About Forex Islamic Accounts

An Islamic forex broker provides services compliant with Islamic law (Sharia), specifically offering “swap-free” accounts. These accounts do not involve interest charges on positions held overnight, a practice that is prohibited in Islam. The broker’s operations also avoid elements of uncertainty and gambling, which is in line with Islamic principles.

With its Islamic trading account, eToro provides a user-friendly, secure platform for forex trading, featuring a diverse range of currency pairs, social trading capabilities, educational resources, and reasonable fees, making it appealing for all skill levels.

Need a swap-free account? Here Are the Best Islamic Brokers in 2023

eToro – A social trading platform offering Islamic accounts compliant with Sharia principles.
Avatrade – Provides Islamic trading accounts with swap-free options and Islamic financial products.
IC Markets
FP Markets – A full-service broker with Islamic investment options but no specific Islamic account.
Plus500 – Provides interest-free Islamic accounts compliant with Sharia law.

Best Islamic Brokers — Full Analysis (Updated in 2023)

eToro

eToro offers an innovative social trading platform that makes it easy for beginners to copy trades from more experienced investors. The intuitive interface and focus on community engagement give eToro the feel of a social network.

However, limited assets, tools, and account types restrict the platform’s usefulness for some advanced traders. eToro shines beyod just forex, including crypto trading and fractional shares but even for these it lacks robust research amenities and advanced order types.

The platform appeals most to novice investors seeking exposure to forex through social trading – and of course, to Islamic traders thanks to its Shariah-compatible forex trading account.

Pros:

eToro is an innovative social trading platform that makes copying trades easy
eToro users enjoy an intuitive interface with a social network feel which is set to engage users
The company has an established reputation as one of the most well-know brokers on the internet

Cons:

Limited currency pairs (relatively speaking) and limited tools can restrain advanced traders
In particular, lack of robust research tools can hinder analysis

Absence of advanced order types restricts trading.

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AvaTrade

AvaTrade is a global forex and CFD broker founded in 2006. It is regulated in tier-1 jurisdictions like Ireland, Australia, and Japan, making it a trusted broker. AvaTrade offers a good range of tradable assets including forex, CFDs, and crypto. It also offers an Islamic swap-free forex trading account.

It provides multiple trading platforms like MetaTrader 4/5 and its own AvaTradeGO mobile app. Deposits and withdrawals are free. Spreads are competitive for professional accounts.

However, inactivity fees are high. Overall, AvaTrade is a reliable broker with good platforms, but fees could be lower. It’s a decent option for beginner to intermediate traders – and for those looking for a swap-free forex trading account.

Pros

Regulated in tier-1 jurisdictions like Ireland and Australia for safety
Offers multiple trading platforms like MetaTrader and AvaTradeGO app
Professional account spreads are competitive at around 0.6 pips (20)

Cons

Limited to only forex, CFDs and crypto assets, lacking stocks
Inactivity fees are high at $50 per quarter after 90 days
Withdrawals are slower than expected at around 3 business days

[Try [Avantrade] >>]

IC Markets

4x short point about – Minimum Deposit, Our Score, Tradeable Symbols (Total number), Maximum Leverage

IC Markets is a leading forex and CFD broker known for its ultra-fast execution speeds, tight spreads starting from 0 pips, and support for all trading strategies. Regulated in multiple jurisdictions, it provides access to over 500 instruments across forex, commodities, indices, shares, bonds, futures, and crypto.

While the $200 minimum deposit is higher than some competitors, IC Markets appeals to professionals seeking top-tier trading conditions and platforms like MT4/5 and cTrader. Overall, IC Markets delivers exceptional order execution. advanced tools, diverse markets, and 24/7 multilingual customer service..

Pros

Ultra-fast trade execution speeds under 40ms
Tight spreads from 0 pips and low commissions
Supports all trading strategies including scalping

Cons

Higher minimum deposit of $200
Doesn’t accept US clients, but you’re fine if you’re resident in Australia
Web platform lacks two-factor authentication

[Try [IC Markets] >>]

FP Markets

FP Markets is an Australian forex and CFD broker regulated by ASIC, CySEC, and FSCA. It offers the MT4, MT5, and web trading platforms with mobile apps. Spreads are tight from 0 pips on ECN accounts.

