A Shariah-compliant forex account is an account that follows Islamic law, which prohibits the earning or paying of interest. Islamic forex traders must adhere to this religious law and find alternative ways to make a profit in the currency markets.
There are a few different types of Islamic forex accounts available. The most common type is the swap-free account, which does not involve any interest payments. This type of account is also known as a clean account.
Another type of Islamic account is the margin account. This account allows you to trade with leverage, which can increase your profits but also your losses. Margin accounts must be funded with cash and do not allow the use of leverage.
Islamic forex traders must also be aware of riba, which is the term for interest in Islamic law. Riba is forbidden in Islam, so forex traders must find alternative ways to make a profit in the markets.
One way to avoid riba is to trade in spot currencies, which do not involve interest payments. Forex traders can also trade in derivatives, such as contracts for difference (CFDs) and spread bets, which do not involve the paying or earning of interest.
Islamic forex traders must also comply with other Shariah laws, such as the prohibition of gambling and the prohibition of investing in companies that produce alcohol, pork or pornography.
If you are looking for a Shariah-compliant forex account, there are a number of different options available. You can find a list of Islamic forex brokers on the Shariah-compliant forex website.
