Islamic Accounts for Online Financial Trading

The definition of an Islamic account

Both currencies and commodities are traded in the spot market for 24 hours. At 5:00 pm New York time, all open positions are rolled over for the next 24 hours and the daily interest is added to the company’s accounts every 24 hours. The company can then either pay the interest or charge the client’s account to cover the fees.

With an Islamic account we make sure that there is no Riba in any form throughout the duration of the contract. In the currency market, if you don’t close the trade before 5:00 pm New York time, all open trades will be automatically rolled over, which normally poses a problem for those following Islamic law, due to the possibly usurious interest charged for the rollover. 

There’s no doubt that currency trading is one of the most difficult dilemmas in Islamic jurisprudence (Faqih). On the one hand, it requires the simultaneous exchange of currencies,  which makes it a kind of hand to hand exchange. On the other hand, contemporary scholars consider the record of money transferred to or from a bank account as delivery. To resolve the issue, several decisions and fatwas have been issued. According to these decrees, the conditions for trading currency are:

The solution

One can either trade as much as his money permits, or take a loan from broker on the condition that the broker doesn’t receive any usurious interest on the loan.

The benefits of an eToro Islamic account

How to open an eToro Islamic account?

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