Traders can access 10,000+ instruments including forex, indices, commodities, cryptocurrencies, and equities. Funding and withdrawals are fast through various methods. Customer service is available 24/5 in multiple languages.

FP Markets provides ample education like courses, ebooks, webinars and video tutorials. Overall, FP Markets seems to be a reliable broker for forex and CFDs trading offering competitive spreads, advanced platforms, extensive assets, and good education. The top-tier regulation helps provide security.100 words review about the Broker, with a hook to read our full review about him.

Pros

Regulated by top authorities like ASIC and CySEC for security
Offers competitively tight spreads from 0 pips on ECN accounts
Provides excellent educational resources like videos, ebooks and webinars

Cons

MetaTrader platforms have an outdated interface design
Limited product range beyond forex, CFDs, cryptocurrencies and equities
Research offerings could be expanded with more fundamentals data

[Try [FP Markets] >>]

Plus500

Plus500 offers a user-friendly trading platform ideal for beginner traders. With regulatory oversight, transparent pricing, and robust charting, Plus500 provides a simplified experience focused on the essentials.

However, the platform lacks advanced tools, quality educational resources, and comprehensive research. The straightforward platform and low minimum deposit make Plus500 a great starting point, but active traders will soon outgrow the limited offerings.

Pros

Plus500 is a trusted brand with comprehensive regulatory oversight
Intuitive platform good for new traders
Low minimum deposit, again good if you’re just starting

Cons

Lacks advanced trading tools which can block trading progress
Minimal educational resources, so you’ll need to do your learning elsewhere
Sparse research and analysis

[Try [Plus500] >>]

What is an Islamic forex broker?

An Islamic Forex broker operates a halal trading account designed for individuals who adhere to the teachings of the Quran and wish to engage in investment activities within the Islamic financial market, in accordance with Islamic finance principles.

Such accounts, also known as swap-free accounts, have unique features that set them apart from conventional Forex accounts. Due to the stipulations of Sharia law which forbids the accrual of interest, Islamic account holders neither pay nor receive interest rates. Additionally, the tenets of Islamic finance require that transactions be immediate, implying that currency transfers from one account to another should be instantaneous, with transaction costs also settled instantly.

Why do you need to use an Islamic forex broker?

In Islam, usury or “Riba” (the practice of charging interest or making money purely from money) is strictly prohibited. This poses a problem with conventional forex trading where traders usually borrow one currency to buy another and hence interest is charged for the position held overnight. This is known as a swap fee or a rollover fee.

To resolve this issue and make forex trading accessible to Muslim traders, many forex brokers offer Islamic forex accounts. These accounts are free from overnight interest, hence, no swap fee is charged for the trading positions held overnight. They operate on the principle of “Halal”, which means permissible according to Islamic law.

To summarize, if you are a practising Muslim and you want to abide by the principles of your faith while participating in forex trading, you would need an Islamic forex account. But remember that even with these accounts, not all aspects of forex trading may be considered Halal. As always, consulting with a knowledgeable person about religious matters, in this case, a Muslim scholar, would be beneficial.

How to choose the best Islamic broker

There’s a few things you need to consider when choosing a Shariah-compliant broker, which goes beyond just being compliant with the religious code. Think about the following:

