Forex Islamic Accounts, also known as No Riba Accounts, are accounts created, especially for Islamic clients. The Forex Islamic Accounts are formed keeping in mind Islamic beliefs. According to Muslim beliefs, a person should always give without expecting anything from others. As such, the Forex Islamic accounts are accounts where interests are non-existent. Forex trading quickly grasped the concept and the true significance of the belief and made available Forex Islamic accounts to Muslim clients. The Forex Islamic accounts allow Muslim clients to trade without paying interest on open positions.
Usually, clients are charged interest on positions they have opened. This is done not with the intention of exploiting clients but to compensate for the charges levied by banks. Roll over fees or Swaps or in other words ‘interest charges’ depend upon the currency pair, which is being traded. The Swaps can be adjusted from time to time. This is veracious because the interest rates of banks keep changing.
One major criticism of the very existence of Forex Islamic accounts is that the clients, who are not Muslim, feel that the law is unfair to them. However, this criticism does not hold ground, as forex Islamic account holders pay charges which normal forex account holders do not. The charges levied on forex Islamic Accounts differ among various companies.
Another criticism that the very foundation of Forex Islamic accounts has to face is that many clients’ derive unfair benefits because of the law. Many clients open positions and close them only after receiving a significant amount of profit. These positions are usually kept open for a significant amount of time. This causes losses to the forex companies which have to bear the brunt of the interests charged by banks. There have been many debates and heated discussions over the very existence the forex Islamic accounts! While the existence of the foundation undermines fair play, one cannot ignore the massive Muslim client population and their beliefs!
Selecting a Forex Islamic Account Broker
It is very important to select a reliable forex trader for forex Islamic accounts. This refers to a very unique type of trading especially when forex Islamic accounts are associated with a unique Islamic forex trader. This is a type of forex trading which you will never find in any other forex trading system. This step is also considered as very crucial before making any type of trading because an Islamic broker can offer you several other customer services and trading options other than forex Islamic accounts. This solution will allow other users besides Muslims to invest money in trading and forex systems. Forex trading system is a process in which a reliable broker whether he/she is Muslim or not will never ever ask about your religion to start trading forex.
Now, you will be thinking that if there is nothing going to be applied on the forex Islamic accounts in terms of interest then how does this account work? It so happens that whenever a forex trader announces that he is leaving his trading positions ‘open’ overnight, the standard broker will ask for a basic fee which is taken in terms of interest. This is a fee which is paid to the bank by the broker to leave the trade open overnight. This is the basic rule on which forex Islamic accounts work.
However, the fee which is provided by the broker to a bank is considered as problematic for Muslim community. According to the Muslim law, it is not righteous to receive money against ‘giving’. You can take it in a simple way that whenever a Muslim invests money in forex Islamic account or forex trading system, it is not allowed for him to get or pay money in terms of any kind of interest on the payment which he/she receives. It is a method which is sometimes followed by Jewish community as well. However, their trading system and trading accounts are totally different than that of forex Islamic accounts.
The concept of forex Islamic accounts were invented specially to assist Muslims to take part in forex trading because it is free of interest which is also considered as ‘Haram” in Muslim religion. Anyone from Muslim and non-Muslim community can easily open his/her account. However, before opening forex Islamic accounts, one should completely consider whether it is right for him/her or not. Sometimes, forex Islamic accounts come with several downsides of higher spreads but all of this depends on the selection of a good broker.