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How to Choose the Best Islamic FOREX Broker: Explained

With many years of meticulous FOREX broker testing, Arincen stands out as a voice of authority. Our analyses, shaped by exhaustive data collection, are trusted by many. Each year, we gather 120 data points from more than 100 brokers. Our team of more than 20 people collaborate extensively to produce high-quality broker reviews like this one. For a detailed explanation of how we test brokers, navigate to the bottom of this article.

Selecting an Islamic broker is not very different from choosing a regular broker. The basics remain the same – you need a broker that is well-established, well-capitalized and has worked hard to give you a good range of market-leading features. Only after you are satisfied with those elements should you turn your attention to what sets Islamic brokers apart. 
Islamic trading has many similarities to regular trading, but also some key differences. To begin, it is especially important for traders practicing the Islamic faith to trade in a way that is consistent with the teachings of the Holy Quran. It is, quite simply, a deal breaker for Muslim traders to have access to trading conditions that are compliant with what is known as Shariah finance.
In this article, we will cover the most crucial elements of Islamic trading, and we will point you toward the types of features that set Islamic brokers apart from each other. It is crucial to note that while we offer you commonly accepted interpretations of Shariah finance, we do not claim to be the final authority on these matters. If you still have doubts, you are advised to seek counsel from religious experts.

Best Islamic FOREX Brokers for 2024

Company name ICM Capital
Regulations

FCA

Minimum deposit 500$
Main branch United Arab Emirates
Company name Tradeview
Regulations

FCA

Minimum deposit 250$
Main branch USA
Company name XTB
Regulations

FCA

Minimum deposit 500$
Main branch UK
Company name IG
Regulations

FCA

Minimum deposit 500$
Main branch UK

The Foundations of Islamic Trading

There are a few key rules to follow if you are going to trade according to Islamic principles, but one rule stands out – it is forbidden for an Islamic trader to earn or pay interest
Many regular traders take part in day trading, which sees them maintaining open positions for short periods, often a few hours or less. However, from time to time, some traders must keep their positions open for longer than 24 hours. In this case, it is accepted practice for traders to pay interest to the broker for this facility, otherwise known as a rollover fee. In Shariah finance, this customary practice is prohibited.
Interest payments incurred for keeping overnight positions open might be commonplace for regular traders, but for followers of the Islamic faith, they are a non-starter. This is where Islamic brokers come in, as they have developed accounts that comply with the requirements of halal (acceptable) Islamic trading while staying away from what is haram (not acceptable).
Many more rules need to be followed for traders to remain in good standing with Shariah finance. We will cover these later in the article. However, it is crucial to note that receiving or paying interest is a cornerstone issue to navigate when a follower of the Islamic faith starts their trading career.

Best Islamic FOREX Brokers in 2024

ICM capital Broker

ICM capital Broker

ICM Capital is considered the industry leader in deposits and withdrawals, whereby each withdrawal does not take more than five business days. Moreover, the company offers its customers a handy credit card to withdraw their profits, in addition to enabling customers to use various deposit methods. The company, which is licensed by the UK's FCA, has several branches around the world. Among other things, it has a rich portfolio of assets, especially stocks, offers a low spread, as well as the ability to use MT4.
Broker Evaluation 8.11
Regulatory Bodies

FCA

Minimum Deposit 500$
Islamic Account yes
Payment Methods Bank transfer - credit card - Electronic Banks - Crypto
Main Branch United Kingdom
Customer Service 24/5
Demo account yes
Trading Platforms MT4 - MT5 - C TRADER -Web Platform

Pros

  • Segregated client funds.
  • Regulated by the UK’s FCA.
  • Established in 2009.
  • More than 10,000 ICM Capital users and traders.
  • Reasonable minimum deposit from $500.
  • Decent funding options.
  • No swaps.
  • MetaTrader4 (MT4) desktop and mobile download.

