Benefits of an Islamic broker
Instead, you could open an account with a Sharia-compliant broker Forex broker to enjoy interest-free leverage and avoid interest on rollovers.
- Interest-free leverage. Islamic Forex brokers will provide interest-free leverage. In other words, you can borrow entirely free of charge.
- No rollover interest.With an Islamic Forex account, your open positions will be closed by 5pm New York time to avoid rollover interest. You can them re-open them immediately after that. Some brokers will open them on your behalf free of charge.
Are there any disadvantages?
If you’re a non-Muslim thinking of opening an Islamic account simply to avoid interest, think again. Most brokers will ask that you provide evidence of your faith if you request a Sharia compliant account. They could close your account altogether if they have grounds to believe you are trying to game the system.
Interest-free doesn’t necessarily mean you’ll be at an advantage, as some brokers will look for alternative sources of revenue if they cannot charge interest. This is why Islamic accounts can have marginally wider spreads than conventional accounts. Other brokers may require higher minimum deposits.
However, this isn’t always the case. easyMarkets offers Forex and commodity trading accounts in Islamic format at no additional cost. What’s more, you can keep your open positions overnight for up to two weeks with no additional cost.
Forex And Islam – The Rules & Requirements Of Islamic Forex Trading
The Forex market is quite a diverse trading arena. There are many different brokers, many different platforms, and many different schools of thought when it comes to Forex trading. One example of how diverse the Forex market really is, are the Islamic Forex trading accounts. While Islamic Forex is not what it sounds like and anyone can open an account with Islamic Forex brokers, it does go to show how the industry takes all demographics into consideration.
So if anyone can sign up with Islamic Forex brokers, what makes them Islamic accounts? Well, basically, Islamic Forex account is like any other regular trading accounts minus the interest payments that accompany most Forex trading accounts. Let’s back up a little.
According to Islamic law, the collection or payment of interest of any kind is strictly prohibited. Sharia law believes and dictates that Muslims should be giving for the sake of giving and not to receive something in return. Read More
Choosing a Forex broker is something every new trader has to do at one point or another. This can be tricky if you do not know where to look or how to filter our the Forex scams out there. If you are looking to open an Islamic Forex account, finding an Islamic Forex broker is no easier.
What do I mean when I say Islamic Forex broker? To understand the meaning of an Islamic Forex account, you need to know some basic laws of Islam, also known as Sharia law. Among many other laws, one of the most fundamental laws when it comes to doing business with Muslims is the prohibition for a Muslim to take interest of any kind.
The Islamic religion believes that anything given or taken should be free of interest, which would indicate that the reasons behind the transaction were not pure. What this means when it comes to an Islamic Forex account is that rollover fees, for example, are strictly prohibited.
What are rollover fees? Forex trades, in theory, are supposed to be closed at the end of every trading day. If a trader leaves his positions open overnight, they need to pay rollover fees, which are interest payments that are generated when a position is left open overnight. Based on Sharia law, this type of payment is forbidden, and therefore Islamic Forex accounts are free of rollover fees. Read More