Forex trading is exploding around the world, including everyone, from every country. That, naturally, also means that Muslim traders are being attracted to the potential to earn, just like everyone else.
However, due to the specific rules that come from Islamic law and Shariah, some aspects of traditional forex accounts are not suitable for Muslim traders, which is why they require access to Islamic forex brokers, which offer special, Islamic accounts.
In This Guide
If you already know what to look for in Islamic forex brokers and you simply want a list of the best platforms, here are our top four suggestions for you:
On the other hand, if you are brand new to trading and you wish to know more about these platforms, as well as why they are so good as Islamic forex brokers, read our reviews of each individual platform, and decide for yourself which one suits your needs the best.
Our first, and also the best Islamic forex broker is eToro, without any doubt. It is the best overall choice for Islamic traders in need of a swap-free account. eToro has been around since 2007, and it grew so large between then and now that it now services 20 million customers from all over the world.
Naturally, many of them are certainly Muslim traders who found the platform perfect for their needs. eToro offers Islamic accounts that have no rollover fees on contracts open for over 24 hours. More than that, the broker also does not have commissions for forex trading, and it is interest-free when it comes to leverage.
The platform offers access to over 40 major currency pairs, such as USD/EUR, as well as a number of minor pairs, so you are likely to find all of the most sought-after currencies paired against one another.
In addition to that, eToro is a very user-friendly platform that offers a wide variety of supported payment methods, such as credit and debit cards, Skrill, Neteller, PayPal, bank transfers, and alike, so you can deposit and withdraw money in the way that you find the most comfortable.
eToro does not charge deposit fees, and you would have to be inactive for over a year in order for its inactivity fee to take effect. But, the platform’s biggest advantage is social trading. eToro allows traders to copy others — professionals, who have years of experience in trading — and enjoy profits due to the same, or similar results. This is highly beneficial for newcomers to the world of trading, who do not have the necessary experience but wish to start right away.
Through copy-trading, the risk you undertake by putting your money on the line is much lower than what you would have to deal with if you simply tried your luck and engaged in random trades and moves.
Lastly, eToro is also regulated by some of the most reputable regulatory bodies in the world, many of which are known for being very strict, so its security and all other aspects are on point at all times. The only thing that you need to remember is that its minimum deposits — while being $50 for regular accounts — are $1,000 for Islamic accounts, due to the lack of overnight fees.
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Last, but not least, we have Capital.com, which is a CFD broker that offers CFDs based on a variety of underlying assets. Today, however, we are interested in forex, for which it offers a decent leverage ratio of x40 for all currency pairs. Trading CFDs with forex as an underlying asset can be very useful in situations where the currency prices begin to drop, as it allows traders to bet in the way the price will go, and get their profits if they are correct.
Buying foreign currencies directly would result in losses in such a situation, so do consider CFD trading if you are concerned about the prices going down. Capital.com also has its own trading platform, as well as MT4 support, so traders can choose which one they prefer. There are 140 currency pairs available, and in order to start, users only need to deposit a minimum of $20.
The platform is user-friendly, rich with tools, and it offers great leverage. However, like Libertex before it, it doesn’t offer Islamic accounts at this time, although this could easily change at some point in the future, so be sure to pay close attention to any such developments.
79.17% of retail investor accounts lose money when trading CFDs with this provider.
Next up, we have Libertex, which is another very popular forex broker that has been around for nearly 25 years. Given how competitive and unforgiving the trading industry is, a broker would not be able to survive a quarter of a century if it didn’t offer an excellent service, so you can be sure that Libertex will offer just what you need.
With that said, Libertex is very much focused on professional investors and traders, who get to use leverage with a ratio of 600:1, while retail traders only get 30:1 for forex. The reason why Libertex offers such a low leverage ratio for retail clients is the fact that it is heavily regulated, and regulations do not allow potential novices to engage in such risky trades.
However, the platform offers a selection of currency pairs that is more than decent, with over 50 of them in total. More than that, it supports both MetaTrader 4 and MetaTrader 5, which means that it is a great fit for professional and retail traders alike. Of course, you can also trade on its own web trader at any time.
Other than forex, Libertex also features cryptocurrencies, which are also very hot and sought-after these days. But, the best part is how available it is to everyone, as you can open an account and get started with a minimum deposit of only $10. The only problem is that the platform does not offer Islamic accounts at this time, although it is believed that it has plans to make them available in the future, so keep an eye out for that if you like this platform.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
In the third spot, we have Avatrade, and fortunately, this platform does offer Islamic accounts for Muslim forex traders. In fact, AvaTrade is one of the best options available for those who wish to buy and sell vanilla forex options.
The platform offers access to 55 forex pairs, most of which can be traded either as spot currencies or via options contracts. Both are completely free of commission, of course, and spreads are the only thing that traders need to think about. Spot trading is available through a mobile app or a webtrader, both of which are filled with features.