Cons

  • Does not allow scalping.
  • Not ASIC-regulated.
  • Relatively limited range of instruments.
  • Slow live-chat service.
  • Relatively high trading fees.
  • Limited range of trading tools and resources
Dukascopy  Broker

Dukascopy Broker

Tradeview Forex, interchangeably known as Tradeview Markets, was established in 2004 and is headquartered in the Cayman Islands, setting itself up as a significant player in the online FOREX and CFD trading world. Regulated by the Cayman Island Monetary Authority (CIMA) and the Malta Financial Services Authority (MFSA), Tradeview Forex is a reliable platform in a competitive market​​​​. The broker’s commitment to offering a broad and accessible trading environment shines through with its low deposit requirement and how it provides various advanced trading platforms to clientele.

Broker Evaluation 7
Regulatory Bodies

FCA

Minimum Deposit $450
Islamic Account Yes
Payment Methods Bank transfer - credit card - Electronic Banks - Crypto
Main Branch USA
Customer Service 24/5
Demo account Yes
Trading Platforms Proprietary Platform-MT4 - MT5 -Web Platform

Pros

  • Established in 2004.
  • Variety of trading platforms, such as MT4, MT5, cTrader, and Currenex, catering to different trading preferences and strategies.
  • Low minimum deposits.
  • beginners and experienced traders looking to refine their strategies.
  • Supports automated trading through the use of Expert Advisors (EA) on MT4 and MT5 platforms.
  • Decent leverage levels of 1:200 available in some jurisdictions.
  • Regulated by CIMA, MFSA, and will soon be regulated by the UK’s Financial Conduct Authority (FCA).

Cons

  • While regulated by CIMA and the MFSA, the broker is still in the final stages of becoming regulated by the tier-one FCA.
  • Trades on the Innovative Liquidity Connector® account are subject to commission charges, which may add to trading costs.
  • While offering high leverage up to 400:1 can be an advantage, it also introduces significant risks, especially for new traders.
XTB Broker

XTB Broker

What distinguishes XTB is the fact that it offers the best customer experience among all the companies we have surveyed. Indeed, it boasts the fastest response rate from all the companies under investigation. This is especially relevant, since the market is always on-the-go, and so you need to act fast. XTB offers lots of asset classes, as well as the ability to use the MT4 trading platform. Finally, it maintains a relatively low spread, which is suitable for quick deals.
Broker Evaluation 8.55
Regulatory Bodies

FCA

Minimum Deposit 500$
Islamic Account yes
Payment Methods Bank transfer - credit card - Electronic Banks
Main Branch United Kingdom
Customer Service 24/5
Demo account yes
Trading Platforms MT4 - MT5 -Web Platform

Pros

  • Long history of operation.
  • Globally recognized, having won multiple awards.
  • Some of the lowest FOREX spreads in the market.
  • Regulated by the FCA (UK).
  • Offers protection for client accounts.
  • Emphasis on customer service.
  • Excellent support, learning and research tools.

Cons

  • Does not accept US clients.
  • Non-FOREX spread costs are relatively high.
  • No GSLO.
  • No back-testing or automated trading capabilities.
  • Conditions vary according to regulation and entity.
ig markets Broker

ig markets Broker

IG is arguably the best broker when it comes to security and trust, boasting, as it does, licenses from 10 regulatory bodies, including the all-important FCA from the UK. The company is also a bank and is a publicly traded company in London. It is known for offering more than 10,000 asset classes of currencies, commodities, future contracts, ETFs, indices, cryptocurrencies etc. Further, it has its own state-of-the-art trading platform and offers a relatively low spread.
Broker Evaluation 7.54
Regulatory Bodies

FCA

Minimum Deposit 250$
Islamic Account yes
Payment Methods Bank transfer - credit card - Electronic Banks
Main Branch United Kingdom
Customer Service 24/5
Demo account Yes
Trading Platforms Proprietary Platform -MT4 - Web Platform

Pros

  • Easy-to-navigate platform that is simple for beginners to master.
  • Margin rates are easy to understand and affordable.
  • Mobile and tablet platforms offer full functionality of the desktop version.
  • Accepts US clients.
  • Access to more than 100 currency pairs
  • Emphasis on education and research.
  • Regulated by the FCA (UK), as well as the CFTC and the NFA (US).
  • Offers protection for UK/EU client accounts.

