I have a question regarding Forex Trading

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

The primary issue with online forex trading is that the delivery of currencies never take place.

In online forex trading there is no actual trading and exchanging of currencies. One merely takes a position on the movement of a currency pair. This is tantamount to gambling where one will be staking his wealth against the broker. If you speculate correctly, you will profit at the expense of the broker, and if you speculate incorrectly the broker will profit at your expense.

Some brokers offer so called ‘Islamic accounts’ where they waive off all interest charges. That does not make the deal Shariah compliant. Firstly, the primary issue mentioned above still remains and secondly, the broker lends money with the condition and objective that you trade with him. This has been clearly prohibited in the hadith. See the following narration:

Abdullah bin Amr reported the Messenger of Allah (Sallallaahu Alayhi Wasallam) as saying: The proviso of a loan combined with a sale is not allowable, nor two conditions relating to one transaction, nor profit arising from something which is not in one's charge, nor selling what is not in your possession. (Abu Dawud-3504)

For more detail, you may refer to the following Fatwa: http://askimam.org/public/question_detail/46239

And Allah Ta’āla Knows Best

Mudassir Benish

Student - Darul Iftaa
U.S.A

Checked and Approved by,
Mufti Ebrahim Desai.

(2021-01-20)