Post
FUTURES contracts and LEVERAGE and MARGIN from an Islamic perspective💼
Issued in trading with leverage or margin trading⚙️a decision from the Islamic Fiqh Academy🏦 prohibiting and banning it due to its dangers and evils, and here is its text: "Praise be to Allah alone, and peace and blessings be upon our Prophet Muhammad and his family and companions. The Council of the Islamic Fiqh Academy of the Muslim World League🌍 has considered (margin trading, which means the buyer [client] pays a small part of the value of what they wish to buy called [margin] and the broker [bank or others] pays the rest as a loan, and the purchased contracts remain with the broker🏛️ as a pledge for the loan amount). It includes:
1- Trading (buying and selling)📉: in the currency, stocks or bonds markets with options contracts or futures contracts or financial leverage.
2- Loan 💰: the amount that the broker provides to the client if the broker is a bank or others🏛️.
3- Riba⚠️: occurs through (overnight fees💰), which is the conditional interest on the investor if they do not act on the transaction on the same day, whether a percentage of the loan or a specified amount.
4- Pledge ⏳: which is the commitment signed by the client to keep the trading contracts with the broker pledged for the loan amount, giving them the right to sell these contracts and recover the loan if the loss reaches a specified percentage of the margin amount, unless the client increases the pledge corresponding to the price drop.
Immediate trading (SPOT) in permissible currencies📉 and avoiding futures contracts (FUTURES)🚫
Let us know how you trade?
Issued in trading with leverage or margin trading⚙️a decision from the Islamic Fiqh Academy🏦 prohibiting and banning it due to its dangers and evils, and here is its text: "Praise be to Allah alone, and peace and blessings be upon our Prophet Muhammad and his family and companions. The Council of the Islamic Fiqh Academy of the Muslim World League🌍 has considered (margin trading, which means the buyer [client] pays a small part of the value of what they wish to buy called [margin] and the broker [bank or others] pays the rest as a loan, and the purchased contracts remain with the broker🏛️ as a pledge for the loan amount). It includes:
1- Trading (buying and selling)📉: in the currency, stocks or bonds markets with options contracts or futures contracts or financial leverage.
2- Loan 💰: the amount that the broker provides to the client if the broker is a bank or others🏛️.
3- Riba⚠️: occurs through (overnight fees💰), which is the conditional interest on the investor if they do not act on the transaction on the same day, whether a percentage of the loan or a specified amount.
4- Pledge ⏳: which is the commitment signed by the client to keep the trading contracts with the broker pledged for the loan amount, giving them the right to sell these contracts and recover the loan if the loss reaches a specified percentage of the margin amount, unless the client increases the pledge corresponding to the price drop.
Immediate trading (SPOT) in permissible currencies📉 and avoiding futures contracts (FUTURES)🚫
Let us know how you trade?
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.