Cons

  • US traders can currently only trade FOREX.
  • No GSLO for US-based traders.
  • No account protection for US clients.
  • Relatively high share-CFD fees.
  • No copy trading or back-testing integration on IG platform.
SAXO BANK Broker

SAXO BANK Broker

Saxobank is considered one of the best investment banks in the area of financial markets and currencies, as it offers the very best trading platform and tools from all the companies we have reviewed. Meanwhile, its spread is very low and, as such, suitable for short-term deals; and it offers a large number of asset classes, including currencies, commodities, indices etc. Finally, its customer service is excellent and very responsive to traders' needs.
Broker Evaluation 6.09
Regulatory Bodies

FCA

Minimum Deposit 10000$
Islamic Account No
Payment Methods Bank transfer - credit card
Main Branch Copenhagen, Denmark
Customer Service 24/5
Demo account No
Trading Platforms SaxoTrader

Pros

  • Extensive range of offerings.
  • Regulated by the FCA (UK) and other top regulators.
  • Great trading platform.
  • Among the industry’s best research.
  • Superior user interface.
  • Offers protection for client accounts.

Cons

  • High bond, options and futures fees.
  • Lack of emphasis on customer service.
  • Confusing instrument fee structures.
  • High minimum deposit.
  • Does not accept US clients.
  • No MT4.
  • Lacks live chat.
CMC MARKETS Broker

CMC MARKETS Broker

CMC Markets is thought of as one the best companies, offering some 9,000 asset classes that encompass currencies, commodities, indices, cryptocurrencies, bonds and stocks. The company offers a relatively low spread, the MT4 platform, and fast customer service. It is most suited for traders looking for diversity in asset classes.
Broker Evaluation 7.07
Regulatory Bodies

FCA

Minimum Deposit 0$
Islamic Account No
Payment Methods Bank transfer - credit card - Electronic Banks
Main Branch United Kingdom
Customer Service 24/5
Demo account not
Trading Platforms Proprietary Platform -MT4 - Web Platform

Pros

  • Extensive range of offerings.
  • Regulated by the FCA (UK).
  • Low FOREX fees.
  • Emphasis on education and customer service.
  • Great Web and mobile platforms.
  • Offers protection for client accounts.
  • Research amenities are industry leading.

Cons

  • Does not accept US clients.
  • Limited product portfolio.
  • High stock CFD fees.
  • High CFD spreads for certain indices.
  • Differences between Next Generation and MT4.
  • Complicated account verification.
  • No back-testing or automated trading capabilities.
think markets Broker

think markets Broker

Originally founded in New Zealand in 2010, and moving to Australia within the space of their first two years, Think Markets is a global online brokerage focusing on FOREX and CFD trading. In addition to a range of major and minor currency pairs. Think Markets has an array of CFDs on offer. This includes indices, as well as hard and soft commodities.
Broker Evaluation 8.05
Regulatory Bodies

FCA

Minimum Deposit 0$
Islamic Account yes
Payment Methods Bank transfer - credit card - Electronic Banks - Crypto
Main Branch Australia
Customer Service 24/5
Demo account not
Trading Platforms Proprietary Platform -Web platform-mt4- mt5

Pros

  • Beginner assistance offered through 24/6 channels.
  • Spreads are as low as 0.0 pips.
  • 24/7 expert customer service.
  • CFD shares and indices come at no extra fee.
  • Zero broker fees for FOREX trading.
  • Technical analysis and quality market information.
  • Percentage allocation management module (PAMM) and Multi-account manager (MAM) accounts available.

Cons

  • Direct share trading is on a separate platform.
  • No binary options offered.
  • Commissions charged for two account types.
  • After a strong early start, ThinkTrader user ratings have slid to 3.4 stars.
  • No US, Canada or Japan clients allowed.

