Due to religious reasons, Islamic traders aren’t able to use normal trading accounts. Many brokers now offer an Islamic trading account as an alternative. These accounts allow Islamic traders to enjoy all the benefits of trading without going against the rules of their faith. While the account is similar to a normal binary trading account, there are a few key differences.
Not Available To Everyone
The most obvious difference is Islamic trading accounts aren’t available to all traders. Some brokers do offer them to all traders as to not discriminate on the basis of religion. Others do require you to be of the Islamic faith before allowing you to use this type of account. Consult your broker before joining to fully understand the requirements.
Based On Shariah Law
Muslims must follow Shariah Law, or Islamic Law, if they wish to trade. This means they are not allowed to earn interest on trades. Since the law forbids risky trading or gambling. These accounts are carefully created to ensure Muslims don’t break the law. Often times, an Islamic trading account may be called a Swap Free or Interest Free account since interest and fees are typically waived.
Possible Trade Restrictions
Since currency trading is often seen as a more risky option, it’s not always permitted under Shariah Law. This means some brokers may restrict Islamic accounts to commodities only. Muslims with these accounts are always encouraged to carefully consider every trade to avoid simply betting on whether prices will rise or fall. In most cases, most restrictions are left up to the trader since Islamic accounts trade on the open market.
Requires Special Training
Even if the broker doesn’t restrict the account, anyone practicing the Islamic faith must carefully study what is and isn’t allowed. Betting and random trades go against the religion. Any trades must be made for practical reasons, not just for fun or to recoup for previous losses.
If you’re opening this type of account, consider using a demo account first that doesn’t require any financial investment to better learn how to binary options trading works without breaking Shariah Law. With some practice and careful study of the market, binary options trading is possible and legal for Muslims.
Not Offered By All Brokers
While most brokers do offer some type of Islamic friendly account, some brokers don’t. Some may offer something similar, but you should check the account details carefully to ensure it meets the requirements of your faith before joining. For best results, only use a broker that offers an Islamic trading account. Some even offer custom accounts to further meet your needs.
While generally Muslims aren’t thought of as traders due to religious restrictions, they can trade by using a special account. You’ll still need to carefully consider every trade to avoid gambling or betting. While it can be tricky at first, once you’re experienced, it’s easy to understand when and what to trade without such high risks. If you’re ever concerned about what’s allowed and not allowed, talk to a broker who’s well versed in Islamic culture for guidance as you learn the ins and outs of Islamic trading.