Halal Binary Options Trading and Islamic Trading Accounts for Muslim World
What is halal binary options? Is binary options trading is halal according to the law and tradition of Islam? These are the biggest questions for the Muslim binary options traders who can trade binary options through online from anywhere in the world. Here in this post, we are going to discuss the Sharia Law implication on the form of binary options trading. So binary options trading is Halal or Haram?
For the last two decades after the rise of online trading, it creates a new era for the retail traders of the financial industry. No matter what are the races and creeds of the traders. Muslims are the one-quarter of the total population of the world. It is expected that if binary options trading is Halal then so many Muslim traders will join to the Islamic binary options trading.
According to the Islamic law known as the Sharia Law, the Riba or Interest is forbidden for the Muslims. It is considered committing a major sin. Many binary options broker take this fact into the count. They established a new trading system which Halal binary options trading. They also put a different trading account for the Muslims and names it Islamic Trading Account. Some brokers sensing it as an opportunity which can benefit them as well as it will be ideal for the Muslim traders.
Muslims life is guided by the Islamic law known as Sharia Law. Sharia a very old Arabic word actually meaning “the path of life to be followed”. The Muslims are abode to follow the Islamic rules in their whole life in every sector of their life. It can be anything, social matters, economic matters or political matters, anything. All the rules are found in the Holy Quran.
In the case of investment and banking lending money with interest or taking interest in a fixed rate from invested money is strictly forbidden by the Sharia Law. Risk sharing is not the principle of investment in the Muslim world. The investment principles in the Sharia Law are “Bai’ al ‘inah” or the agreement of buy and sell back, the “Bai’ bithaman ajil” means the deferred payment of sale, the “Bai muajjal” means the credit sales, and the “Mudarabah” means profit sharing. There are few more options for investment like Bai Salam, Musawamah, and Murabahah.
So it is clear that the interests of binary options trading of overnight positions are prohibited for Muslims by the Sharia Law. In the financial market, online trading runs 24 hours. New York time 5 pm all the positions of open market rolled over every day for the next 24 hours trading cycle. Then the daily interest added to the accounts of the brokers.
It is done regardlessly whether the brokers of binary options credits or debits the accounts of their customers with their interest, unlike the forex brokers. In this case, the interest which is earned or payable during the transaction of trading makes the binary options trading Haram for the Muslims. This fact makes a collision with the religious beliefs of the Muslims.
What is Islamic Trading Account?
In order to solve the conflict with the Muslims religious beliefs, some innovative brokers of binary options industry came forward and established the idea of Islamic Trading Account or the “Swap Free” trading account. During the trading, this account eliminates the Riba or interest. As the example, to make overnight payable interest the automatic rollover of the open market is not happening in this account. That means there is no opening at 5 pm in this account.
Instead of this at 5 pm New York time all the open positions of Islamic Trading Accounts closed and immediately reopen to avoid the payable interest for the next 24 hours trading cycle. The brokers who claim they are proving Islamic accounts according to the Sharia Law must fulfill the following conditions.
Trades immediate execution
Transactional cost’s immediate settlement
On trades, there is no payable interest
To help the traders to find out the best binary options brokers who are providing Islamic Trading Account we add a list above. You should note that we are not pushing you to these brokers, it’s just a recommendation from Legit Binary Options Review.
Other Facts to be Considered
If some of you already used Islamic Trading Account without any knowledge or a little knowledge that how to trade with this account, then it would be gambling rather than binary options trading. It is certainly Haram for the Muslims. What is the case the individual trader can know only.
There is another fact that every trade should have a winner or loser and this is not Halal for Muslims because this trade is not able to profit all parties or all parties are not bearing the loss. So take this point into consideration and be sure that the Islamic Trading Account providers really follow the principles of Sharia Law.
Please note that Legitbinaryreview.com is not taking any position whether the binary options trading is Halal or Haram. On this subject, we are not any religious authority. It depends on the skills of the individual trader and it is impossible for us to give you any kind of advice in this matter. For the further details and certifications, you can see the below references.
References for Further Reading
Question and answer considering Halal binary options trading on the Islamqa.org
Question and answer considering call and put binary options on the alqalam.org.uk