There is a high degree of risk involved in trading securities like FOREX, or CFDs, which are highly complex instruments. As a trader, you could be exposed to excessive leverage, questionable broker tactics, market volatility, and limited regulatory protection. Despite your best trading techniques and risk management strategies, your efforts may not be profitable, and you could suffer losses.

Is FOREX Trading Allowed for Islamic Traders?

The question of whether FOREX trading is acceptable or unacceptable within Shariah law generates much conversation, which is why it is worth underscoring the commonly accepted positions. Islam allows for the enhancement and improvement of your personal situation. This means that seeking to improve your financial situation through trading is acceptable
It is understood that FOREX trading can be considered halal according to the principles of Islamic finance. Bear in mind that although Islamic traders are not required to pay interest, they must pay the margin, commissions, and administrative fees like everyone else. Also, to compensate for losing out on swap fees, brokers usually widen the spreads between currency pairs, which benefits them but costs Islamic traders.

What Is an Islamic FOREX Account?

An Islamic FOREX account has been developed with the Islamic trader in mind. Paying close attention to the requirements of Islamic faith and the stipulations of the Quran, brokers ensure that none of the features of the account contravene the teachings of Islam.
As we have mentioned, rollover fees cannot be levied if an account is to be compliant with Shariah finance. Islamic accounts are often referred to as swap-free accounts. These accounts are different from normal accounts in several crucial ways. 
Before we go on, let us delve deeper into why it is necessary to structure Islamic FOREX accounts in this way. In Islam, the concept of “hand-to-hand" trading relates to the ancient practice of completing transactions face to face, in one sitting, so that interest does not come into the equation
However, with the evolution of commerce resulting in electronic transactions taking place across continents, scholars have indicated that hand-to-hand should be replaced by a modern equivalent, which equates to completing a transaction in the same session. Naturally, this poses challenges in the context of an overnight interest charge.
Shariah-compliant transactions in the FOREX world must ideally be conducted very quickly, so currencies can be transferred without delay, with all costs and fees settled at once, in a manner resembling hand-to-hand trading. However, it is not always the best strategy for Islamic traders to close their positions so rapidly, as they will often need to hold their positions open overnight to maximize their chances of making a profit. 
To facilitate this, brokers make an exception to their rollover fee rule by creating a swap-free account option. This exemption makes all the difference because, without it, Muslim traders would not be able to take part in the FOREX trading world.
Islamic FOREX Account

How to Open an Islamic FOREX Account

Opening an Islamic account is not much different to opening a regular account. You will need to submit all the relevant documentation, such as national identity documents and proof of income. Bear in mind that some brokers have been known to request a letter from a religious authority stating that you are a practicing Muslim to open your account. However, this is not standard practice.
Once your account has been approved, normally one to two days after you make the application, you will be able to fund your account by making the first deposit. After your account is funded, you can start to trade as you would with a normal account.
Many brokers also offer you the chance to practice on an Islamic demo account. It is a good idea to take advantage of this as you can practice your strategies in real market conditions without any of the risk. You will also start to get familiar with the ways in which pricing and fees work within an Islamic account.

What Is a Swap Fee?

This is one of the key terms you will encounter in Islamic FOREX trading. Whenever you leave your position open for more than 24 hours, you are required to pay interest for the privilege of this facility. This interest is called a swap fee or rollover fee. As we have discussed, the need to pay interest comes from the fact that the broker is effectively giving you a loan.
However, as interest payments are not allowed according to Shariah law, Muslim traders would be in an impossible situation if they wanted to actively trade FOREX. This is where the concept of the swap-free account originated.
Brokers have gone further by opening access to more instruments in Shariah-compliant ways. Besides FOREX, Islamic traders can invest in indices, commodities, and shares. Concerning share trading, you should note that, according to Shariah law, it is acceptable to buy shares as a stake in a company. However, it is haram to buy shares in a company that carries out activities against Shariah Law, such as gambling and/or alcohol production.
Two notable items that you cannot trade as an Islamic trader are bonds and treasury bills. Bonds are issued based on a fixed interest rate, the proceeds of which will be paid at the end of the life of the bond. This is haram. Similarly, futures contracts contravene Shariah law as the exchange of goods happens at a future date, violating the hand-to-hand principle.

