Online Forex Trading In Islam, Is It Allowed?

Forex trading is a foreign exchange / foreign exchange trading influenced by the development of internet technology, where physical contact between humans become very minimal, so the deal and the instructions for sale and purchase are on one internet site platform.

In the online forex trading trader, they use a selling and buying system such as the online business in Islamic perspective. Online forex trading becomes famous since 2008. There are so many online trading markets available in the market since then.

The simple concept of online forex trading is about selling and buying foreign exchange. In economics Islam, this activity can be specified with Al-Sharf as the form of selling and buying in Fiqh Muamala.

The practice of online forex trading in Islam is permissible and lawful to do as long as it based on the Islamic way. Such as on the Al-Sharf system, there are some rules you should follow so that your online trading allowed to do.

So, here are the following rules about online forex trading in an Islamic way so you cannot be the one as the eat usury people.

1. Not For Speculation

Speculation with a selling and buying system in Islam refers to gambling. It is uncertain and makes a bad habit for you. It can be a bad addiction that killing you and your family. Because this activity is harmful to everyone, that is why it is unlawful to do.

This makes clear that online forex trading is made not for speculation. Besides, Allah has mentioned about not to do gambling on the Quran surah Al Baqarah verse 219 mention about this.

 يَسْـَٔلُوْنَكَ عَنِ الْخَمْرِ وَالْمَيْسِرِۗ قُلْ فِيْهِمَآ اِثْمٌ كَبِيْرٌ وَّمَنَافِعُ لِلنَّاسِۖ وَاِثْمُهُمَآ اَكْبَرُ مِنْ نَّفْعِهِمَاۗ وَيَسْـَٔلُوْنَكَ مَاذَا يُنْفِقُوْنَ ەۗ قُلِ الْعَفْوَۗ كَذٰلِكَ يُبَيِّنُ اللّٰهُ لَكُمُ الْاٰيٰتِ لَعَلَّكُمْ تَتَفَكَّرُوْنَۙ – ٢١٩

“They ask you (Muhammad) about Khamar and gambling. Say, “In both of them there are grave sins and some benefits for humans. But the sins outweigh the benefits. ” And they ask you (about) what (they should) inform. Say, “Strengths (of what is needed).” Thus Allah explains His verses to you so that you think,” (QS 2:219)

2. Saving or Transaction Needs

On the online forex trading, there should be a saving or transaction needs system. The transaction must be in the Islamic way so that it will be your saving profit.

The transaction should be emphasized with the same type of currency exchange term. For example, gold with gold at the same quality and quantity.

Based on the Quran surah Al Baqarah verse 275 mentions about this.

اَلَّذِيْنَ يَأْكُلُوْنَ الرِّبٰوا لَا يَقُوْمُوْنَ اِلَّا كَمَا يَقُوْمُ الَّذِيْ يَتَخَبَّطُهُ الشَّيْطٰنُ مِنَ الْمَسِّۗ ذٰلِكَ بِاَنَّهُمْ قَالُوْٓا اِنَّمَا الْبَيْعُ مِثْلُ الرِّبٰواۘ وَاَحَلَّ اللّٰهُ الْبَيْعَ وَحَرَّمَ الرِّبٰواۗ فَمَنْ جَاۤءَهٗ مَوْعِظَةٌ مِّنْ رَّبِّهٖ فَانْتَهٰى فَلَهٗ مَا سَلَفَۗ وَاَمْرُهٗٓ اِلَى اللّٰهِ ۗ وَمَنْ عَادَ فَاُولٰۤىِٕكَ اَصْحٰبُ النَّارِ ۚ هُمْ فِيْهَا خٰلِدُوْنَ – ٢٧٥

“People who eat usury cannot stand but rather like the establishment of a person who is possessed by Satan because he is crazy. That is because they say that buying and selling is the same as usury. Though Allah has justified the sale and purchase and forbid usury. Whoever gets a warning from his Lord, then he stops, then what he has obtained previously belongs to him and his affairs (it’s up to) to God. Whoever repeats, they are the inhabitants of hell, they are eternal in it.” (QS 2: 275)

3. At-Taqabudh Transaction

Online forex trading should happen with the same currency in the same quantity and quality as the At-Taqabudh transaction. It has to do with the similar value so that you will avoid the usury.

Since usury is unlawful in any kind of selling and buying system on Islam, we should do this in the Islamic ways as the law of buying goods with advances.

Such as mentions in the Quran surah Al Baqarah verse 276.

يَمْحَقُ اللّٰهُ الرِّبٰوا وَيُرْبِى الصَّدَقٰتِ ۗ وَاللّٰهُ لَا يُحِبُّ كُلَّ كَفَّارٍ اَثِيْمٍ – ٢٧٦

“Allah destroys usury and fertilizes alms. Allah does not like everyone who remains in disbelief and is filled with sin.” (QS 2:276)

4. Rational Exchange Rate

In online forex trading, there must be a rational exchange rate for a different currency. Since the exchange commonly is a foreign currency that is why this needs to well done.

It has to be rational and have an exact value so that you will get avoid the usury. You should leave it if it has some irrational rate and cause usury as the law of mutual funds in Islam.

Based on the Quran surah Al Baqarah verse 278 mentions about this.

يٰٓاَيُّهَا الَّذِيْنَ اٰمَنُوا اتَّقُوا اللّٰهَ وَذَرُوْا مَا بَقِيَ مِنَ الرِّبٰوٓا اِنْ كُنْتُمْ مُّؤْمِنِيْنَ – ٢٧٨

“O, believers! Fear Allah and leave the rest of usury (which has not been collected) if you are a believer.” (QS 2:278)

5. Cash Transaction

In the Islamic way, the transaction of forex trading should do in cash. But if it is online forex trading, so you get the cash. Whether it is saved in your account or you take them all in cash hand.

But, the concept should have the same way with cash transactions so that you can avoid the usury as the effect of sins in Islam.

Based on the Quran surah An Nisa verse 161 mentions about this.

وَّاَخْذِهِمُ الرِّبٰوا وَقَدْ نُهُوْا عَنْهُ وَاَكْلِهِمْ اَمْوَالَ النَّاسِ بِالْبَاطِلِ ۗوَاَعْتَدْنَا لِلْكٰفِرِيْنَ مِنْهُمْ عَذَابًا اَلِيْمًا – ١٦١

“and because they practice usury, when in fact they have been banned from it, and because they eat people’s property in an illegal way (vanity). And We provide for those who disbelieve among them a painful punishment.” (QS 4:161)

So, there are some rules about online forex trading you should follow. These rules allow you to do online forex trading in the Islamic way based on the Quran.