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  #1  
Old 06-06-2010, 03:25 PM
Efendi Efendi is offline
 
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Default Forex trading

Salam alaikum.

What does Islam says about money trading in FOREX?
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  #2  
Old 06-06-2010, 06:11 PM
Ibn Dawud Ibn Dawud is offline
 
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Wa alaikum salam

What is forex trading?
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  #3  
Old 06-06-2010, 09:18 PM
Efendi Efendi is offline
 
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Quote:
Originally Posted by Ibn Dawud View Post
Wa alaikum salam

What is forex trading?
http://www.forex.com/uk/index.html
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Allah is your lord, and you are His slave.
Fight against filth and innovations.
Guard yourself against temptations.
Call people to truth and the way!
Of Sunnah, don't lead them astray!
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  #4  
Old 06-07-2010, 04:28 AM
Ibn Dawud Ibn Dawud is offline
 
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Quote:
Originally Posted by Efendi View Post
Personally I would stay well away from it, without a doubt.
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  #5  
Old 04-15-2012, 02:31 PM
Al-Ghuraba Al-Ghuraba is offline
 
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Shaykh Aymen,

I am very interested in this topic and have done a little research on it.

From 0:00 upto 2:15 the shaykh says it is permissible to trade on the stock market, (edit: if certain criteria are met e.g. no loan, no riba, must have possession etc.) and after that he answers a different question.
+ YouTube Video
ERROR: If you can see this, then YouTube is down or you don't have Flash installed.


And from what I know there is no difference between trading on the stock exchange or currencies on the FOREX. Here's an example:

Stocks: buy gold/shares/sugar/coffee/etc for £200 and sell it for £300 (profit: £100)

FOREX: buy £200 currency (£) and sell it for $600 currency ($) (where $600 is worth £300 - profit: £100)

If this is the case, why would the trading of Stocks and shares be allowed but trading currencies on the FOREX not be allowed?

May Allah reward you
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  #6  
Old 04-15-2012, 02:38 PM
Ayman bin khaled Ayman bin khaled is offline
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Is it permissible to deal in currencies in the foreign exchange market (forex) over the Internet? What is your opinion regarding the issue of tabiyeet (stipulating interest for not using the deal at the same day)? What is also your opinion about the clearing process which is to delay submitting one to two days after the contract ends.

The Islamic Fiqh Council of the Muslim World League, in its eighteenth session that was held in Makkah al-Mukarramah from 10 to 14/3/1427 AH (8 to 12 April 2006 CE), has examined the issue of trading in margins, which means that the customer pays a small amount of the value of what he wants to buy, which is called a “margin”, and the agent (the bank or otherwise) pays the rest as a loan, provided that the purchase contract remains in the name of the agent as a pledge for the money that was loaned.

After listening to the research that has been submitted and the detailed discussion on this topic, the opinion of the council is that this transaction involves the following:

1 – Dealing in buying and selling for the purpose of profit, and this dealing is usually done in major currencies or financial certificates (shares and bonds) or some types of products, and it may include trade in options, futures and the indexes of major markets.

2 – Loans, which refers to the money given by the agent to the customer directly if the agent is a bank, or via a third party if the agent is not a bank.

3 – Riba, which occurs in this transaction in the form of fees for delaying the deal. This is interest that is charged to the purchaser if he does not make a decision on the same day, and which may be a percentage of the loan or a set amount.

4 – Commission, which is the money that the agent gets as a result of the investor’s (customer’s) dealing through him, and it is an agreed-upon percentage of the value of the sale or purchase.

5 – The pledge, which is a commitment signed by the customer agreeing to leave the contract with the agent as a pledge for a loan, giving him the right to sell these contracts and take back the loan if the customer’s losses reach a specific percentage of the margin, unless the customer increases the pledge in order to compensate for a drop in the price of the product.