Regulation and Licensing of Shariah-Compliant Brokers

There is no difference in how brokers are regulated when they offer Shariah finance products. Shariah-compliant FOREX brokers must be regulated by the same regulators that regulate non-Shariah brokers. Both these types of brokers can readily provide access to financial assets such as FOREX, commodities, and indices. If you want to learn more about some of the best-regarded regulators, read our article on regulation here. Remember that you do not have to use a broker with international regulation if your local broker is regulated by a solid local regulator.
To ensure that your broker is legit, you can follow these steps:

Make sure your broker is regulated by a reputable authority. Not all brokers are regulated by tier-one regulators, but you can still rest easy if your broker works with the regulator in your area. To verify if your broker is registered with a regulator, navigate to the regulator’s official website.

Which Regulations Guide the Use of Leverage in Islam?

There is a healthy debate among Islamic scholars about the use of leverage. Some feel leverage trading can be permissible within limits if it complies with the principles of Islamic finance. However, other scholars argue that leverage trading is not permissible in Islam due to its association with excessive speculation and gambling, which is prohibited.
Consult an Islamic scholar or your broker directly for more information. On the matter of leverage in general, several key regulators have introduced specific guidelines to safeguard retail traders.
Let's look at some of these leverage rules set by major regulators:
Financial Conduct Authority (FCA) in the UK:
30:1 for major currency pairs
20:1 for non-major currency pairs, gold, and major indices
10:1 for commodities (excluding gold) and non-major equity indices
5:1 for individual equities and other reference values
Australian Securities and Investments Commission (ASIC) Australia:
30:1 for major currency pairs
20:1 for non-major currency pairs, gold, and major stock market indices
10:1 for commodities other than gold and minor stock market indices
5:1 for equities (stocks) and other underlying assets
The Cyprus Securities and Exchange Commission (CySEC) in Cyprus:
CySEC regulations fall closely in line with the European Securities and Markets Authority (ESMA) guidelines and the Markets in Financial Instruments Regulation (MiFIR).
30:1 for major currency pairs 
20:1 for non-major currency pairs
10:1 for major indices, such as the S&P 500
5:1 for equities (stocks) and other underlying assets

High leverage can amplify potential profits, but it equally magnifies potential losses. It can put a stop to your trading career if not used carefully. The allure of high returns is tempting, but the risk associated with such strategies is highly dangerous. We strongly urge traders to approach leverage with caution, fully grasping its mechanics and implications.

What are Competitive Commissions and Fees at the Best Islamic Brokers?

Trading fees can be tricky to keep track of, so it's important to compare them with industry standards. Here are some fees of which to be aware:
Spreads
There are two main kinds of spread, one is fixed and the other is variable. A first step in FOREX trading is identifying the spread differential, defined as the difference between the bid (sell) price and the ask (buy) price of a currency pair. While most FOREX currency pairs are traded without commission, the spread is one “cost” that applies to any trade that you place. This is, indeed, the biggest source of profit for the FOREX company.
The spread refers to the difference between two prices, such as the bid/ask rate in a currency exchange rate. An example of a good spread is 1.4 pips for the EUR/USD (the narrower the better, this means that a spread of 1.4 pips is better than a spread of 2 pips). You can learn more about this concept in this article.
Remember that because brokers catering to Islamic clients cannot charge rollover fees as it is against Shariah law, they often seek to make more money through spreads, which are typically higher in markets bound by Islamic law.
Commission
This is the service charge that brokers require for carrying out transactions on behalf of their clients. As for commissions, FOREX trading companies can be placed into three categories. The first offers fixed spreads, while the second tenders variable spreads, with a third category of companies offering low-cost spreads, but that comes with a (relatively high) fixed commission.
Rollover fees: When you leave a trade open overnight, the broker normally charges a rollover fee for the facility of holding your trade open for that period. This is because they assume the risk of the market changing adversely. As we have said, you should know that as a Muslim trader, it is haram to pay conventional rollover fees. This is why you should only trade with a broker that offers Islamic swap-free trading.
Withdrawal and deposit fees
Some platforms might charge fees for depositing or withdrawing funds. Pay attention to this. It's important to know these and any associated limits or conditions.
Subscription or inactivity fees
Certain platforms have monthly charges or fees for inactive accounts. Ensure you're aware of these potential costs.

