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Islam and Trading
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gbpusdg

Biedrs kopš Sep 19, 2017  35 ieraksti gbpusdg Dec 06 2017 at 07:40
Adribaasmet posted:
gbpusdg posted:
brakeboy posted:
gbpusdg posted:
1 - Trading on Margin (not allowed in Islam)
2 - Going Short (not allowed in Islam)
3 - Short-term (day) trading (Not considered responsible ownership - no intention to take delivery).


SIMPLE SOLUTION:

DON'T TRADE ON MARGIN

DON'T GO SHORT

DON'T DAY TRADE

/THREAD



Hi BrakeBoy,

Thank you for your post.

Unfortunately it is not as simple as you state.

There are many Muslim (on here) who do trade on margin, who do go short, and who do day trade and they believe there is nothing wrong with it and that it is permissible.

The point of this thread is therefore to have a conversation and prove (or not) through established Islamic rules and regulations that the above three points are definitely not allowed (or allowed).

All the best.




I have also seen, so many religious people are doing Forex trading!


Hi Adribaasmet,

Yes - but many do without understanding the religious rules.

Just because someone is doing something does not make it right. Plenty of religious people do wrong things.

Regards


gbpusdg

Biedrs kopš Sep 19, 2017  35 ieraksti gbpusdg Dec 06 2017 at 07:41
togr posted:
gbpusdg posted:
togr posted:
gbpusdg posted:
Islam and trading:

Aim here is to discuss the legitmacy of 'trading' forex or any other instrument for short-term gain.

My understanding is as below:

Any form of 'trading', where there is zero intention of taking delivery or using the FX proceeds for valid commercial purposes is considered HARAAM.

Trading forex where there is a legitimate need for different FX currencies, ie. going on holiday, need to send money abroad, buying items from abroad, all these are valid and legitimate reasons for exchanging one currency for another.

Where there is zero intention of taking delivery, where the only objective is to try and guess if a currency will rise/fall, is considered gambling and is strictly forbidden in Islam.

This applies to stocks as well as stocks or any other trading.

Islam is about responsible ownership and most short-term traders do not care about responsible ownership, they are just worried about short-term price movements.

Also, shorting something you do not own, is strictly not allowed in Islam ie. if you have a US$ account and you sell dollars for CHF, this is allowed provided you own the actual number of US$'s. However you cannot sell CHF for US$'s as you do not own any CHF.

Also, trading on margin is strictly not allowed. You cannot buy/sell in a greater amount that what you have. That is why, even in valid commercial transactions, if you have only $500, you can only trade $500, ie a leverage of 1:1. Anything trading leverage of greater than 1 is strictly forbidden.

ALL swap points are Haraam, whether it's receiving or paying.

All Gambling is strictly Haraam.

Lying about past performances is definitely a sin and any earnings based upon lies and gambling is strictly not allowed and is Haraam. (so all signal providers who lie about their past - be aware)

Thoughts people.

My though: if you are right a lot of people ends up in hell.



Hi Vontogr,

Well, depends if you have enough good credits to offset the bad ones twist evil

But I set this up for certain (Muslim) scammers who use the name of God to espouse how honest and good they are but in rel life, were running near scam like activities on here ie. hiding the truth about many blown accounts, trading demo, creating fake accounts to give themselves good reviews etc etc.

But hopefully the thread can serves another purpose too - one of information.

G


Just out of curiosity
can you go to 'paradise' even if you made bad things?


Hi Vontogr,

I am hardly a scholar of such matters and let's face it, depending on what your faith is, what is allowed in one faith may not be allowed in another ie. permissible for Jews and Christians to consume alcohol but for Muslims it's not allowed.

Best Regards.

gbpusdg

Biedrs kopš Sep 19, 2017  35 ieraksti gbpusdg Dec 06 2017 at 15:37
moizhassan posted:
Actually Forex isn't Haraam. Using the logic which is used above then investing in any business or starting business would be haraam as the investor doesn't know if his business will give him profit or loss but invests or starts the new business because he thinks it will be profitable for him.


Hi Moozhassan,

I disagree with you 100%.

Starting a business which has real World assets and utilities is perfectly acceptable.

Tell me something, is starting a bank where you charge Interest allowed in Islam? No it is not. Why? because Interest is not the same as a real World business where you buy and sell actual items. Yet opening up a bank is also a speculation. So your argument that any business is allowed is clearly WRONG.

If you take my very first post, I clearly state where forex is traded for LEGITIMATE business purposes, ie. exchanging money to buy/sell goods in a foreign currency, going on holiday, this is perfectly acceptable.

However trading for speculation, where there is zero intention of taking delivery of currencies and where all you are doing is speculating for short-term price movement, it is not allowed.

You have not answered any of the questions I have posted. Please post response to below (I have provided islamic jurisprudence rulings (wth hadith etc) that back-up my points).

1 - Trading on Margin (not allowed in Islam)
2 - Going Short (not allowed in Islam)
3 - Short-term (day) trading (Not considered responsible ownership - no intention to take delivery).


So please try and read what i am writing and try and understand the deeper points. You have completed failed to understand the rules.

