Best Islamic Forex Brokers
While forex trading in is Islam can be haram, it is not impossible to trade in an accepted Islamic way. The most important step is to find a Forex broker that follows Islamic principles and offers swap-free trading to Muslim traders. In this guide, we take a look at the best Islamic forex brokers.
What do we mean by Islamic forex brokers?
A broker is considered Islamic if it offers swap-free trading accounts to customers who follow the Quran’s teachings and cannot pay swap fees due to their religious beliefs.
In several important ways, Islamic trading accounts differ from standard Forex accounts. Because Sharia law prohibits the accumulation of interest, traders who use Islamic accounts do not pay or receive interest rates on their accounts. Furthermore, transactions in Islamic finance accounts must be completed as soon as possible. This means that currencies must be transferred from one account to another immediately, and transaction costs must be paid concurrently.
Brokers typically do not promote this type of trading account because it can be less profitable for them, and the number of customers who request it is typically quite low. The few brokers who provide this manner of trading to their Muslim clients are regarded as brokers who offer Islamic or ‘swap-free’ accounts.
Our choice for the best Islamic forex brokers
We reviewed many Islamic forex brokers to determine the ones that offer the best features for Muslim clients. From our reviews, these are some of the best Islamic forex brokers:
Axi — Overall best Islamic forex broker
Admiral Markets — Best for MetaTrader platforms
XM Broker — Best for education
FP Markets — A wide range of tradable instruments
AvaTrade — Best for mobile trading
FBS — Best for multiple account options
VT Markets — Award-winning customer service
Blueberry Markets — Best for web trading
FXPrimus — Transparent fee structure
Are Muslims allowed to trade forex and CFDs?
Foreign exchange trading can be halal (acceptable) or haram (prohibited) under Islamic law, depending on the motivations and actions of the individual trader. Forex trading is permissible under Islamic law when done with a suitable trading strategy and using an Islamic account; however, trading with a conventional account that deducts interest violates Islamic law and is thus prohibited.
What is the Islamic teaching on interests?
According to Islamic teachings, practicing Muslims are prohibited from receiving or giving interest (Riba). This means that Muslims are not permitted to charge interest on debts or money owed to them.
The Arabic word riba is roughly equivalent to the concept of exceeding or increasing. It is commonly translated as ‘usury’ or ‘interest,’ and it refers to unequal exchanges or charges and fees for borrowing, both of which can result in interest payments. Riba, at its core, refers to financial and wealth gains obtained through unethical means.
All Islamic legal scholars agree that receiving or paying interest is prohibited under Islamic Sharia law. These are as follows:
- any interest earned on a deposit in a bank account
- interest payments for any type of borrowing or lending
- loans with an interest component taken out to purchase real estate
- loans with an interest component taken out for the purpose of funding educational programs
How to trade the Islamic way?
Since Sharia law prohibits the accumulation of interest, a practicing Muslim trader must trade with an account that does not pay or receive interest rates. In addition, transactions must be carried out without delay, and transaction costs must also be paid at the same time.
Finding an Islamic Forex account that offers swap-free trading for Muslim traders is required if you want to trade according to Islamic principles. Here is how to practice Islamic trading with different trading styles:
- Day trading: This involves opening a trade and closing it before the end of the trading day. Because open positions are not held overnight, swap payments are avoided.
- Scalping: This is a type of trading in which the trader opens positions to close them quickly, typically within a few minutes but sometimes even within a few seconds. Scalping, like intraday trading, has the advantage of not requiring interest payments because positions are not held overnight.
- Swing trading: Swing trading entails opening positions for several days or even weeks at a time. A swing trader who is committed to Islamic finance must use an Islamic account regardless of the circumstances to avoid incurring interest costs.
- Position trading: This refers to holding a position for a long time, often months and years. For this strategy, a Muslim must use an Islamic account that does not pay or receive swap interests.
What are swap charges?