Withdrawal and Deposit Fees Comparison Table

Comparing fees is a complicated business at the best of times. Viewing fees in a graphic representation like a table helps you cut through the noise of all the differing options.
Method Credit Card Wire Transfer Skrill Neteller Cryptocurrency PayPal
Deposit fee 0$ $0 + Bank commission 1.9% 2.5% Unavailable 3.75%
Withdrawal fee 0$ $15 1% $0 Unavailable 2%
Method Credit Card Wire Transfer Skrill Neteller Cryptocurrency PayPal
Deposit fee 0$ 0$ 1.9% 2.5% $0 3.75%
Withdrawal fee 0$ 0$ 1% $0 $0 2%
Method Credit Card Wire Transfer Skrill Neteller Cryptocurrency PayPal
Deposit fee 0$ $0 + Bank commission 1% 1% Unavailable Unavailable
Withdrawal fee 1.5% 30$ 1% 1% Unavailable Unavailable
Method Credit Card Wire Transfer Skrill Neteller Cryptocurrency PayPal
Deposit fee 0$ $0 + Bank commission Unavailable Unavailable Unavailable 3.4% + fixed fee
Withdrawal fee 0$ $0 + Bank commission Unavailable Unavailable Unavailable 3.4% + fixed fee
Method Credit Card Wire Transfer Skrill Neteller Cryptocurrency PayPal
Deposit fee 0$ $0 + Bank commission Unavailable Unavailable Unavailable Unavailable
Withdrawal fee 0$ $0 + Bank commission Unavailable Unavailable Unavailable Unavailable
Method Credit Card Wire Transfer Skrill Neteller Cryptocurrency PayPal
Deposit fee 0$ $0 + Bank commission Unavailable Unavailable Unavailable Unavailable
Withdrawal fee 0$ $0 + Bank commission Unavailable Unavailable Unavailable Unavailable
Method Credit Card Wire Transfer Skrill Neteller Cryptocurrency PayPal
Deposit fee 0$ $0 + Bank commission 0$ 2.5% Not mentioned Unavailable
Withdrawal fee 0$ $0 + Bank commission 5.50$ 0-7.5% Not mentioned Unavailable

What Assets and Instruments Do Islamic FOREX Brokers Offer?

Retail trading offers a diverse range of financial instruments, each with its own set of opportunities and challenges. Here are the most common tradable assets and instruments. Be sure to check that your broker provides Shariah-compliant trading accounts to trade these financial assets:
With the largest trading volume globally, the FOREX market allows traders to speculate on the future movements of currency prices, trading pairs like EUR/USD, GBP/JPY and many more.
Whether it's precious metals like gold and silver, or energy commodities like oil and natural gas, commodities trading offers a chance to profit from the tangible assets that drive global economies. Be sure to check first as to which ones are Shariah-compliant first.
CFD trading is haram because you are not taking an active stake in a transaction, as demanded under Islamic finance law. CFD trading allows you to speculate on the rising or falling prices of fast-moving global financial markets, such as shares, indices, commodities, currencies, and treasuries. You don’t own the underlying asset, which makes it unsuitable for Muslim traders. Also note that bonds, options, and futures also involve an interest payout at a future date, making them haram.
These represent ownership in a company and constitute one of the most popular avenues for retail traders, given their potential for substantial returns and the thrill of being a part of the corporate world. Remember you cannot, by Islamic finance laws, invest in companies that deal in gambling or alcohol.
These are baskets of stocks representing a particular market or sector, like the S&P 500 or the Nasdaq, giving traders exposure to broader market movements.
Brokers Currency pairs Stocks Indices Commodities Crypto ETFs
ICM Capital 67 Pairs 89 Shares 17 Indices 12 Commodity 6 Coins Unavailable
Tradview 80 Pairs 5000 Shares 10 Indices 10 Commodity 30 Coins Unavailable
XTB 57 Pairs 1848 Shares 36 Indices 22 Commodity 22 Coins 135 ETFs
IG 108 Pairs 20000 Shares 200 Indices 20 Commodity 5 Coins 200 ETFs
Saxo Bank 320 Pairs 22000 Shares 200 Indices 200 Commodity 9 Coins 6700 ETFs
CMC Markets 330 Pairs 8000 Shares 80 Indices 100 Commodity 18 Coins 200 ETFs
Think Markets 46 Pairs 3750 Shares 15 Indices 11 Commodity 21 Coins 350 ETFs

