AMIDS

Introduction
Islam encourages trade and wealth creation, but only when conducted ethically and transparently. Modern financial markets offer many opportunities, yet not all methods comply with Islamic principles. Understanding which trading practices are halal and which are prohibited is essential for Muslims seeking lawful profit.
Futures Trading and Its Prohibition
Futures trading involves contracts to buy or sell an asset at a predetermined price on a future date, often without owning the asset at the time of sale. While widespread in conventional finance, this practice violates several Islamic principles:
Selling What You Do Not Own
Islam forbids selling assets one does not possess. Futures contracts often involve promises on assets not yet owned.
Excessive Uncertainty (Gharar)
Price prediction and contract ambiguity make futures contracts highly speculative, which Islam prohibits.
Gambling (Maisir)
Profit often comes from predicting price movements rather than engaging in real trade, resembling gambling.
Interest (Ribā)
Many futures trades require margin or leverage, which involve interest or debt, strictly forbidden in Islam.
No Real Exchange
Most futures contracts are closed before delivery, meaning no actual asset changes hands, making the transaction speculative.
Conclusion: futures trading is haram, regardless of intent or market conditions.
Spot Trading: A Permissible Alternative
Spot trading involves buying an asset, owning it, and selling it later. This is considered halal tijārah if certain conditions are met:
Ownership (Qabḍ): You fully own the asset at purchase.
Immediate Exchange: Payment and asset transfer occur at the time of purchase.
No Interest (Ribā): No borrowing, margin, or interest-based fees.
No Excessive Uncertainty (Gharar): The trade is straightforward, with a known asset and price.
No Gambling (Maisir): Profit arises from legitimate ownership and market risk, not speculative betting.
Leverage Warning:
Even minimal leverage (0.5×, 2×, etc.) is not permissible, as it involves borrowing money and potential interest, introducing gharar and maisir. Only your own funds may be used for halal trading.
Permissible Forms of Trading in Islam
Spot Trading – Buying and selling assets you own without leverage.
Equity Investment – Purchasing shares in halal businesses with real ownership.
Trading Assets You Own – Physical or digital assets exchanged transparently.
Salam Contracts – Forward contracts allowed only with full advance payment, fixed delivery, and clear specifications.
Modern futures, options, and leveraged contracts do not meet these requirements.
Conclusion
Islamic trade is guided by principles of fairness, clarity, and ownership. Futures trading, leverage, and speculative contracts violate these principles and are prohibited. Conversely, spot trading and real asset ownership provide lawful, ethical avenues for wealth creation.
True profit in Islam comes not from risky bets or borrowed money but from ethical, transparent, and asset-backed trade. Understanding and adhering to these rules ensures both material and spiritual benefit.