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While many people look at the prestige of each broker, the best way to determine the best broker for you is by carefully evaluating your needs as a Forex trader. New traders will benefit significantly from brokers who offer additional educational materials. Experienced traders Will benefit more from brokers who provide Advanced trading platform tools. Check out our list of best Forex brokers with Islamic accounts below…
- XM Trade – best overall trading platform
- Forex.com – has the best all-round offer
- AVAtrade – easiest to use trading platform
- XTB offers the most currency pairs and analysis tools
- FXCM is the Best broker for technical analysis and tools
List of the Best Islamic Forex Accounts
BEST OVERALL: XM Trade
XM.com is part of a much larger organization called the Trading Point of Financial Instruments UK Limited. This organization created the exam group in 2009, which then founded XM.com, which is now one of the best established and well-known investment firms in the world.
With over 1.5 million clients in 196 countries, the XM global company focuses on three core principles:
Be big, Be fair, Be human.
USERS CHOICE: Forex.com
FOREX.com is a forex and CFD broker offering over 84 currency pairs and 230 CFD's across major asset classes. The brand is part of the GAIN capital holdings which operates in multiple countries holding licenses from many different regulatory hubs including UK, US, CA, Japan and Australia.
We would recommend this platform to active and mid active traders as they will benefit from slightly lower trading fees and spreads.
EASIEST TO USE: AVA Trade
For a start, Avatrade boasts some pretty impressive business statistics, facilitating over two million transactions every month, with total values regularly exceeding $60 billion in value. These transactions aren’t only limited to forex trading, but extends to other financial instruments such as digital currency, bonds, different binary options and CFDs.
XTB is primarily a CFD and forex broker regulated by the most trusted financial regulators including the FCA and is also listed on the Warsaw stock exchange.
We would recommend this platform to users looking for fast deposit and withdrawal + great research tools.
FXCM is a UK based forex broker which offers some CFD's as well and is regulated by some top tier regulators like FCA and ASIC.
We would recommend this platform to users looking for great technical research tools.
No minimum deposit required so feel free to give it a shot - inactivity fees charged only after a year.
The Islamic Forex Account
Using a regular Forex trading account might be against your beliefs, primarily if you practice the Islamic faith and observe Sharia law (also spelled Sharīʿah law). That’s why some of Forex brokers now offer Islamic forex accounts. However, it can be challenging to identify forex trading accounts that comply with Sharia law, so careful consideration of your religious guidelines is needed as you evaluate the features that each broker offers.
A ḥalāl account or and Islamic forex trading account has many differences from a traditional Forex account. Probably the most significant difference is that Islamic accounts do not allow for the earning of interest on their deposits. This is because Sharia law does not allow for “money from money” (called Riba). This prohibition includes rollover interest, swap points, and many different types of loans.
In addition, Sharia law requires that all transactions be completed immediately. This requires that all funds and costs be transferred and deposited immediately after any transaction occurs.
The two critical aspects of Sharia law that affect the use of forex accounts are Riba and Gharar.
Riba can most easily be translated as “Usury” and specifically includes all forms of interest. Both the terms Riba and “usury” contain a strong feeling of unjust earnings caused by conducting business or trade.
Gharar is most easily translated as “gambling” but in tales also for a strong understanding or feeling of any business negotiation that is excessively hazardous or risky. Gharar is strickly prohibited under Sharia law, but what activities qualify as gharar is more challenging to identify. For example, many would consider CFDs or Forex speculation to be gambling or gharar. However, investing in less risky areas such as the bond market or certain highly stable stocks would not be considered gharar.
Shortlist of financial activities that be affected by Islamic prohibitions:
- Overnight rollovers are prohibited under Sharia law because they constitute a form of riba.
- Earning interest on margin deposits is also prohibited along with all forms of accrual of interest.
- Almost all forms of margin trading involve paying and earning interest. This would qualify as riba and would be against Sharia law.
- Trading futures would qualify as gharar as it is an agreement to buy or sell at a future date (instead of right now). Sharia law prohibits this kind of future-based investing.
Key Points Of Islamic Forex Accounts
First, in order to ensure the safety of your money, it is essential to have the appropriate oversight from a respected regulator. Five of the top tier of regulators are the US commodity futures trading commission, the Cyprus Securities and Exchange Commission, the national futures association, the Australian securities investment commission, and the financial conduct authority.
Be sure to evaluate and discuss the specific terms and conditions that are offered to you by your broker for your Islamic account. This is important because there are many differences between brokers, and not all Islamic accounts are the same. For example, some Islamic accounts require a higher deposit then non-Islamic accounts. These differences can also affect spreads and maximum leverage ratios.
Also, be sure to evaluate all of the standard elements that are important to any Forex account, such as customer support, asset types, trading platform, and currency pairs.
There are some disadvantages to trading in an Islamic account in the form of restricting access to money-generating tools. However, as many of these involve riba or gharar, using an Islamic account can be helpful in complying with your religious tradition.
It’s also important to note that day trading strategies (that normally close out their positions by 5 PM each day) avoid any rollover. In practice, this avoids riba and allows you to use a regular account for Forex trading. However, long-term traders that plan to run positions overnight with some regularity will be better served by brokers that offer Islamic accounts such as (insert here).
If you’re looking for more information about Forex trading, check out ThinkMarkets and easyMarkets because they provide better educational resources than most brokers.
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