Islamic Forex Brokers and Islamic Accounts
Muslim Friendly Forex Acounts
Islamic Forex accounts or Muslim friendly Forex account simply mean a lack of swap. As we know that Swap is the interest rate difference on the two currencies of the currency pair you are trading.
Islamic religion prohibits interest or the gains which you get without providing any services. In Arabic interest is called “Riba” and such accounts which do not offer interest rate swaps are also called “Riba free accounts” or “no riba accounts”.
In fact there is no point in going thru the religious intricacies and details of the same can be found at different sources including Wikipedia but just for people who have some curiosity we will try to cover this point.
Islamic religion forbids the following:
1) Gains on money because of any kind of speculation without providing any services:
Possible Reasoning: You should not earn only because you already have money. What about the poor people?
2) Gains because of unequal exchange of commodities in terms:
Possible Reasoning: You may be taking advantage of a person in need of something while he/she cannot afford it by exchanging commodities of unequal quantities. You may be offering something of less value which the person really needs by taking something of higher value which he/she has but can spare because of the more important needs.
Islamic Forex Broker:
A broker which offers a swap free trading account i.e. an account where a trader can get profits because of the trading activities but not any gains or losses because of interest rate difference on the base and quote currencies of the currency pairs being traded.