As for forex options, there is an entire custom platform called AvaOptions, which is also available on web or via mobile app, and it is very user-friendly and convenient to use. The platform is regulated by ASIC and the FCA, both of which are highly reputable, and its customer support is available for 24 hours per day during workdays. The best thing that Muslim traders will appreciate regarding this platform is that they can open Islamic accounts and deposit as little as $100 in order to access swap-free trading.
71% of retail CFD accounts lose money with this provider.
As you can see, the mentioned brokers have their similarities and differences, so let’s sum up the most common types of expenses that you can expect while trading on them.
You might be wondering why you need an Islamic forex broker, or Islamic account, in the first place. Is it really necessary?
The answer is — yes, Muslims do need it in order to avoid getting into conflict with the laws of their faith. You see, while trading forex is halal under Sharia law, trading forex with traditional accounts is haram, for one specific reason.
That reason is the fact that traditional forex accounts charge an overnight fee for those who leave their position open at the end of the day, and they remain open throughout the night and into the next day. Non-Muslim traders can just pay the fee and continue their trading, but when it comes to the members of the Islamic faith, these interest charges are a form of riba, or usury, according to Islamic finances, which goes against the Islamic law and Shariah.
With that in mind, Muslim traders who hold positions open at the end of the trading day would not be following Sharia law, which would, in turn, conflict with the Islamic faith. This was solved on trading platforms through the introduction of Islamic accounts, where such fees were excluded.
However, because of that, Islamic account owners can expect to find that they have to deposit higher minimums in order for their funds to reach their accounts, or they might have to pay slightly higher spreads for forex trades. They might even be charged a fiat commission. However, since they don’t pay overnight fees, while other traders do, the amount of money that all traders end up paying ends up being relatively equal.
If you are ready to start trading with your Islamic account, there are only a few steps left to be taken, starting with selecting a trading platform, and then opening and setting up your account. We can take you through all of the steps right now, and for the purposes of the guide, we will be using eToro, although the procedure is relatively similar on all platforms.
The first thing to do is to register on eToro, which you can do by going to eToro’s website, and clicking the sign-up button. You can register by creating a new account from scratch, or you can log in with your Google or Facebook account, and essentially skip this first step.
The next step would be to verify your identity. This is called a KYC procedure, and it is required by every regulated broker. It is done for your protection, as someone who might be trying to impersonate you would not be able to provide this information. eToro will need you to upload a photo of your ID, driver’s license, or passport, as well as your bank statement that is not older than 3 months.
Once your account is created and verified, your next step will be to deposit some funds. This is very easy to do through a ‘Deposit Funds’ button on the bottom-left side of the dashboard. Simply click it, and a new window will pop up, where you can enter the desired amount, choose a payment method and fill in the necessary details. After that, just click the Deposit button, and your funds will arrive shortly.
This next step is crucial for all Muslim traders, who are required to change from a standard to Islamic account with eToro. All they need to do at this point is contact customer support, which is available 24/5, and request to change their account to an Islamic one. The account status will be changed within one or two business days, and after that, you will be ready to start trading forex with no overnight fees.
Finally, once your Islamic account is activated, you can start trading. Simply search the currency pair that you wish to trade, or go to the ‘currencies’ section of the platform, where you will see all of the offered trading pairs. Then select the one that you wish to trade, and click the trade button. Enter the details in the new window, and click ‘Trade.’
You are, of course, free to use whichever platform you prefer. However, when it comes to our research, it suggests that eToro is the best platform for Muslim broker traders, overall. Keeping forex trading halal is a priority, and doing it with eToro as the best Islamic forex broker is easy.
It offers plenty of currency pairs, it eliminates overnight fees for Muslim traders, it is easy to use, and it is even one of the best platform for novice traders. The only downside is that the minimum deposits will be noticeably higher — from $50 for non-Muslim retail accounts to $1,000 for Islamic accounts. However, given that the overnight fees are removed, it ends up being the same for everyone in a fairly short period of time.
A swap charge is a special fee that traders have to pay in order for their forex position to remain open overnight. However, for Islamic forex accounts, this fee is disabled in order to allow them to participate without coming into conflict with the laws of their faith.
Islamic forex brokers typically require a higher minimum deposit in exchange for not charging overnight fees. In other cases, you may also see slightly higher spreads. But, swap fees on overnight positions are not present, so in the end, the amount that Muslim traders will use will be more or less the same as other traders.
The amount you need to open an Islamic account varies from broker to broker. Our top recommended service, eToro, requires a minimum deposit of $1,000, although some brokers let you do it for less.
Forex trading is halal as long as you use an Islamic account, which doesn’t charge interest on overnight positions.
Absolutely, most forex brokers offer trading with leverage, which may be high or low, depending on whether you own a standard or professional account.
Ali is an experienced writer covering the cryptocurrency markets and the blockchain industry. He has 8 years of experience writing about cryptocurrencies, technology, and trading. His work can be found in various high-profiled investment sites including CCN, Capital.com, BeInCrypto, Bitcoinist, and NewsBTC.
Best UK Stock, Forex, CFD, Crypto, Social or Day Trading Platform that meets your needs.