Under Islamic law, foreign exchange investments are considered halal. Stock trading is halal as long as the underlying companies engage in halal practices. For example, Muslim forex investors would not be able to participate in the trading of shares of gambling or alcoholic beverage companies. It is generally accepted that buying shares is not haram.
This is because you simply own a percentage in a business. However, you must ensure that the company in question is not operating in an anti-Islamic manner. Companies such as Guinness (alcohol) and Ladbrokes (gambling), for example, would not be allowed. Forex trading is becoming more accessible and the potential for quick money is attracting more traders every day.
Forex trading is considered halal and not haram in Islam, as long as it is treated as a business and there are no interests involved. Determining whether trade is haram or halal under Sharia law can be difficult and confusing given the nature of the trade. Trading index or index funds allow traders to diversify their exposure to assets, making these instruments very popular in most trading circles. In Islam, gambling is expressly prohibited, which sometimes makes it difficult to determine if trading is haram, since there is no guarantee that you will make money when trading the markets.
However, if one treats Forex trading as a game or participates in interest swaps, it would be considered haram and is prohibited by Islamic law. Bitcoin and cryptocurrency trading is considered halal when a trader fully understands these assets and trades them as a business. However, if you have a clear conscience and are, in fact, treating day trading like a business, there are no strict rules in Sharia law that qualify your actions as haram, and your trading activities would be considered fully halal. Under Sharia law, trading in gold is considered haram because it is a “ribawi” item, which means that it cannot be traded for its future value.
On the contrary, trading Forex can be considered haram if you are trying to make money through a sense of greed or if you are recklessly willing to give up money to try to get rich quickly. Also, especially with stock trading, make sure that the stocks you trade are common stock and not preferred stock. The type of operation and what it is operating also comes into play, since there are many actions that would be prohibited under Islamic law because it would own a part of something that is haram. Unlike other forms of trading, binary options offer easier trading than many other instruments, such as stocks and currencies.
While there are certainly still a substantial number of people who conclude that Islamic day trading is halal, perhaps the best steps you can take are to choose your broker carefully and evaluate your trading decisions with halal parameters in mind. That said, innovation in product trading has led to the creation of investment products that allow you to trade these instruments without breaking any godly rules of Islam.