Is Forex Trading Halal or Haram?

asalam alaykum and welcome back to the channel today we have massive topic it's about Forex one of the most frequently Asked question is about foreign exchange of currencies so today we are going to ask is what is happening in Forex really Halal permissible islamically compliant how do we understand it so let's get into it so when we are talking about foreign exchange when we are talking about exchanging currencies or money you go to visit foreign country you want to buy something nice you need that currency so you go to the market and you give let's say $100 and they give you whatever is equivalent in L or euros and so on so Islamic rule when it comes to exchanging of currencies is very very simple if the currencies are the same like a dollar for dollar you can only exchange them one to one and they must be exchanged on the spot and another rule when it comes to exchanging different currency is that you can exchange them as you wish but as long as they are exchange on the spot so with that in mind what are the some of the ways that we see the currencies are being exchanged there is a spot Market these are often the markets where you would see big institutions central banks are exchanging large quantities of money that they might need for paying the invoices and so on this is something that most of the listeners here are not going to be engaged with another way to engage in Forex is through derivatives you have these Forex Futures and options where you are not really buying really currency but a contracts and this is something that most of the scholars will say is not Sharia compliant because you're not trading something that is real anyway there is no real ownership of the asset and this is just betting on the fluctu ation in price now finally we come to the retail Forex this is something that you will see all of these courses on your ti Tok and Instagram people are offering you signals or some ideas teaching you how to see what's going to happen before it happens all of those getrich quick schemes that talk about trading Forex this is the one that we are talking about this is trading Forex through what we call contracts for difference cfds now this way of trading Forex is actually the very similar to what we see with the derivatives which is that you are not really taking ownership or possession of money at all what you are doing is you are entering into the contract for difference with your platform with the broker and this is where the problem start often time people think that you are getting some kind of a loan it acts as a leverage as as if you are buying something real there is no loan no one is giving anyone loan it's just called like a loan or margin or leverage so when you are putting $1,000 for example for a position which is 100 to1 you are buying into the $100,000 position you are not taking ownership of $100,000 there is no one who is giving you a loan so all of this is just terminology what you are doing is a contract for difference so you and the platform are entering the contract it's basically saying something along these lines I'm putting $1,000 for $100,000 position if the price is this then I will get $2,000 3,000 whatever is the price at the end if the price is something else then the platform will get my money so what is this when the price of the currency moves tiny bit this Leverage What we call this amplification can completely wipe your $1,000 or make your $1,000 multiplied now the currency is moving 1% but it is totally wiping or multiplying your $1,000 so we see that this is purest form of gambling where you are pretending that you have actually purchased the money and you are actually benefiting from the price movement so all of those rules of exchanging of money they don't even apply to Forex of today because Forex of today has nothing to do with buying and exchanging money or currencies it's like you are watching a birds in the sky and you are ride a contract with your friend and you say if the birds go up I'll give you $1,000 and the friend say if the bird flies down I'll give you $1,000 it's just pretend so in reality you are not really purchasing anything you are not trading the trading is totally incorrect word here you are simply speculating or betting on the price movement I have also seen on some of these platform they say we have Islamic version now when I read what is the Islamic opinion they say we don't charge interest and this term interest here is also misleading if you don't have any real money being exchanged there is no even loan to speak of interest there is no even buying or selling into that nothing is really recorded in the real world it's everything is just recorded on a books of De platform you are betting against the broker so when these Islamic option tell us there is a Islamic version they are saying that there are no fees for certain transaction and there is this interest rate differential which is just a name for a fees that sometimes is applied but the reality is where whether there is that fee or no there is no fee the underlying transaction is not money exchange there is no real ownership both of these are just trading contract for difference so in summary because there is no real buying and selling of these currencies there is only a contract where we are betting and speculating on a price movement of something that we don't have even ownership of this is the pure game of chance and so it is not possible to make this permissible business now there is one more thing to be mindful of because for these platform and Brokers to make money remember they are betting against you you are betting against them you are not even betting in the Forex against the other fellow Traders you are all betting against the platform and so in gambling House Always Wins they wouldn't be in a business if most of the Traders would win so what you will find often is that the way the system is designed you have a small margin volatility is your enemy it will wipe you quickly it won't wipe platform so what you will find is because how this game is done volatility sometimes artificially even increased by some of these platform and there are many of these platform we often find them they increase volatility just to shake off these Traders from their position and small margins so that they can win and some studies show that somewhere around 85 to 90% of all Traders eventually lose so this promise that we see in these getrich quick courses where you can learn how to do these technical analysis you will supposedly have these signals and access to information and you will look at some pie charts and therefore you will do something nothing in real life moves in these Pips and seconds and milliseconds there is no real life force that do these kinds of things so this is all purely speculative people who do this you can see them after a while completely gambling lifestyle they're constantly glued to their screen watching little movements from second to a second and they are just fearful that something will completely Vive them off so only people who make money are the platforms and people who are selling you this fake idea that this is the way to earn money so my advice for people is that learn some real skill do something that is useful with your time do something that is productive that benefits people and inshallah we'll see you in the next video Salam alikum thank you for spending time to watch this video if you would like to learn more about finance and economy from Islamic perspective head to our new platform Muslim Money Matters where we go in much greater details regarding the content until next time my name is Al chanam alaykum oh [Music]

Is Forex halal, and what is the Islamic perspective on trading currencies? While currency exchange occurs in various forms, such as spot transactions for institutions or personal use when traveling, we focus on the most prevalent method today: Forex trading through contracts for difference (CFDs). If you've seen ads by popular platforms or influencers inviting you to their "get rich quick" courses on learning how to trade Forex, this is the way they are doing it-via contracts for difference. Additionally, you might have noticed that these same platforms often offer Islamic forex trading options that supposedly avoid interest. But the question is: what really happens when you engage in forex trading on these platforms, and are you actually buying anything at all? Tune in to understand the nuances and Shariah considerations when it comes to forex trading and whether Islamic options are any better than conventional ones. To learn more about Islamic finance and economy and to support MMM in producing future financial literacy videos like this, consider becoming a member of our Muslim Money Matters platform. 🌐 Join us at https://www.muslimmoneymatters.com 📲 Connect with Almir on social media: 🔗 Links: https://www.almircolan.com/links 📩 Subscribe to Almir's email updates: 🌍 Website - https://www.almircolan.com