Believes

What type of trading is this ?

The Veritas Group Inc since the beginning has decided to make sure it’s private hedge share trading account to be 100% legit bound to federal law. Thus, Veritas Inc provides two types of trading platform one is for the general public and one for the specific islamic trading platform. Veritas Inc trading is a hedge fund group that provides individuals to trade and invest in share assets owned by the managing group of Veritas by engaging in contract between the firm and themselves.

Is Currency Trading Halal

Forex trading is increasingly accessible and the potential for quick money draws more traders in every day. On the surface, this looks like one of the halal investment opportunities as you’re simply buying and selling money. However, dig a little deeper and you might wonder is forex trading actually haram?

If you were to buy £4,000 for $2,5000 and sell it six months later when the pound appreciates against the dollar, then this is a halal transaction. But in reality there remain several issues.

Is Buying Shares Halal

It is generally accepted that buying stocks is not haram. This is because you are simply owning a percentage in a business. However, you do need to be sure the company in question is not dealing in a un-Islamic manner. Companies like Guinness (alcohol) and Ladbrokes (gambling), for example, would not be allowed.

You can break down companies form an Islamic perspective into three categories:

  1. Shares from permissible practices – Shipping, manufacturing, clothing, medical equipment, real estate, tools, furniture, supplies and so on are all free from haram practices or transactions, such as cheating and borrowing on the basis of riba (unjustified lending). These companies are also known as ‘clean’ companies.
  2. Shares based on prohibited practices – Any company that deals in tourism, alcohol, hotels, nightclubs, pornographic materials, riba-based banks, commercial insurance companies, etc, is not permissible. In these circumstances the stock market is haram.
  3. Shares based on partly haram practices – Whilst the majority of the work may be permissible, some practices are haram. Transportation companies, for example, hold interest based-bank accounts and are often financed by riba-based loans, or individuals through stocks. These types of companies are known as ‘mixed’ companies.

So, what do you do if the company deals in goods and services that do not agree with Islamic law?

You do not invest. If you want to avoid any potential conflict the easiest decision is to avoid buying and selling shares in the stock at all. Having said that, there remains some wriggle room. In some cases, you may still be able to trade and remain halal.

What is Veritas Trading ?
  1. The trader chooses a company selling shares offered as a TVG by the broker. It could be a stock, an index, a currency or any other asset that the broker has in their selection.
  2. The trader opens the position and sets parameters such as whether it’s a long or short position, leverage, invested amount, and other parameters, depending on the broker.
  3. The two engage in a contract, agreeing what the opening price for the position is, and whether or not additional fees (such as overnight fees) are involved.
  4. The position is opened and remains open until either the trader decides to close it or it is closed by an automatic command, such as reaching a Stop Loss or Take Profit point or the expiration of the contract.
  5. If the position closes in profit, the broker pays the trader. If it closes at a loss, the broker charges the trader for the difference.
Is Trading Binary Options Halal

Unlike other forms of trading, binary options offer more straightforward trades then a lot of other instruments, such as stocks and forex. The option will either pay out a fixed amount of compensation if the option expires in the money, or it will pay out nothing if the option expires out of the money.

If the trader has little knowledge of what and how to trade, then to trade binaries would be a form of gambling, and not halal.

On top of that, because each contract must have a winner and loser, this is arguably not halal. For not every party can profit or extract value from the trade. So, it’s worth noting that many consider binary options fundamentally haram.

Islamic Trading Accounts

It is clear that halal online trading will depend partly on your actions and partly on the broker you opt for. Whatever your online Islamic investment, be it stocks, forex, or options, for a broker to claim they offer accounts based on Islamic principles, they need to meet the following criteria:

  • Immediate execution of trades – Cutting out the delay helps satisfy the rule of prompt hand to hand exchanges between two parties.
  • Immediate settlement of transaction costs – Be wary of accounts where open trades are automatically rolled over to the next trading day, as they may incur interest charges for the rollover.
  • Zero interest rates on trades – To avoid breaking rules around riba, there must be no interest. Any interest will deem the contract invalid and not halal.
Final Word

There will always be a divide in opinion as to whether day trading is halal or haram. It must also be noted that despite in-depth research into numerous sources, this page is not trying to offer readers religious advice. Instead, it looks to collate viewpoints and present them in an easy-to-digest format.

Whilst there certainly remains a substantial number of people who conclude Islamic day trading is halal, perhaps the best steps you can take are to choose your broker carefully and evaluate your trade decisions with the parameters of halal in mind.

Solutions

Fortunately, it is relatively straightforward to stick with just halal shares. Most scholars agree you simply need to avoid companies where a considerable amount of their stock value is tied to large piles of debt/cash. Instead, opt for companies where the value is derived from their broader business.

You can actually find Islamic stock screeners that will identify halal stocks for you. However, such software is relatively expensive. Alternatively, most platforms allow you go get a screenshot of the company, highlighting their debt levels and market capitalisation.

For the most part, common sense is your greatest weapon. Avoid heavily leveraged companies that are concerned with the buying and selling of haram goods and services. So, in summary, whether stock trading is halal or haram, entirely depends on the companies you opt for and how much profit you retain

Section

Most Scholars are in agreement that if the company only deals in a fraction of un-Islamic goods and services then you may still invest. It is suggested that you simply give away the percentage of the profits that are created by the haram section of the business. So, if 10% of the company’s profits stem from alcohol, you’d donate 10% of your profits to a charity.

Ownership

Another part of the answer to ‘is forex trading legal in Islam?’ centres around ownership. You are merely speculating whether the value of the currency will increase or decrease, so is this halal?

This is difficult to answer definitively and it may be something you want to seek specific religious advice on.

Leverage

To make substantial intraday profits from tiny price movements you need to invest large sums of money, thousands, if not hundreds of thousands of pounds. So, to alleviate this problem forex brokers offer you leverage. In effect allowing you to invest £50 or £75 for every £1 you put up. You can now take much larger positions and increase your profit.

However, this is in effect a loan. In Islam, it is permissible to borrow from someone for the purposes of investing to make a profit and then return that loan interest-free to the creditor.

However, with forex brokers, they are lending you the money for the sole purpose of taking a commission. Effectively they will make a return on every trade. Many scholars consider this a form of interest, making trading forex haram.

Currency

Muslims make use of money, just like every other religious group. What causes haram in finance is if money is used in impermissible methods. Some of these impermissible methods include:

  • Riba – charging interests for loans
  • Bribery – illegal financial payments
  • Gaining money from shady sources like through lotteries and gambling
  • Exploiting money from others. For instance, you underpay your staff, or you make a profit over what is not yours.
  • Money hoarding

Among all listed methods above, ethereum trading is halal.

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