The Committee believes that this transaction is not permissible according to sharee’ah for the following reasons:

Firstly: It involves obvious riba, which is represented by the addition to the amount of the loan which is called “paying fees for delaying the deal”. This is a kind of haraam riba. Allaah says (interpretation of the meaning):
“O you who believe! Fear Allaah and give up what remains (due to you) from Ribaa (from now onward) if you are (really) believers.
279. And if you do not do it, then take a notice of war from Allaah and His Messenger but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums)”
[al-Baqarah 2:278-279]

Secondly: The agent stipulates that the customer must deal through him, which leads to combining both giving a loan for something in return and paying commission, which is akin to combining giving a loan and selling at the same time, which is forbidden in sharee’ah because the Messenger (peace and blessings of Allaah be upon him) said: “It is not permissible to give a loan and sell at the same time…” The hadeeth was narrated by Abu Dawood (3/384) and al-Tirmidhi (3/526), who said it is a hasan saheeh hadeeth. In this case he has benefited from his loan, and the fuqaha’ are unanimously agreed that every loan that brings a benefit is haraam riba.

Thirdly: Dealings that are done in this manner in the global markets usually involve many contracts that are haraam according to sharee’ah, such as:

1- Dealing in bonds, which comes under the heading of riba which is haraam. This was stated in a resolution of the Islamic Fiqh Council in Jeddah, no. 60, in its sixth session.

2- Dealing indiscriminately in company shares. The fourth statement of the Islamic Fiqh Council of the Muslim World League in its fourteenth session in 1415 AH stated that it is haraam to deal in the shares of companies whose main purposes are haraam, or some of their dealings involve riba.

3- Selling currencies is usually done without the hand to hand exchange which makes them permissible according to sharee’ah.

4- Dealing in options and futures. A resolution of the Islamic Fiqh Council in Jeddah no. (63), in its sixth session, stated that options are not permissible according to sharee’ah, because the object of dealing in these contracts is not money or services or a financial obligation which it is permissible to exchange. The same applies to futures and trading in indexes.

5- In some cases the agent is selling something that he does not possess, and selling what one does not possess is forbidden in sharee’ah.

Fourthly: This transaction involves economic harm to the parties involved, especially the customer (investor), and to the economy of the society in general, because it is based on borrowing to excess and taking risks. Such matters usually involve cheating, misleading people, rumours, hoarding, artificial inflation of prices and rapid and strong fluctuation of prices, with the aim of getting rich quickly and acquiring the savings of others in unlawful ways. Hence it comes under the heading of consuming people’s wealth unlawfully, in addition to diverting wealth in society from real, fruitful economic activity to this type of risk that has no economic advantage, and it may lead to severe economic turmoil that will cause great loss and harm in society.
The Council advises financial institutions to follow the ways of finance that are prescribed in sharee’ah and that do not involve riba and the like, and do not have harmful economic effects on their customers or on the economy in general, like shar’i partnerships and the like. And Allaah is the Source of strength.
May Allaah send blessings and peace upon our Prophet Muhammad and all his family and companions. End quote from Majallat al-Majma’ al-Fiqh al-Islami, issue no. 22, p. 229.

We ask Allaah to guide us and you.

And Allaah knows best.

Source: http://islamqa.com/en/ref/106094
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  #7  
Old 04-15-2012, 03:13 PM
Al-Ghuraba Al-Ghuraba is offline
 
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Shaykh Aymen,

Quote:
After listening to the research that has been submitted and the detailed discussion on this topic, the opinion of the council is that this transaction involves the following:

1 – Dealing in buying and selling for the purpose of profit, and this dealing is usually done in major currencies or financial certificates (shares and bonds) or some types of products, and it may include trade in options, futures and the indexes of major markets.

2 – Loans, which refers to the money given by the agent to the customer directly if the agent is a bank, or via a third party if the agent is not a bank.

3 – Riba, which occurs in this transaction in the form of fees for delaying the deal. This is interest that is charged to the purchaser if he does not make a decision on the same day, and which may be a percentage of the loan or a set amount.

4 – Commission, which is the money that the agent gets as a result of the investor’s (customer’s) dealing through him, and it is an agreed-upon percentage of the value of the sale or purchase.

