Islamic forex trading
Islamic finance is the practice of finance according to the principles of Islamic. It is driven by ethical principles. Two striking features of Islamic finance are:
- It proposes a risk sharing philosophy wherein the lender must share in the borrower’s risk.
- The purpose of Islamic finance is to promote economic and social development through specific business practices.
Islamic forex trading also needs to confirm to the Islamic finance principles.
Islamic forex account
As per the Islamic law, or Shariah law, Muslims are not allowed to earn interest on their giving. This law when applied literally also applies to interest on Forex trading. To enable many Muslims to take advantage of the foreign exchange markets benefits, many brokers made it possible for Muslims to trade in forex with the help of Islamic forex trading accounts. These accounts offer interest free forex trading to their customers.
The traders benefit from interest or swap free accounts. The only determining factor to Islamic account is that the trader should be of Islamic religion. Also Islamic accounts for speculation purposes are not tolerated by many websites. They are offered for all account types regardless of base currency or leverage offered.
Many brokers have the facility to change from traditional accounts to these Islamic accounts easily and quickly.
Selection of brokers
When selecting a broker to operate your Islamic forex trading account one needs to carefully make an analysis. It is important to choose the account type. The services and trading conditions should also be studied in prior. Also one may choose to operate through two different brokers to see which one gives better results. Also sometimes trader are willing to take higher spreads to get better results or even better customer service.
There are a lot of brokers available on the Internet for carrying out Islamic forex trading. One can just open their account and begin to trade in forex.
In this world of profit oriented businesses it is become imperative to sustain certain ethical and moral standards. The Islamic finance principles adhere to the same. As per the Muslim law is prohibited to carry out any business and financial contracts which do not adhere to the Islamic principles. Therefore, the fundamental feature of Islamic finance is socio-economic and distributive justice. Islamic finance must help in the development and the good of the Islamic community. The manner in which finance achieves this purpose is provided in the Holy Quran.