What Trading Platforms, Tools and Features Should Islamic Broker Offer?

When choosing a trading platform, you should consider a range of features that cater to both novice and seasoned traders. Here are some elements to keep in mind:
To choose the perfect trading platform, here’s some solid advice:
Remember that the trading platform you choose can have a significant impact on your trading success, so it's important to choose wisely.

Tip for those who have no experience
Every successful trader begins with a solid foundation in education and research. We've meticulously curated a suite of resources for you. Dive into our comprehensive articles to grasp the basics, watch our videos to learn from industry experts, and stay updated with our newsfeed. Moreover, our expert signals and sophisticated analytics are at your fingertips to guide your every decision.

How Do Stop Outs Affect You As a Trader?

Stop outs are bad news. It is one of the worst things that can happen to a retail FOREX trader. If this happens to you, rest assured that you have not planned your trading activities well. Different regulators have different guiding policies relative to leverage. Key regulators have implemented specific rules to limit the leverage offered to retail traders as a means of consumer protection.
Here are selected leverage rules for CFDs according to some key regulators:
Stop out of 0%
Your broker won't close any of your positions, even if your margin level reaches rock bottom. This is because some brokers allow you to end up in the red, which means you might owe them money if your trades keep losing.
Stop out of 50%
Once your equity dwindles to half of your used margin, the stop-out alarm goes off. Your broker steps in and starts closing your trades, beginning with those least profitable. This continues until your margin level bounces back above the stop-out level.
Stop out of 100%
When your margin level hits 100%, your broker takes the drastic step of automatically closing all your open positions. In some setups where the broker separates margin-call and stop-out levels, the margin call happens at 100% and the stop out at 50%. If your margin level plunges to 50%, your trading platform springs into action with a stop out, closing your trade at the market price.
It's worth noting that while stop-out procedures are meant to protect traders from negative balances, they can lead to significant losses in volatile markets if positions are closed automatically, especially if the market quickly reverses after the stop out. As such, using protective measures, like stop-loss orders and not over-leveraging, is always a good idea. 

Important Matters to Note as an Islamic Trader

So, what do Islamic traders have to consider when they begin their trading career? The following are the four main Islamic trading principles:
Conventional banking in the Western model does not easily support these principles. This explains the need for Islamic trading, a special type of trading that respects the dictates of Shariah Law as they relate to finance. Here are some of the practical considerations that arise when employing specific trading approaches. 
1. Day Trading
Day trading consists of working a strategy that requires you to open and close positions during the same session. In this instance, there are no swap or rollover fees to be paid. As you can see, day trading does not contravene Sharia law as no interest is paid or earned. So, what is the point of having an Islamic account for day trading? 
It is fair to say that if a Muslim trader can stick to day trading without ever rolling over trades into the next day, then they can use a regular account to perform day trading. If a trader believes they might be tempted to hold trades open the next day, then it is a good idea to work through an Islamic account. This will ensure that they remain compliant according to Islamic principles for the times they hold trades open longer than a day.
2. Scalping
Scalping involves opening a position to close it very quickly. Scalping trades can be opened and closed within a few minutes. Traders who scalp do so to open several small positions and make a tiny profit from each. As the transaction window for scalping is so small, there is no interest to be paid, making this form of trading acceptable in Shariah finance.
Normally, Islamic scalpers can use standard accounts that do not need the special facilities of an Islamic account. In the same way as normal trading, if a scalper goes on a roll and wishes to keep their positions open, then at that point they would need an Islamic account.
3. Swing Trading
Swing trading involves keeping positions open for days or weeks. As we have mentioned, any trading style that involves a position remaining open overnight is destined to attract interest, and this makes it against Shariah finance. Therefore, swing trading must be conducted free of interest payments.
As a Muslim trader, if your strategy revolves around swing trading, you must work through an Islamic account. What about Islamic traders who employ a combination of strategies? Some brokers will allow traders to hold regular accounts and Islamic accounts at once. It takes some research to find out who these brokers are, and it takes practice to understand how workable it really is to alternate between account types.