5 – The pledge, which is a commitment signed by the customer agreeing to leave the contract with the agent as a pledge for a loan, giving him the right to sell these contracts and take back the loan if the customer’s losses reach a specific percentage of the margin, unless the customer increases the pledge in order to compensate for a drop in the price of the product.
Loans are just an option, it is not compulsory to get a loan and the riba is only if the person does not make the deal on the same day.

Quote:
Dealings that are done in this manner in the global markets usually involve many contracts that are haraam according to sharee’ah, such as:

1- Dealing in bonds, which comes under the heading of riba which is haraam. This was stated in a resolution of the Islamic Fiqh Council in Jeddah, no. 60, in its sixth session.

2- Dealing indiscriminately in company shares. The fourth statement of the Islamic Fiqh Council of the Muslim World League in its fourteenth session in 1415 AH stated that it is haraam to deal in the shares of companies whose main purposes are haraam, or some of their dealings involve riba.

3- Selling currencies is usually done without the hand to hand exchange which makes them permissible according to sharee’ah.

4- Dealing in options and futures. A resolution of the Islamic Fiqh Council in Jeddah no. (63), in its sixth session, stated that options are not permissible according to sharee’ah, because the object of dealing in these contracts is not money or services or a financial obligation which it is permissible to exchange. The same applies to futures and trading in indexes.

5- In some cases the agent is selling something that he does not possess, and selling what one does not possess is forbidden in sharee’ah.
A person does not necessarily have to deal in bonds, or deal with companies whose purpose is haram, or in options and futures. And you can sell what you possess.

Shaykh does the "hand in hand" mean having possession of the product or actually mean trading it physically hand in hand. If it means physically hand in hand, why is it permissible to trade on the stock exchange?
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  #8  
Old 04-15-2012, 03:27 PM
Ayman bin khaled Ayman bin khaled is offline
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To make it simple for you, it is best to be specific:

Collect the details of a transaction that is done today and you know of then send all that to amjaonline.com. Then ask them what is the unlawful part of such transaction, if it was unlawful.

In any case, forex trade is deemed unlawful by Ijmaa since the verdict is issued by the Fiqh council and that was based on very detailed studied and papers submitted to them. However, as this still confuse you, just do what I advised you so that you narrow down the scope of question and answer.

Barak Allahu feek

Quote:
Originally Posted by Al-Ghuraba View Post
does the "hand in hand" mean having possession of the product or actually mean trading it physically hand in hand. If it means physically hand in hand, why is it permissible to trade on the stock exchange?
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Last edited by Ayman bin khaled; 04-15-2012 at 03:46 PM.
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  #9  
Old 04-15-2012, 05:11 PM
Al-Ghuraba Al-Ghuraba is offline
 
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JazakAllah sheikh, i will take your advice and try to email them when my exams have finished.

But the 'hand in hand' still confuses me... What does it mean?

Is it okay if i buy something over the phone from a person in China? Or if i order something online from eBay/amazon? These transactions are not 'hand in hand' and 99percent of the time i will never even have met with seller, so are they haram?
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  #10  
Old 04-15-2012, 05:33 PM
Ayman bin khaled Ayman bin khaled is offline
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Quote:
Originally Posted by Al-Ghuraba View Post
But the 'hand in hand' still confuses me... What does it mean?
This condition is mentioned in relation to currencies not merchandise.

Quote:
Is it okay if i buy something over the phone from a person in China? Or if i order something online from eBay/amazon? These transactions are not 'hand in hand' and 99percent of the time i will never even have met with seller, so are they haram?
This is a type of transaction that is different than forex.

So, in simple terms:

Trading with currencies is permitted provided some conditions are met:

1) If the sold and bought currencies are of same kind (i.e. GBP vs GBP) then the amount should be equal (i.e. I buy $100 for $100) and the paid and recieved amount should take place when the transaction is finalised i.e. no delay payment is accepted.

2) If the currencies are different (GBP vs AUD) then only one condition should be met that is: the paid and recieved amount should take place when the transaction is finalised i.e. no delay payment is accepted.

Forex has other issues that the fatwa above explained. If these issues are not implemented and the above two conditions are met then it should be fine. However, I highly doubt there is any lawful forex trading these days.