For a non-Islamic account, when you keep a position open overnight, you are charged a swap fee, also known as a “rollover fee.” A swap is a difference in interest rates offered by the two currencies that comprise the pair you are trading. The amount you owe is determined by whether you have a long or short position in the currency with the higher interest rate.
Why does Islam forbid paying or accepting swaps?
Islamic teaching sees interests as haram, so it is not allowed for a Muslim to trade with an interest-paying account. The standard trading account is forbidden in Islam because its operation necessitates paying interest. On the other hand, an Islamic trading account is permitted because it does not require the payment of swap interests.
What is a swap-free account?
A swap-free account is a trading account that does not receive or pay swap charges. It is designed for Muslims whose faith forbid interest payments. However, some brokers may charge a fixed fee instead of a swap on this type of account to cover their costs. The fee, which is not considered interest, is determined by the nature of the order.
Can’t swap-free accounts be abused by non-Muslims?
Swap-free accounts are special accounts reserved for Muslim customers who adhere to Islamic religious beliefs. To ensure that non-Muslims don’t abuse the account, brokers that offer Islamic accounts use several methods to verify the faith of clients who want to open such accounts.
How does a broker regulate who uses its swap-free account?
The swap-free account was originally designed for Muslims, but brokers know that non-Muslims may want to abuse the account. There are different ways brokers verify the faith of a client before opening an Islamic account for them. One method is to ask for a letter from a local Islamic leader.
Comparing Islamic forex brokers
Which Islamic forex broker has the best trading platform?
Islamic forex brokers, just like regular forex brokers, strive to provide traders with the most intuitive trading platforms to ensure the ease of trading all available instruments.
One of the Islamic forex brokers with the best trading platform is Admiral Markets; the broker offers a full suite of MetaTrader platforms (MT4 and MT5), which are available on desktop, web, and mobile versions.
Which Islamic forex broker offers the best customer support?
Forex trading can become overly complicated, especially in sophisticated trading platforms. Hence, the need for the services of a knowledgeable customer support team who are available to respond to clients’ general, technical, and account-related inquiries.
VT Markets is one of the Islamic forex brokers with the best customer support team. The broker offers a responsive customer support team who are available 24/7 to respond to clients. Interestingly, the broker’s support team can be reached through multiple contact channels, including telephone, email, live chat, “request a callback” form, and various social media handles (Facebook, Instagram, Twitter, LinkedIn, and more).
Which Islamic broker offers the best learning resources?
The importance of a generous selection of useful educational resources cannot be overemphasized. XM is one of the brokers that boasts a good selection of educational resources, a trading academy, seminars, webinars, trading articles, trading guides, blogs, and more.
Which Islamic forex broker requires the least minimum deposit?
From our review, Axi is the Islamic forex broker with the lowest minimum deposit requirement. It has a minimum deposit requirement of $0, allowing traders to begin trading with any amount that they can afford.
Which Islamic forex broker has the lowest spreads?
From our real-time trading data, Blueberry Markets is one of the Islamic forex brokers with the lowest spreads. It maintains tight spreads starting at 1.0 pips on the Standard zero commission account and from 0.0 pips on the raw spread account. However, FXPrimus offers the lowest cost when you factor in the commission charges.
Which Islamic forex broker is the best broker for scalping?
FXPrimus is an excellent low-cost broker that is suitable for scalping. The broker offers the full suite of the MetaTrader and cTrader platforms and allows algorithmic trading programs used for scalping-based strategies. The broker’s Zero Spread Account (PrimusZero) offers one of the lowest trading costs (spreads plus commissions) in forex trading.
Which is the overall best Islamic forex broker?
According to our review, the overall best Islamic forex broker is Axi. The broker offers a suite of different account types with competitive trading fees, and the minimum deposit is $0, which is favorable for Islamic traders. The broker provides many learning resources and offers a reasonable range of tradable instruments, including cryptocurrencies.