How to Select the Best Islamic Brokers 2024

The number of Islamic traders is increasing all the time. This has driven growth in the base of Islamic brokers from which to choose.
From what we have discussed in this article, there are many elements to consider when comparing Islamic brokers. Here are some important questions you can ask of a broker as you think about working with them:
Traders are advised to check that their broker can handle the basics of trading before asking if they can handle the unique requirements of Islamic trading.

Conclusion

Selecting the best halal FOREX trading platform requires the careful consideration of several key factors. Regulation should be at the forefront of this decision. Equally important is the availability of Islamic account types that comply with Shariah law, providing a trading environment that aligns with Islamic principles.
Excellent customer service is vital, as it ensures effective support and guidance in the trading journey. Furthermore, a wide range of financial assets is essential for diversification and maximization of trading opportunities. Lastly, the overall trading experience, encompassing user-friendly platforms, tools, and educational resources, must be considered to ensure a seamless and productive trading journey. By prioritizing these elements, Islamic traders can make an informed choice about the best halal FOREX trading platform that not only meets their financial objectives but also adheres to their religious beliefs.

Forex Risk Disclaimer
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

FAQ

Are the proceeds of Islamic FOREX trading taxable?

Each country is different. Many Islamic FOREX traders reside in Gulf nations such as the UAE which is a tax-free zone. If this is you, your earnings will not be taxed. However, other countries such as Malaysia and India have Muslim populations of varying sizes, and they may tax FOREX earnings. It’s important to contact a tax expert in your area to find out where you stand on this.

What are the advantages Islamic trading?

One of the main advantages of Islamic accounts is that they give market access to Islamic traders who would otherwise not have been able to take part in this thriving global marketplace. The next big advantage is that there are no swap fees on Islamic accounts. This way, you can open long-term positions while not violating the hand-to-hand principle.

What are the disadvantages of Islamic trading?

When traders short positions, they receive positive interest payments when they make profits. Muslim traders do not have the benefit of earning interest from shorting strategies. Also, when broker interest fees are removed, many brokers either make up for this through flat admin fees or by increasing the spreads on FOREX pairs, often to the detriment of Islamic traders.

Is FOREX trading allowed under Islam?

Purchasing currencies and profiting from the exchange of currencies is acceptable under Sharia finance. In the pursuit of improving their financial position, traders can pursue strategies like FOREX trading. However, they must never pay or receive interest.

If FOREX trading is allowed, are there any restrictions?

Yes. Many brokers do not permit Islamic traders to buy selected exotic accounts such as the Turkish lira or the Mexican peso. This is not an exhaustive list, so you are advised to check with your broker. The reason for banning some exotic currencies is because these countries frequently have financial systems featuring high interest rates. It is, therefore, haram for traders to be “associated” with these currencies.

Does Islam allow CFD trading?

No, this type of trade is not allowed. When you buy a contract for difference (CFD), you are not buying a product or the underlying asset of a type of instrument. You are trying to predict how the price will develop in the future so that you can benefit from making the right prediction. This is not acceptable according to Sharia finance because you are not taking an equal share in the risk of the transaction.
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Adrian Ashley
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