Wallahu A'lam
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  #11  
Old 04-15-2012, 05:57 PM
Al-Ghuraba Al-Ghuraba is offline
 
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JazakAllah sheikh it makes more sense now

And i saw this fatwa, can i please get your opinon on this sheikh:

http://www.islamweb.net/emainpage/in...twaId&Id=88034

The questoner asks about online trading which im pretty sure he is talking about the forex. The answer says it needs to be hand in hand and what the questioner asked is permissible, but its not hand in hand! Did i understand this wrong?
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  #12  
Old 04-16-2012, 03:16 AM
Ayman bin khaled Ayman bin khaled is offline
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Online trading can be in currencies, goods or stocks. Each has a different ruling. Do not confuse yourself.
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  #13  
Old 04-16-2012, 05:51 AM
Al-Ghuraba Al-Ghuraba is offline
 
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Question
I have following query: Is currency trading Halal/ Haram? in Islam? My question will be cleared by the following example. Example: If I buy one EURO against two Dollars, and in my mind I will sell my purchased one EURO when it will be equal to three Dollars. There is an equal chance that in the future one EURO may become equal to one Dollar and I have to face loss of one dollar in this transaction. Following are some other conditions: 1- All these transactions are done through Internet. 2- If I purchase EURO, the conversion rate amount Dollars is immediately deducted from my account. 3- My account is physically held by the financial institution that is supervising all these transactions .4- when I sell my purchase EURO in future, on profit or loss, then my profit is added and loss is deducted from my account balance. All this happens immediately on selling of EURO. 5-I buy EURO today and sell it tomorrow. Waiting for your prompt reply.
Answer
Praise be to Allah, the Lord of the Worlds; and may His blessings and peace be upon our Prophet Muhammad and upon all his Family and Companions.
Currency trading through internet is permissible if there is no delay in completing the transaction.
The Prophet (Sallallahu Alaihi wa Sallam) said: "Gold for gold and silver for silver should not be exchanged except the same amount by the same amount, and none of the two (gold or silver) should be sold except if available and present and provided it is from hand to hand. Reported by Bukhari and Muslim.
Cash currencies are like gold and silver in rate, so the same ruling applies to them. However, currency trading hand to hand is permissible if the exchange or receipt of the currency takes place in the same meeting.
Receiving money in a transaction is the same as having the amount of purchase debited from the bank accounts immediately.
When the bank gives statement to its customer of an exchange, this is considered as receiving the amount.
In addition to the condition of exchanging hand to hand, there is another condition if the currency is of the same kind, then it should be the same amount, like a dollar for a dollar, and a Euro for a Euro.
But if the two currencies differ in essence, then the only condition is that they just have to be exchanged hand to hand. So, the transactions you describe are permissible.
Allah knows best.

----------


The questioner is asking specifically about trading currencies over the internet and not other things. What confuses me is this part: "the only condition is that they just have to be exchanged hand to hand. So, the transactions you describe are permissible."

How are the transactions that the questioner described hand in hand when they are done over the internet? Or does hand to hand mean something different?
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  #14  
Old 04-16-2012, 06:47 AM
Ayman bin khaled Ayman bin khaled is offline
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Read the fatwa again:
Quote:

However, currency trading hand to hand is permissible if the exchange or receipt of the currency takes place in the same meeting.
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  #15  
Old 04-16-2012, 07:23 AM
Al-Ghuraba Al-Ghuraba is offline
 
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So i guess it means hand to hand is not physical and if that is the case, then i think online currency trading online/forex would be okay if riba and loans etc are avoided - despite it not being traded physically hand in hand?

(sorry for double post)
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  #16  
Old 04-16-2012, 09:23 AM
Ayman bin khaled Ayman bin khaled is offline
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Hand in hand refers to a transaction that is completed on spot where the two parties are there i.e. online or in presence.

As for forex trading, it is more complicated than you think because you need to do it through brookers or agents. That is why you have to double check the entire process before delve into it. In such case, you need to consult with amjaonline.com who will let you know whether the type of particular process you wish to do is lawful or not.
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