Islamic Account main FAQs
What are the advantages of an Islamic account?
Obviously the main attraction of the Islamic account is that it allows those who follow Sharia Law to trade on the markets without breaking with their faith. It also allows traders to stay true to their morals and ethics. Islamic accounts are founded on the principles of fairness and transparency in financial markets.
Is forex trading allowed under Islam?
AvaTrade does not offer cryptocurrency trading in their Islamic accounts, however they do offer traditional fiat currency, or forex, trading. It has been determined by Muslim scholars that forex trading is halal, as long as the trading adheres to several principles, all of which are included in the conditions of our Islamic accounts. Currency exchange and profiting from currency exchange is allowed under Sharia Law because any individual has the right to pursue activities that allow them to improve their financial condition.
Does Islam allow CFD trading?
This is because when you purchase a CFD you are not actually purchasing anything tangible. Instead you are speculating on the price rising or falling. In CFD the trader is leveraging the value of the stock in order to make profits. By opening a no-swap Islamic account the trader is avoiding the issue of taking or giving riba. AvaTrade makes Islamic accounts available to any trader who wishes to abide by Sharia Law and remain halal in their trading practice.
What is a Swap?
The event of leaving open positions on the foreign exchange market for more than 24 hours requires the payment of special fees, called SWAPs. These fees are a kind of interest rate and, therefore, they are problematic for Muslim traders who follow Sharia Law, which prohibits certain financial transactions including those which include the accumulation of interest. As a Swap can be seen as a type of interest, a fee for the service the broker is providing you it creates a problem for Muslim traders following Sharia law.
To solve this issue, brokers like AvaTrade offer a special ‘Islamic account’. This account type is similar to a regular one, with one key difference; it is not subjected to any special fees or interest, which sits well with the finance principles of Sharia law. The Sharia law dictates that the lender must share in the borrower’s risk. In non-Islamic accounts, the risk falls exclusively on the lender. In Islamic eyes, this is considered exploitative and wasteful. AvaTrade is fully committed to providing its traders with a variety of trading solutions to fit their needs and personal requirements.
