What is Islamic Forex?

What is Islamic forex? What are the differences between regular forex and Islamic forex? What fees are not available on Islamic forex accounts?

We will answer these questions from investors who want to invest in accordance with Islamic rules.

1- What is Islamic Forex Account?

The main difference between an Islamic forex account (forex halal) and a regular account is the absence of interest fees. According to Islamic rules, no interest is charged under any circumstances. Islamic forex accounts were created with this prohibition in mind.

2- What is a Non Rollover Forex Account?

The account without rollover (swap) and the account with no interest fee are the same. Let us consider the example of the interest fee that is normally part of the currency trading market and is charged to carry over overnight transactions to the next day. Islamic Forex accounts have no interest fees, so they are known as no swap (rollover) fees.

3- Why Is Interest Against Islamic Rules?

In Sharia, that is, Islamic rules, it is forbidden to receive or give interest, whatever it is. The main reason for this ban is the thought that when a Muslim gives something, he should do it without expecting anything in return. This is why Islamic Forex accounts have emerged.

4- What Do Islamic Scholars Think About This?

Discussions continue on the compliance of both stock transactions and other online trading transactions with Islamic rules. However, thanks to the Islamic Forex accounts made on the basis of the common points and conditions that many Islamic scholars agree, the opportunity for Muslims to make foreign exchange market transactions has been created.

5- How can I find a brokerage firm that provides services in accordance with Islamic Rules?

If the subject is an intermediary institution (broker) providing services in accordance with Islamic rules, extra care should be taken at this point. Before choosing a brokerage house for yourself, it is recommended that you read the comments about that brokerage house and its Islamic-compliant services.

6- What Fees Are Eliminated in Islamic Forex Accounts?

All fees charged as interest in Islamic Forex accounts have been eliminated. An example of this is the removal of the fee charged for the rollover applied during the transfer of the opened positions to the next day.

7- What is the Transfer Fee?

A rollover transaction is postponing the execution of a transaction to another value date in exchange for a transaction price over the difference between the interest rates of the two currencies. Since the foreign exchange market is closed at the end of the day, if the trader wants to move his open position to the next day, he has to pay a rollover fee. Islamic Forex accounts, on the other hand, do not have this rollover fee.

8- What is Riba?

Riba is used for interest in Arabic. Riba, or interest, is prohibited according to Islamic rules because it is forbidden for a Muslim to give something while expecting something in return. Therefore, Islamic Forex accounts provide interest-free services.

9- What is Mushraka?

Mushraka stands for investment partnership or joint venture. The profit obtained as a result of the investment partnership is distributed to the parties depending on the share of the partnership. In case of loss, the parties cover the loss depending on the partnership share.

10- What is a grant?

It means gift, donation, grant. Most brokerage houses that provide Islamic Forex account services offer this service and give the return from the investor's positions to charities.

11- What are the Advantages of Islamic Forex Account?

If you keep your positions open frequently, for long periods of time, an Islamic Forex account is the best solution for you. Thanks to the Islamic Forex account, you can move the positions you have opened to the next day without the problem of paying interest fees.

12-What are the Disadvantages of Islamic Forex Account?

Although the lack of interest fees makes Islamic Forex accounts attractive, they are not without some disadvantages. The minimum principal required for the investor to open an account may be higher than for normal accounts, or the leverage ratio that can be used may be less than for normal accounts. After all, an Islamic Forex account may not be suitable for everyone. But if you are a long-term investor, then an Islamic Forex account is best for you.

13- Is Currency Trading According to Islamic Rules Halal or Haram?

A consensus has not yet been reached on the compliance of foreign exchange market transactions with Islamic rules. While some Islamic scholars say it is appropriate, some say it is not appropriate because of the interest element it contains. In order for the transactions made in the foreign exchange market to be halal, the following conditions must be met: - The purchase and sale transactions must be made immediately and without delay. - The currency of the transaction must be transferred to the accounts of the parties. - The transaction value must be paid without delay. - All transactions must be carried out completely interest-free.