| Updated: January 15, 2025In recent years, the forex market has experienced significant growth, attracting traders from diverse backgrounds and cultures. Among them are many Muslims who adhere to the principles of Islamic finance and seek to engage in forex trading while complying with the Sharia law.
To cater to this growing demand, most forex brokers now offer Islamic accounts, also known as swap-free accounts, specifically designed to accommodate the unique needs of Muslim customers. In this article, you will find in-depth information about Islamic accounts, including how they work, their main features, and the benefits of using them.
Below you can find a list with Forex brokers that support Islamic accounts:
Top 6 Forex Brokers with Islamic accounts
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FXTM
- Established brokerage company regulated by UK FCA, Kenya CMA, and Mauritius FSC
- MT4, MT5, Mobile Trading Platform
- $1M Lloyd’s of London account insurance
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FP Markets
- Australia & CySEC regulated broker
- MT4/MT5, TradingView, Ctrader, Iress
- EUR/USD spread from 0.0 pips
Trading Instruments- Forex CFDs
- Shares CFDs
- Metals CFDs
- Commodities CFDs
- Indices CFDs
- Crypto CFDs
- ETF CFDs
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Pepperstone
- Australia & CySEC regulated broker
- MT4/MT5, TradingView, Ctrader, Iress
- EUR/USD spread from 0.0 pips
Trading Instruments- Forex
- Indices
- Commodities
- Cryptocurrencies
- Share CFDs
- ETFs
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Plus500
- Multi-Level Regulated Broker
- Proprietary trading platforms
- Easy to use mobile app
Trading Instruments- CFDs on: Forex
- Crypto
- Indices
- Commodities
- Stocks
- Options
- ETFs
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Fusion Markets
- Australia regulated broker
- MT4, MT5, TradingView, Ctrader
- Leverage up to 500
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IG
- Offers different account types, including DMA (Direct Market Access) one
- Offers turbo warrants on forex pairs, commodities, indices, and equities
- Supports popular platforms like MT4 and TradingView as well as ProRealTime, L2, and more
Trading Instruments- CFDs on Indices
- Shares
- Crypto
- Futures
- Commodities
- Options
- Interest Rates
- Sectors
- Bonds
- Knock-out trading
Brokers Compared by Spread
| Brand | Commission per lot | |
|---|---|---|
| FXTM | 0.1 | |
| FP Markets | 1.1 | $0 Standard Account; $6 round turn on Pro Account |
| Pepperstone | 1.00 (min) | $0 (Standard Account), $7 round-turn (Razor Account) |
| Plus500 | 1.2 | $0 |
| Fusion Markets | 0.93 avg (Classic) | $0 Classic Account, $4.50 round turn on Zero Account |
| IG | 0.86 av.spread | $0 |
FX Brokers Deposit Method Comparison
| Brand | Minimum deposit | |
|---|---|---|
| FXTM |  |
$200 |
| FP Markets |  |
$50 (AU$100) |
| Pepperstone | |
$0 |
| Plus500 | |
$100 |
| Fusion Markets | |
$0 |
| IG | |
$0 |
Forex Brokers by Regulator
| Brand | Maximum leverage | |
|---|---|---|
| FXTM | |
1:2000 |
| FP Markets | |
1:30 |
| Pepperstone | |
1:30 |
| Plus500 | |
1:30 |
| Fusion Markets | |
1:30 (1:500 for forex and metals via VFSC) |
| IG | |
1:30 |
Forex Brokers Platform Availability
| Brand | FX pairs to trade | |
|---|---|---|
| FXTM | |
|
| FP Markets | |
70+ |
| Pepperstone | |
90+ |
| Plus500 | |
60+ |
| Fusion Markets | |
80+ |
| IG | |
80+ |
Comprehensive Comparison of the Best Islamic accounts Forex Brokers
| Brand | Min. Deposit | Trading Platforms | Spread | Regulation | Trustpilot |
|---|---|---|---|---|---|
 |
$200 |
|
0.1 |
|
|
 |
$50 (AU$100) |
|
1.1 |
|
|
 |
$0 |
|
1.00 (min) |
|
|
 |
$100 |
|
1.2 | ||
 |
$0 |
|
0.93 avg (Classic) |
|
|
 |
$0 |
|
0.86 av.spread |
|
The Main Principles of Islamic Forex Trading
Islamic forex trading is guided by a set of religious principles, known as the Sharia law. Said principles are designed to ensure all trading activities are conducted in a fair and transparent manner. Islamic traders cannot enter into transactions that involve any form of exploitation, deception, or uncertainty, known as gharar. Continue reading to learn more about what is prohibited under the Shariah law.