All the best.

gbpusdg

Biedrs kopš Sep 19, 2017  35 ieraksti gbpusdg Dec 06 2017 at 15:38
AmDiab posted:
moizhassan posted:
Actually Forex isn't Haraam. Using the logic which is used above then investing in any business or starting business would be haraam as the investor doesn't know if his business will give him profit or loss but invests or starts the new business because he thinks it will be profitable for him.


It’s logical! Agree with your opinion!



Hi AmDiab,

I would suggest you re-read what I have written and what I said Moizhassan.

If you are a Muslim, I would suggest you consult a scholar in Islamic Finance as it seems to me you really want an answer than correspondents with what you wish.

It is not about profit/loss - it is about the type of business and the nature of speculation.

As I said earlier, selling alcohol is a business, prostitution is a business (in some countries), paying/receiving Interest is a business - are these allowed in Islam? the answer is NO.

As I said above, if applicable, please consult a scholar in Islamic Finance, describe to him the exact nature of short-term forex speculation (ie. margin trading, going-short, not taking delivery, short-term price targets) and then see what he has to say.

All the best.

Aimak

Biedrs kopš Nov 30, 2009  149 ieraksti Aimak Rokalno (Aimak) Dec 06 2017 at 15:42
gbpusdg posted:
Well, depends if you have enough good credits to offset the bad ones twist evil


So for offsetting the sins of trading forex you should donate or help others with the profits you obtain. This way you go long with heaven and short with hell.

exquisite entries with calculated exits
moizhassan

Biedrs kopš Sep 22, 2017  2 ieraksti moizhassan Dec 06 2017 at 15:44
Everything related to world is accepted except which is prohibited and everything relating to worship is prohibited except which is accepted by Quran and Sunnah. The responsible owner ship only applies to buying of food items.

Prophet Muhammad (pbuh) said: “He who buys food grain should not sell it until he has taken possession of it.” [Sahih Muslim]

So you can't add anything else.Short term trading isn't like gambling either.


Back4Good

Biedrs kopš Dec 06, 2017  21 ieraksti Back4Good Dec 06 2017 at 15:47
It is all a matter of interpretation. In the strictest interpretation you should avoid ALL Forex trading. But in a more relaxed interpretation most forms of trading will be OK

gbpusdg

Biedrs kopš Sep 19, 2017  35 ieraksti gbpusdg Dec 07 2017 at 07:53
Aimak posted:
gbpusdg posted:
Well, depends if you have enough good credits to offset the bad ones twist evil


So for offsetting the sins of trading forex you should donate or help others with the profits you obtain. This way you go long with heaven and short with hell.


Hi Aimak,

I was being sarcastic lol lol

In Islam, it is written that money earned through inappropriate ways is not accepted by by God if even if you give to charity or help others.

If you want to help, you must give money that has been earned through legitimate ways.

Hope this helps.


gbpusdg

Biedrs kopš Sep 19, 2017  35 ieraksti gbpusdg Dec 07 2017 at 07:53
moizhassan posted:
Everything related to world is accepted except which is prohibited and everything relating to worship is prohibited except which is accepted by Quran and Sunnah. The responsible owner ship only applies to buying of food items.

Prophet Muhammad (pbuh) said: “He who buys food grain should not sell it until he has taken possession of it.” [Sahih Muslim]

So you can't add anything else.Short term trading isn't like gambling either.

[/quote

Hi Moizhassan,

Short selling applies to everything not just food grain. See below link where I have listed the two hadiths from.

https://islamqa.org/hanafi/askimam/2068

Hadith:
Hakim ibn Hizam (Radiyallahu ‘Anhu) narrates that he said, “O Prophet of Allah, a person asked me to sell him something which I do not possess, may I sell it to him?” the Prophet of Allah replied, “Do not sell which you do not possess.”

hadith:
‘Amr ibn Shu’ayb narrates from his father how narrates from his grandfather that the Prophet of Allah (Sallalahu ‘Alayhi Wasallam) forbid from having two conditions in one transaction, selling which you do not possess, benefiting from a commodity you did not bear the risk. (Nasa’i, Ahmad)


Also see below link:
https://ameinfo.com/money/banking-finance/why-short-selling-is-haram/


Best regards



gbpusdg

Biedrs kopš Sep 19, 2017  35 ieraksti gbpusdg Dec 07 2017 at 07:54
Back4Good posted:
It is all a matter of interpretation. In the strictest interpretation you should avoid ALL Forex trading. But in a more relaxed interpretation most forms of trading will be OK


Hi Back4Good,

This is not so.

Islamic jurisprudence allows forex trading where the trading is for legitimate real asset purposes ie. If I want to go on holiday, I need to exchange my local currency for foreign currency or if I want to Import materials from abroad, I need to pay the foreign supplier in his local currency. This is perfectly acceptable.

To speculate on short-term price movement is not allowed.

From what I have read, only long-term trading is acceptable ie. if I buy Apple Stocks and my aim is to hold them for the long term, then this is acceptable as I am taking a position in a company that manufactures and sells mobiles.

So far, none of the research and scholarly articles I have read have said short-term forex trading is permissible.

Best Regards



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