Shariah compliance: Ensure the forex broker follows Islamic principles by offering Shariah-compliant accounts that adhere to interest-free transactions, avoiding riba (usury), and aligning with ethical financial practices as prescribed by Islamic law. Most brokers that adhere to these conditions will offer an Islamic-specific brokerage account that complies with Shariah law.
Regulatory authorization: Verify that the broker is duly regulated by reputable authorities recognized by Islamic countries, ensuring transparency, safety, and accountability in financial operations. That said, also ensure the broker is regulated by local authorities that govern good trading practices in the country you’re in.
Transparent fee structure: Even when you’re choosing an Islamic broker, ensure you choose a broker with clear and straightforward fee structures, ensuring no hidden charges or commissions that may conflict with Islamic financial principles.
Asset selection: Compliant, yes, but you still want to trade competitively so evaluate the broker’s available financial instruments and trading options to make sure you can trade as widely as you are allowed to.
Customer support and education: Opt for a broker that offers excellent customer support and educational resources about Islamic forex trading, helping clients understand the Shariah-compliant features and providing guidance on adhering to Islamic principles while trading.
Transparency and Reputation: Research the broker’s reputation by reading reviews and testimonials from other traders. A transparent broker with a positive track record is more likely to provide a trustworthy trading environment.
Leverage: Consider the leverage offered by the broker, understanding the risks and benefits associated with higher leverage ratios. You may find that leverage available to you is affected by your own financial situation or indeed your trading reputation with the specific broker.
Trading Platform: Assess the trading platform provided by the broker. It should be user-friendly, stable, and equipped with essential tools and indicators to facilitate efficient trading.

So yes, ensure your broker is compliant with the ruleset of Shariah, but also make sure that your broker ticks all the other boxes you’d expect from a top-notch forex broker.

Fees for Islamic Forex Broking

Traditional Forex accounts charge swap or rollover interest on positions held overnight. This is not permissible in Islamic law. Therefore, Islamic Forex accounts, also known as swap-free accounts, do not charge or earn swap or rollover interest on positions held overnight.

Furthermore, the Islamic prohibition on gharar means that all terms and conditions of the trading must be clear and unambiguous. Therefore, Islamic Forex accounts cannot charge hidden fees. All costs associated with the account should be clearly stated upfront.

Since brokers can’t make money through interest, they often charge a commission on trades or widen the spread (the difference between the buy and sell price of a currency pair) to generate revenue. This may result in slightly higher costs per trade compared to a traditional Forex account.

Some brokers might charge a weekly or monthly administration fee on Islamic accounts to cover the cost of any manual administration required for these accounts.

Islamic Forex Broking FAQ

What is a swap-free account?
A swap-free account, also known as an Islamic Forex account, does not incur or benefit from swap or rollover interest on overnight positions, which is in violation of Islamic law. Instead of interest, brokers might charge a flat administration fee or higher spreads to compensate for the lack of swap fees.
Are all Islamic Forex brokers regulated?
Not all Islamic Forex brokers are regulated. It’s essential to ensure that any broker you are considering is regulated by a recognized financial authority, such as the Financial Conduct Authority (FCA) in the UK, the Australian Securities and Investments Commission (ASIC), or the US Commodity Futures Trading Commission (CFTC). This is to ensure that your funds are safe and that the broker operates under strict rules and standards.
Can non-Muslims trade with Islamic Forex brokers?
Yes, non-Muslims can trade with Islamic Forex brokers. While the brokers provide services that are in compliance with Islamic law, they do not restrict their services to Muslims only. Non-Muslim traders may also prefer Islamic accounts due to the absence of swap fees, especially if they hold positions open for a long time.
How can I know if a Forex broker is truly Islamic?
The primary indicator of an Islamic Forex broker is the provision of swap-free accounts. However, simply offering swap-free accounts does not automatically make a broker fully Shariah-compliant. It’s advised to conduct further research or seek advice from an Islamic finance expert.
Do Islamic Forex brokers charge higher fees?
Since Islamic Forex brokers can’t earn interest, they might compensate by charging higher spreads or commissions, or administration fees on swap-free accounts. However, this isn’t always the case, and fees can vary widely between brokers. Traders should carefully review the fee structures of different brokers before deciding which one to use.
Are there any specific trading strategies for Islamic Forex accounts?
While the absence of swap fees in Islamic Forex accounts can influence some aspects of trading strategy, the basic principles of Forex trading – such as technical analysis, fundamental analysis, risk management, etc. – remain the same. Traders should still focus on understanding the market and making informed decisions.