- Prohibition of Interest
One of the key principles is the prohibition of riba, which refers to the collection or payment of interest on loans or investments. In the context of forex trading, this means that traders cannot earn or pay interest (swaps) on leveraged overnight positions, as this is considered to be a form of usury.
- Prohibition of Speculation
Another important principle is the concept of gharar, which refers to the avoidance of uncertainty or speculation in trading activities. This means Muslims should avoid entering into trades that involve excessive risk or uncertainty, and should instead focus on making informed decisions based on careful analysis and research.
- Transparent and Fair Trading Conditions
Islamic forex trading emphasizes the importance of transparency and fairness in all trading activities. This means that Muslims should avoid engaging in practices such as price manipulation or insider trading. They should instead focus on making trades based on genuine price movements and market trends.
What Are Islamic Forex Accounts?
These are specialized trading accounts that comply with the principles of the Sharia law we described above. Also known as swap-free accounts, they do not involve paying or earning interest on leveraged positions that remain open after the forex market closes for the day. Here is a brief rundown of the main features inherent to Islamic accounts.
- No swap or rollover charges on overnight positions
- No interest earned or paid on trading accounts
- Trading is done on a spot basis, with settlement occurring within two days
- No trading of currencies that are not backed by tangible assets
- Strict adherence to Sharia law and Islamic principles
- Availability of Islamic-friendly trading platforms and tools
- Access to fewer currency pairs and restrictions on certain financial instruments
Expenses Resulting from Using Islamic Accounts
Traders who use Islamic accounts can anticipate various expenses, including commissions, spreads, and administrative fees. Commissions on Islamic accounts can vary depending on the broker and the specific account type, and are typically charged on a per-trade basis. Some brokers may charge a fixed commission per trade, while others deduct a percentage of the trade value.
Spreads on Islamic accounts may also be wider than those on conventional accounts, which can increase trading costs. This is because Islamic accounts often involve a higher level of manual intervention and oversight to ensure compliance with the Shariah law, which can result in higher operational costs for the broker.
Islamic accounts often come with fixed administrative fees for positions held beyond the daily market close. These fees vary depending on trade volume and currency pair, with major pairs typically incurring lower fees. A brief grace period is usually given before the fees start accruing.
Brokers often adjust their fee schedules to account for increased weekend holding costs. Specifically, fees may triple on certain days, such as Wednesdays for forex and Fridays for indices, resulting in higher charges for traders holding positions over these days.
Allowed and Prohibited Markets for Traders with Islamic Accounts
Traders with Islamic accounts have access to a wide range of financial markets, but there are certain restrictions in place to ensure compliance with the Sharia law. In general, Islamic accounts allow traders to participate in markets that involve the exchange of tangible assets, such as currencies, commodities, and stocks.
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Major and Minor Forex Pairs Are Okay from Sharia Perspective
For example, traders can buy and sell major and minor currency pairs, as well as commodities like gold, oil, and silver. Additionally, Islamic accounts often provide access to index trading through CFDs, allowing their owners to speculate on the performance of major stock market indices like S&P 500, FTSE 100, and the Dow.
On the other hand, certain markets are prohibited for traders with Islamic accounts. These include markets that involve excessive speculation, uncertainty, or exploitation. For instance, trading exotic forex pairs and currencies that are not backed by tangible assets or have high volatility is often not permitted. Similarly, certain markets that involve the use of leverage or margin may be restricted, as they can be seen as a form of usury.
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Debt Securities, Futures, and Forwards Are Off Limits
Furthermore, Islamic accounts may not allow customers to participate in trades that involve complex derivative instruments and debt securities like futures, forwards, and bonds, as these can be seen as uncertain or speculative. Futures contracts, in particular, do not sit well with Sharia principles since they practically are agreements to buy or sell an asset at a future date.
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Spread Betting Is Disallowed
Spread betting on forex pairs is prohibited with Islamic accounts because it involves speculation and betting on the price movement of a currency pair, rather than actually owning or exchanging the underlying asset. This is considered a form of gambling and is, therefore, forbidden under the Sharia law.
Eligibility Criteria and Registration Process in Brief
To open an Islamic forex account, traders must meet specific eligibility criteria, which typically include being a Muslim and adhering to the Islamic principles. The registration process involves filling out an application form and uploading the requested documentation to verify the trader’s identity and faith.
This may include a copy of a passport, national ID, or other government-issued identification, as well as a certificate or letter from a mosque or a similar religious organization confirming the trader’s faith. Many brokers will also require additional documentation, such as a proof of address or income. Once the application is approved, which takes a couple of business days in most cases, the customer can fund their account and begin trading.
It’s worth noting that the registration process may vary depending on the broker and the trader’s location, so it’s essential to review the specific requirements before applying for an Islamic forex account. By following these steps, traders can ensure a smooth and compliant registration process.
