Islamic Forex Accounts

Forex Brokers Enhance Their Offerings For Islamic Traders

The Forex Exchange (Forex) Market is one of the biggest markets in the world today with $4 trillion worth of currencies traded each day. This makes Forex trading globally popular, even in Muslim countries where Shariah Law is strictly enforced. Sharia Law is used as the basis for the legal system in Muslim societies. It prohibits Muslims from accepting interests or fees for financial loans or transactions. Without Islamic Forex accounts, Forex trading can become a problem for Muslims who want to try it out.

Forex Swap Transactions

In Forex trading, a swap transaction involves the trading of two currencies (called pairs) between two parties planned for a specific date. When the set date has not arrived yet (date can still be changed by both parties), currencies hold a position (also called currency spot) and swap rates have to be paid.

A swap rate is an overnight interest for each currency traded. In the banking world, currencies have overnight interbank interest rates for every spot they hold. On the other hand, rates are not based on bank rates, but on what are called forward points, which is a function in trading platforms that Forex brokers provide.

By looking closely at this type of transaction, Muslims are clearly not allowed to trade because of the interest payments involved. The majority of Forex brokers offering services today include swap payments in their profile and no Islamic Forex accounts on-site.

Despite the restrictions and mixed opinions however, what makes Forex trading popular among Muslims?

Forex Popularity in Islamic Societies

There are many reasons why Forex trading is popular in Islamic countries and these apply to other regions as well. From flexible marketing hours to minimal start-up costs, Forex trading enables Muslims to earn extra income.

Investments in Forex trading offer a high level of liquidity because of its huge trading volume. Traders can also take advantage of changes in the rates of currency exchange. In addition, although Forex can become a complicated world, brokers are always ready to lend a helping hand. Most of them offer demo accounts, charts, analysis, and industry news to help new traders manage their trading accounts.

The best thing is, the global rise of people trading in the Forex market has paved the way for the creation and development of the specific type of Forex accounts in order to accommodate a diverse group of clients. Forex brokers, companies that provide a trading platform for traders where they can buy and sell currencies, now enable religious individuals such as Muslims to trade and invest the money they worked hard for.

Forex Accounts with Religious Influence

To make sure that Muslims can also participate in and enjoy the fruits of Forex trading, brokers have come up with Islamic Forex accounts that are swap-free. Some of the top brokers offering such types of accounts include: XTrade – a minimum deposit of $100 allows an individual to open an account; XM – minimum deposit is only $5; and HYCM with a minimum of $50 deposit to open an account.

In this type of account, currencies with overnight-held positions are not charged with swap rates, though additional fees are included. Extra perks are also included which enables Muslims to donate part of their earnings to charity (as dictated by one of the Five Pillars of Islam).

Islamic Forex Traders

Islam-friendly accounts prove that Forex trading can also be beneficial to Muslims. However, it is important for traders to evaluate the services of brokers they have chosen before signing up.

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