Forex trading law in Islam - We must be able to understand Forex trading from various sides. Like understanding Forex trading from an Islamic perspective. Some opinions say that Forex trading has similarities with doing business. Read more about Forex trading below!
What is Forex?
Forex (in simple terms, currency) is also called foreign exchange, FX or currency trading. It is a decentralized global market where all the world's currencies trade with each other. It is the largest liquid market in the world.
Forex Trading Law in Indonesia and in Islam
Liquidity (more buyers and sellers) and competitive pricing (very small spreads between bid and ask prices) available in this marked market is excellent. With the irregularity of performance in other markets, the growth foreign exchange trading, investment, and management are on an upward trajectory.
You Must Know, That Forex Trading is the Same as Trading
Some argue that Forex trading is the same as running a business. Some people even make Forex trading their main source of income. Some people argue that comparing Forex trading and running a business is like comparing apples to oranges. However, there are a number of similarities between the two. And, in fact, treating your trading practice as a business may be the key to increasing your income. Here's why:
1. Get Profit
Let’s face it, no matter if there are also selfless reasons for starting a business, everyone in the corporate landscape is here to make money. Making a profit is the top priority of every entrepreneur. And, of course, it is also the main reason why traders join the Forex market. So, let’s talk about money now! If making a profit while running a business requires so much responsibility and hard work, why shouldn’t forex trading be treated with the same seriousness? Setting up and treating your trading as a business is about taking all the necessary steps to ensure that, at the end of the month or year, you will be profitable. But what steps should a trader take to treat trading like a business? It all starts with having the right trading equipment (trading platform, broker, computer, etc.). Next, it is important to follow the plan exactly as you would follow a business plan.
Sharia Economics: Definition, Types and Development
2. Requires planning
As mentioned earlier, a business plan is a key element to running a business efficiently. And, this is no different when it comes to trading in the Forex market. While a business plan should cover aspects such as capital, budget, goals, risks, marketing strategy, target audience, operations, and competitors, a winning trading plan should include trading strategies, skill assessments, goals, risks, market details, and entry and exit rules.
3. Expanding the Market
You may be tempted to believe that forex trading and owning a business are not the same in terms of geographical independence, which is somewhat true. However, forex trading and owning a business give you the opportunity to expand in other markets. The only difference is that joining a new market when trading forex is much easier than expanding a business into a new market. There is a very important aspect that traders must understand, the forex market is a 24/5 open market and despite the common misconception, you cannot just trade all the time. The global currency market is not open all the time, as one market closes, another is another part of the world that opens. So, now it is easier to understand why you should join other trading markets as well. Let’s take an example that you are a European forex trader, all you need to do is find an international forex broker that is suitable for Europeans who will give you the opportunity to trade in other markets from different parts of the world as well and will offer you better trading conditions compared to those provided by brokers located and regulated in the EU.
What is the Law on Forex Trading in Islam?
With Forex trading, you can make profits by exchanging different currencies at different points in time. While this act is halal, it comes with certain conditions that must be followed such as: According to the Forex contract, you must create and exchange everything at once – there should be no delay between creating the contract and executing the trade. For Forex trading to be permissible, currencies cannot be shorted. Short selling is when you borrow and sell an asset that is not yours, which is against Islamic law. Since borrowing money with interest is considered bad in Islam, transactions cannot be made using borrowed money or the interest earned. Now let’s try to understand if Forex trading is defined as Haram: The Islamic law on whether or not forex trading is haram is more complex and developed than many people think. Islam teaches that all business transactions must be fair, and any transaction that can negatively affect one party is discouraged. We have previously established that making profits from currency exchange is permissible, but Forex entails more than that. Forex companies do not just limit themselves to investing. They also act as intermediaries between potential investors and the banks from which they will borrow money to invest. Some forex brokers also engage in futures and forward contracts, which are generally not permissible under Islamic law. Many people involved in Forex trading wonder whether it is permissible to bet on the value of a currency without actually owning or selling the currency. This type of speculation falls under the category of gambling, which makes trading haram (not permissible).
Forex Trading Is Legal
Halal forex trading is exchanging currencies for profit that complies with Islamic law and beliefs. Halal is the Arabic word for what is permitted as acceptable in Islamic law. If something is not halal, then it is haram and forbidden. Are you still confused? try checking the article about halal or haram forex In most cases, Forex trading occurs through derivative contracts, where the investor does not own the currency but rather speculates on its price fluctuations by arrangement (a bit like betting on a football team or race car, but for currencies). This type of forex trading creates a gray area on its compliance with Islamic law. In Islam, gambling is prohibited. Therefore, derivative trading, where the investor does not own the underlying asset, may be contrary to the religious beliefs of Muslims due to its speculative nature.
Get Maximum Profit with Forex Trading at GIC
The importance of choosing a transparent platform so that you understand whether the forex trading you are doing is transparent or not. GIC trade is here as a solution for you in Forex trading. Register immediately to experience trading at GIC. First, download the GICTrade application via the Google Play Store and the Apple App Store on your smartphone.