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 Forex investing, some brokers are now offering Islamic forex accounts that comply with sharia law. Forex trading without interest is possible in this Islamic account, 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.
Many forex brokers offer a special type of account in which there are no interest payments or charges. This can affect the forex trader’s trading cost since, typically, the forex broker will 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 that is long term, especially if the trader is following the trends. There is no additional cost involved in waiting for a longer time to make the maximum profit since the trader does not have to pay any 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 to close 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 the account can be in USD currency or EUR currency.
If you’re a Muslim 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. To cater to great global Islamic finance demand where the interest isn’t part of a broker’s business model, IC Markets are good for offering trading account with the swap-free choice.
The IC Markets swap-free Islamic forex accounts ensure that clients get billed at the flat rate fee for financing rather than paying the interest. 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 an 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 able to trade on the MetaTrader 4 (MT 4), web trader or MetaTrader 5 (MT5), and cTrader platform through the 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 the state of the 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 company’s reputation. After offering clients the trading options on the fixed spreads, they always make sure 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 change 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.
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