Strategies Suitable for Traders with Islamic Accounts
Traders with Islamic accounts can employ a variety of strategies to navigate the forex markets, while adhering to the principles of the Sharia law. Understanding the unique requirements and restrictions imposed on Islamic accounts enables you to develop more effective trading strategies that align both with your religious values and investment goals.
- Day Trading
Day trading is a popular approach among Islamic account users, as it involves opening and closing positions within a single trading day. This strategy eliminates the need for overnight financing and reduces the risk of exposure to interest-based transactions. By focusing on intraday price movements, traders can capitalize on market fluctuations and close their positions before the end of the trading day, thereby avoiding any potential conflicts with the principles of Islamic finance.
- Swing Trading
Swing trading is another strategy suitable for people with Islamic accounts. This approach involves holding positions for a shorter period, typically ranging from a few days to a week, and can be used to capture medium-term price movements. By using technical and fundamental analysis, traders can identify trends and patterns in the market, and adjust their positions accordingly. Swap-free Islamic accounts are a must for swing traders of the Muslim faith, enabling them to hold positions for over a day while completely avoiding interest.
- Scalping
Scalping is a high-frequency trading strategy that involves making multiple small positions within a single day and holding them for no more than several minutes or even seconds. While scalping can be used with Islamic accounts, it is essential to ensure that all positions are closed before the end of the trading day to avoid any potential conflicts with Islamic principles. By using scalping techniques, traders can take advantage of small price movements and accumulate profits over time, while remaining compliant with the requirements of their religion.
Advantages and Disadvantages of Using Islamic Forex Accounts
Islamic forex accounts offer a unique trading environment that aligns with the principles of the Sharia law. Using them is associated with several benefits but there are also a few downsides traders should carefully consider before applying for this account type.
Advantages
- The compliance with the Sharia law allows Muslim traders to participate in currency pair trading without compromising their religious beliefs.
- The absence of swaps or rollover charges reduces the trading costs for holding overnight positions.
- Muslim customers feel more confident knowing their trading activities align with their values and principles.
Disadvantages
- The spreads are slightly wider which can increase your trading costs and reduce profitability.
- The trading conditions are often more restrictive due to limited leverage and stricter margin requirements that can result in fewer trading opportunities and less flexibility.
- Certain types of financial instruments like futures and bonds are off limits to traders with Islamic accounts.
FAQ
Is forex trading halal or haram?
Forex trading can be both halal and haram, depending on the circumstances. If trading is done in a way that complies with the Islamic principles, it can be considered halal. However, if it involves paying or collecting interest, or other prohibited activities, it can be considered haram.
What leverage can I use with Islamic accounts?
The leverage available with Islamic accounts can vary depending on the broker and your country of residence. However, many Islamic accounts offer leverage ranging of up to 1:30 for currency pairs, particularly to Muslim traders residing in the EU, the UK, and Australia.
What are the most common minimum deposit requirements for Islamic accounts?
The minimum deposit requirements for Islamic accounts can range from $100 to $10,000 or more, depending on the broker and the specific account type. Some brokers may offer lower minimum deposit requirements of $50 or $25, for example, while others may require higher deposits.
What platforms are available to Islamic account users?
Islamic account users can access a variety of trading platforms, including MetaTrader 4 & 5, cTrader, TradingView, and other Islamic-friendly platforms. These platforms offer a range of features, including tools for technical and fundamental analysis and automated trading.
Why do brokers require Proof of Faith documents?
Brokers require Proof of Faith documents to verify that the trader is a Muslim and adheres to Islamic principles. Otherwise, less scrupulous onboarding clients may attempt to open Islamic accounts simply for the sake of interest-free trading. The Proof of Faith document can be a certificate from a mosque, a letter from an Islamic scholar, or other documentation that verifies the trader’s faith.
Why You Should Trust RationalFX
When it comes to making informed decisions about forex brokers, it’s essential to rely on trustworthy sources. RationalFX, a company with over 17 years of experience since its founding in 2005, has established itself as a credible authority in the industry. With an impressive collection of over 2500 reviews on Trustpilot, boasting a score of 4.2, it’s clear that Rational FX has built a reputation for providing reliable and unbiased information.
What sets Rational FX apart is its rigorous evaluation process, which considers over 30 different criteria when selecting forex brokers. This comprehensive approach ensures that every aspect of a broker’s service is taken in consideration, including regulation, forex spreads, trading platforms, deposit methods, and reputation. With its wealth of experience, transparent review process, and outstanding customer feedback, Rational FX is a trusted source for anyone seeking reliable information on forex brokers. You can reach us via e-mail at [email protected] or contact us through our social media accounts here: Facebook, YouTube, or leave a feedback here.