Best & Halal Islamic Forex Brokers List
Online forex trading can be a little challenging for Muslims who want to remain Shariah-compliant. There are issues inherent in forex trading that may make forex trading seem haram. However, and quite luckily, forex brokers have found solutions aimed at making forex trading halal.
Basics of Shariah Compliant Forex Trading
If you are a practicing Muslim, any form of online forex trading that you do must be Shariah-compliant. But what does this actually mean and how will you know what or not what to do? You need to know what Islam says about online forex trading.
Here are 3 key concepts about forex trading that you need to observe:
1. Islamic Forex Brokers with No Riba
Literally translated, Riba means increase or excess or hoarding. In Islam, this is seen as a form of selfishness, and is therefore prohibited. Riba is commonly used in reference to financial interest that might be charged by some businesses. Charging an interest of whichever form goes against the Muslim teachings of fellowship.
In order to remain Shariah compliant, you need to make sure that the forex broker you choose does not apply interest (also known as swap) on your overnight open positions. Check our Islamic Forex Brokers List to see the brokers we recommend.
2. Islamic Forex and Prohibition of Gharar
In Islamic religion, transactions that involve excessive risk are haram. Gharar is uncertainty, a risk, or a hazard that is caused by not being sure about the price of a commodity or not knowing what you’re buying or selling.
To remain totally shariah compliant in forex trading, Islamic traders are advised to enter into trades with proper risk management. There are many ways of doing this using sell and buy limits as well as stop loss orders. For instance, if you’re going long on the EUR/USD you might decide that your entry price will be 1.2208 while your exit price will be 1.2280. This gives the trade a certain certainty.
What is an Islamic Forex Account?
The Muslim faith (Shariah law) forbids followers from earning interest on givings.
When literally applied, this law has an impact on to forex trading. Typically, any open positions that are not closed at the end of the day attract an interest.
To address this issue, many forex brokers have started offering Islamic forex trading accounts. These accounts do not accrue any interest on open positions that are held overnight. This type of trading is commonly referred to as No Riba Trading.
What is an Islamic Account in Forex?
An Islamic account in forex is a halal trading account that allows Muslim traders to invest in the forex market in a way that respects the Quran. With such type of an account, Islamic traders can open as much positions as they want and hold them for an indefinite period of time without worrying that the positions would attract Rollover fee/interest.
Is Forex Halal or Haram?
Online forex trading is halal if you make sure you’re treating it as any other business and not like gambling. To begin with, you should have realistic expectations and trade with proper risk management. Additionally, ensure that you’re trading with brokers that offer halal Islamic forex accounts. XM Forex is our #1 recommended forex broker for Islamic accounts.
I have taken the time to analyze various Islamic forex accounts so that you can see at a quick glance the forex broker that suits you best. I keep updating this page with new brokers who offer Islamic forex accounts. Make sure that you check it from time to time.
Regardless of the type of account you are opening, it is important that you do your due diligence before trusting your money with a forex broker. You should also analyze the type of services and trading conditions that the broker avails. sometimes, beginner forex traders prefer to open accounts with at least two brokers in order to gauge which platform will work best for them.
It is also important to note that many forex brokers will never allow you to run a normal account alongside an Islamic account.
Before you pick your Islamic forex broker from the list I have provided, make sure you have read a few reviews on the best forex brokers in Kenya and decide which one will best work for you. I personally recommend XM and HotForex for the No Riba Trading accounts.
Best Islamic Forex Brokers List
XM Forex was established in 2009 and has grown to be one of the best forex brokers of all time. The company boosts of more than 3.5 million active traders and is regulated in more than 5 top-tier jurisdictions including the UK, Australia, Cyprus, Belize, and Dubai.
Among all the Islamic accounts on this list, XM Forex has the most fair and halal trading conditions. Unlike some brokers who widen spreads to cover for the interest that you’d have paid, XM does not impose any additional fees on Islamic accounts.
Additionally, traders on the XM Forex Islamic account enjoy the same trading conditions as traders on all the other account types. You can comfortably trade on the account while enjoying 100% real-time market execution, leverage up to 888:1, and free and instant access to all trading platforms.
The XM Forex Islamic account offers traders access to more than 1000 tradeable assets including forex currencies, stocks such as those of Apple, Amazon, Netflix and other reputable companies, precious metals including gold and silver, as well as oil. Click here to see the full list of tradeable instruments.
Additionally, XM Forex has 24/5 dedicated client support that’s available once you sign into your client dashboard at XM.com.
HotForex is another excellent forex broker that offers Islamic forex accounts. The broker has more than 10 years in existence and is regulated by more than 7 regulatory authorities.
What we like most about the HotForex Islamic Account is the number of premium tools that are available totally free. These tools are created to make your trading journey easier and are suited for both beginner and experienced forex traders.
In particular, HFCopy, a type of copy trading system allows new and inexperienced Islamic traders to copy trades and strategies from more experienced traders on HotForex. Same is the case with the HotForex PAMM which allows you to delegate a certain percentage of your deposited capital to a funds manager.
The HotForex Islamic account is available on MT4, WebTrader, and Mobile Trading, which is a little frustrating that the account is not available on more trading platforms. However, we have found that MT4 is ideal for most traders.
We have compiled a list of forex brokers that offer Islamic accounts.
|Broker Name||Min. Deposit||Spreads(EUR/USD)||Upgrade toIslamic Account||Max. Leverage|
|Easy Forex||$200||From 1.8 Pips||Yes||1:200|
|Iron FX||$500||From 1.7 Pips||Yes||1:500|
|Social Trading||$1000||2 Pips||Yes||1:400|