Are Binary Options Halal and Compatible with Islamic Traditions? Here we take a look at the meaning of Sharia Law for binary options trading and whether it is “Halal” or “Haram”. The development of online trading in the financial industry over the past 20 years has opened up new horizons for retail traders of all races and creeds. As a quarter of the world’s population is Muslim, it is inevitable that more and more Muslim traders will join the online Islamic binary options trading scene. In Islamic economic jurisdictions or Sharia law, charging “riba” or interest is prohibited and considered a major sin. Many brokers came up with the idea of “halal” as they sensed an opportunity to benefit themselves and their Muslim traders.
Halal Binary Options Brokers in South Korea
This broker is marketing specific account types that are halal-operated and compatible with Islamic traditions and Sharia law.
Are binary options halal or haram?
The life of a Muslim is guided by Sharia law. Sharia is actually an old Arabic word that means “path to follow”. Muslims are expected to abide by Islamic principles that cover all aspects of life, from social issues to economic issues outlined in the Holy Qur’an. In the banking and investment sector, Sharia law prohibits the lending of funds in monetary terms. Instead, investments in the Islamic world are governed by the concept of “risk sharing” with principles such as Bai’ al’inah (sale and repurchase agreement), Bai’ bithaman ajil (delayed sale), and Bai’muajjal (credit sale). ), Vaisalaam, Mudarava (profit sharing), Muravaa and Musawama
When Sharia law is applied to binary options trading, it means that taking positions overnight or interest charged is also prohibited. In the spot finance market, trading takes place on a 24-hour basis. All open market positions until 5:00 PM New York time will roll over on the next 24-hour cycle. Then, each interest is added to your broker account. Regardless of whether a binary broker debits or credits a customer’s account at a profit like a forex broker, the fact that interest can accrue or be paid during a trading transaction makes trading “param” to Muslims. This situation puts Muslim traders on a collision course with their religious beliefs.
Islamic trading accounts
To overcome this dilemma, some innovative binary options brokers have come up with the idea of Islamic trading accounts, or “swap free” accounts, which eliminate all forms of Riba during trading. For example, instead of automatically transferring open market positions to allow you to pay overnight interest, open positions in Islamic trading accounts close by 5:00 PM New York and then reopen immediately, avoiding interest payable over a 24-hour cycle. there is.
For a broker to be able to claim to offer trading accounts in accordance with Islamic principles, these accounts must at least meet the following conditions:
- Execute trades immediately
- Instant settlement of transaction costs
- Do not pay interest on transactions
We have compiled a list of the top binary brokers offering Islamic trading accounts to help traders choose a broker offering Islamic trading accounts. The above list is not exhaustive and is only a guide.
Other considerations
If someone has used a halal binary options account but has little or no knowledge of how to trade or how to trade, they will gamble using binary options. This is definitely Haram. Only individual traders can know if this is true.
It also means that binary options cannot be halal because each contract or trade must have a ‘winner’ and a ‘loser’ so not all parties can profit or extract value from the trade. . Although some brokers offer “Islamic” accounts and take steps to adhere to Islamic principles, there will always be people who view the entire concept of binary options as Haram.
This site (binaryoptions.net) cannot take a position on whether binary options are truly halal or haram. Actually we cannot advise on that matter as it may also depend on the individual trader’s skills. See the reference below for a detailed explanation.
