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Is Margin Trading Permissible?

Shaykh Abdul-Rahim Reasat answers a question on the legality of margin trading.

Can you please confirm if margin trading is permissible? This is where you predict if the market will go up or down by using leverage positions.

Thank You.

I pray you are well.

Margin trading is not permissible for a number of reasons. Firstly, because it entails entering into a interest-bearing contract with the broker. “The Messenger of Allah, Allah bless him and give him peace, cursed the one takes interest, the one who gives it, the one who writes [the contract], and those who witnesses it.” (Muslim)

Also, the use of leverage positions, as done in Forex, is problematic as this process uses instruments, such as options and futures, which fundamentally contradict the nature of a sound, Shari‘a-complaint contract. (Mufti Taqi Usmani, Fiqh al-Buyuʿ).

It is better to ask Allah to open the doors of halal provision for you; you’ll be saved from the problems that rain down on people to deal with interest.

May Allah grant you the best of both worlds.

Abdul-Rahim

Checked and approved by Shaykh Faraz Rabbani.

Forex Trading and Poker Games

I would like to know what the ruling on Forex trading is given the interest free account. E.g., trade ZAR for Dollars etc., by watching the markets and buying at the correct moment.

I would also like to know what the ruling is on playing poker? How different is this from gambling and since poker is just a game, can one compare this to say playing golf for a monetary prize or partaking in Olympics for a monetary prize?

Jazak Allah khayr.

Regarding Forex trading, please read Is Forex Trading Permissible?

Regarding poker, it is forbidden in the Qur’an:

“They ask you about wine and gambling. Say: ‘In them both lies grave sin, though some benefit, to mankind. But their sin is more grave than their benefit.’” (Sura al-Baqara 2:219)

O believers, wine and gambling, idols and divining arrows are an abhorrence, the work of Satan. So keep away from it, that you may prevail. Satan only desires to arouse discord and hatred among you with wine and gambling, and to deter you from the mention of God and from prayer. Will you desist?” (Sura al-Maida 5:90-91)

It is different to sports in that it relies largely on chance. See also My Brother Gambles to Support Us. What Should We Do? and Is It Permissible to Play Board Games With Dice? [Video].

I pray this helps.

Farid

Checked and approved by Shaykh Faraz Rabbani.

Is Forex Trading Permissible?

Answered by Shaykh Faraz A. Khan

Question: I want to know about the forex trading is it permissible in islam? nowadays many houses offer interest free account so is it permissible to trade in currency pair like we buy euro for dollars and later on sell them and make profit

Answer: Assalamu alaikum wa rahmatullah,

I pray this finds you in the best of health and states.

In and of itself, currency exchange (sarf) is permissible, as long as certain conditions are met, such as the transaction be done hand-to-hand without delay. [Mawsili, Ikhtiyar]

However with respect to forex trading in particular, Mufti Taqi Usmani — leading contemporary Hanafi scholar and Islamic finance expert — believes it to be impermissible, due to various problematic elements associated with this form of trading.

Please see:

Forex Currency Trading

And Allah knows best.
wassalam
Faraz