swap free accounts don’t play on interest fees, such as rollover fees. Some brokers even offer trading of forex futures and contracts, with swap free trading accounts.
Each broker has different features and it is important to choose the right forex broker suitable for you.
Are Islamic trading accounts suitable for everyone?
You can sign up for Islamic forex accounts, even though you don’t practice Islam. The prospect of not worrying about interest-based fees may attract forex traders.
However, Islamic forex trading accounts have their own disadvantages. These accounts generally have lower lead because of reduced risks.
Many forex brokers require higher deposits to start an Islamic trading account. These features make swap free accounts an unsuitable type of forex transaction for some.
The Islamic forex accounts are ideal for those, who want to indulge in forex trading, without compromising on Islamic principles. Others, who are interested in opening 100% interest-free accounts can also open swap-free accounts.