How Does Islamic Trading Account Work?
Sharia law or Islamic law is applicable for Muslims and prohibits them from earning any interest on the money they invest or keep in a bank. Since many Muslims are interested in investing in Forex, some brokers are now offering Islamic forex accounts that comply with sharia law. In this Islamic account, forex trading without interest is possible and it is also called a no riba forex account. The broker is considered Sharia-compliant, if he does not charge the trader, or does not pay the trader the standard interest on open forex trades.
There are a large number of forex brokers who offer a special type of account in which there are no interest payments or charges. This can affect the cost of the trading for the forex trader since typically the forex broker will make a profit from the interest payment from a trade account. In some cases to compensate for the loss of the interest income, the broker may charge spreads or commissions for the Islamic account which are slightly higher. However, since forex brokers are interested in increasing their market share in Islamic countries, they often do not charge higher commissions on forex accounts. So forex traders benefit from opening an Islamic account.
Using an Islamic account will affect the cost of trading. The forex trader will find it is easy to adopt a trading style which is long term, especially if the trader is following the trends. There is no additional cost involved in waiting for a longer time so that the trade will make the maximum profit since the trader does not have to pay any kind of interest. In most cases, an Islamic account does not have any additional restrictions on the trades which can be made. It has been noticed that a few forex brokers are known to force forex traders to close the trades opened for a long term in an Islamic account after a specified period. Hence before opening the Islamic account, it is advisable to check the broker’s rules for the closure of long-term trades.
The best Islamic forex brokers that offer islamic accounts are:
- Hotforex
- Icmarkets
- Avatrade
- Octafx
Hotforex Islamic accounts represent trading accounts offered by Hotforex broker, which do not incur swap or rollover charges for holding positions overnight. Spreads are from 1 pip and account can be in USD currency or EUR currency.
If you’re a Muslim who is searching for the best available trading account in the Islamic world, then IC Markets is the ideal account for you.
According to Islamic customers, charging or receiving interest isn’t allowed. For catering to large global Islamic finance demand where the interest isn’t part of the business model of a broker, IC Markets are good for offering trading account with the swap-free choice.
The IC Markets swap-free Islamic forex accounts, ensure that rather than paying the interest, clients get billed at the flat rate fee for financing. Whether you’re looking to trade on indices markets, commodities or forex, you’ll remain assured that you won’t need to pay any interest on Islamic account with IC Markets.
With IC Markets swap-free forex trading becomes quite simple for the clients. This lets you change both the Standard account and Raw Spread Types for swapping free. It means that you’re simply able to trade on the MetaTrader 4 (MT 4), web trader or MetaTrader 5 (MT5), and also cTrader platform through IC Markets trading account.
Holding periods and rates are subjected to change and reflect high-risk conditions in the market at a particular time.
With IC Markets you get some best conditions for trading with ASIC regulated brokers. Thus, clients get assured that all their trades get locked through state of art infrastructure set up for trading.
* Minimum deposit of $200
* Allows bank transfers, credit cards, and PayPal
* Has over 60, 000 users.
* Has demo, mini, standard, zero spread, raw spread, and Islamic accounts.
* Variable spreads.
* Supports several platforms.
* Only offers email support
The global forex trading giant Avatrade has its own Islamic account for trading living up to the reputation of the company. After offering clients with the trading options on the fixed spreads, they always make sure that they’re able to work accordingly to all strategies.
Avatrade’s company ethos respects the beliefs of their clients and therefore ensure correct Islamic regulations are followed.
After opening a standard account, the account manager helps you in changing to a swap-free trading account while ensuring that the trading account remains compliant with the Sharia law. Islamic account requests are generally processed in one or two business days.
* Minimum deposit of $250
* All payment options
* Over 200,000 users.
* Offers a demo, mini, micro, standard, and Islamic account.
* Both fixed and variable spreads.
* Supported by all trading platforms
* Has both live, phone, and email support.
* Minimum balance of $5
* No Paypal
* Over 30,000 users.
* Provides dem,o, micro, mini, standard, zero spread, and Islamic accounts.
* Variable spreads.
* Offers no live customer support.
* Supports mobile apps.
CONCLUSION
We have looked at some of the viable options you can use for Islamic forex trading. Make sure that consider all the factors and specs we looked at before settling on one.
