Trading in the Forex market

প্রশ্ন · Question

Trading in the Forex market (foreign exchange market) using a
Contract for Difference (CFD), where trading and speculation are based
on the price movement of an asset, rather than buying and selling it as
usual.
The Forex market is a global market regulated by international bodies
and institutions that oversee traders, financial intermediaries, and
other institutions such as banks and reserve funds.
To enter the Forex market, I need a financial intermediary (broker)
with whom I have a trading agreement and contract. This contract
includes a CFD, where I deposit money with the broker and then trade
foreign currencies through a mobile application.
Many fatwas that have addressed this topic, whether their answer is
permissible or forbidden (which is the majority opinion), have only
addressed the issue of money leverage and overnight fees (riba). This
is something that can easily be avoided during trading. However, the
core of the question is the principle of the contract itself: Is it contrary
to Islamic law?

উত্তর · Answer

Wa Alaikum Assalam Wa Rahmatullah Wa Barakatuh
What I know about Forex is that (Forex is an abbreviation for "Foreign
Exchange," meaning the exchange of foreign currencies; it's a huge
global market for trading currencies with the aim of profiting from
price differences). We previously answered a similar question on
14/10/2024, and I'll quote what it said about currency trading:
[- Trading in gold and silver : As for gold and silver, selling and buying
them for each other or for cash must be done hand to hand, as in the
hadith narrated by Al -Bukhari and Abu Dawud on the authority of
Omar:
«
“Gold for silver is usury except hand to hand, ” meaning hand to hand.
Therefore, buying gold for silver or for cash is not valid except by hand
to hand.
And because after we have learned how to trade online, the exchange
does not happen immediately, but rather it may take hours or days,
therefore it is not permissible to buy gold and silver with an electronic
card via the Internet unless the card is deducted from the account
immediately when buying gold or silver, i.e. hand to hand, so do not
receive the gold or silver except at the time the amount is deducted
from your account ... And since there is no immediate exchange in
trading online, but rather after a day or two, then it is not permissible.
- Trading in stocks and bonds is forbidden because stocks belong to
joint-stock companies that are invalid according to Islamic law, and
because bonds are linked to usury .We have detailed the subject of
joint-stock companies in the book, The Economic System , as well as in
the booklet, The Turbulence of the Stock Markets, and other books.We
have mentioned in the booklet, The Turbulence of the Stock Markets , a
summary of the matter as follows:

“As for the Shari'ah rule pertaining to the dealing in these shares and
in securities, whether buying or selling, it is forbidden. This is because
these shares are those of a company that is unlawful according to
Shari'ah. They are in fact certificates of bills which contain mixed sums
from a lawful capital and unlawful profits made from an unlawful
transaction. Each bill represents the value of a share, and this share
represents part of the assets that belong to the unlawful company.
These assets have been mixed with an unlawful transaction which
Shari'ah has prohibited. Thus, it is illicit money, whose buying and
selling becomes unlawful, and dealing in such money is also illicit. This
is also the case for bonds, in which money is invested with interest,
and so is the case for bank shares and similar, since they all contain
sums of illicit money; thus their buying and selling is unlawful, because
the money contained in them is illicit.”
- Trading paper currencies on the Internet, such as the dollar and the
euro, is forbidden because there is no hand -to-hand exchange, which
is necessary in exchanging money. Hand -to-hand exchange, as it
applies to gold and silver, also applies to paper money on the grounds
of currency, i.e. using them as prices and wages. We mentioned the
following in the Answer to Question on 11/07/2004:
[Dealing with paper currencies: Yes, what applies to gold and silver in
terms of usury and other monetary rulings applies to them .This is
because the realization of the reason (cash, i.e. its use as prices and
wages) in these papers makes them take the rulings of
money.Therefore, buying usurious items with these papers applies to
what was mentioned in the hadith (hand to hand), i.e. it is not a debt.
The subject is as follows:
The Messenger ﷺ says: «
بِالشَّعِيِْ، وَالتَّمْرُ بِالتَّمْرِ، وَالْمِلْحُ بِالْمِلْحِ، مِثْلًَ بِمِثْلٍ، سَوَاءً بِسَوَاءٍ، يَداً بِيَدٍ، فَإِذَا اخْ تَلَفَتْ
هَذِهِ الَْْصْنَافُ فَبِيعُوا كَيْفَ شِئْتُمْ إِذَا كَانَ يَداً بِيَدٍ Gold is to be paid for by gold,
silver by silver, wheat by wheat, barley by barley, dates by dates, and

salt by salt, like for like and equal for equal, payment being made on
the spot. If these classes differ, sell as you wish if payment is made
on the spot” (Narrated by Al -Bukhari and Muslim on the authority of
Ubadah bin Al-Samit, may Allah be pleased with him).
The text is clear when these usurious (riba) categories differ, that the
sale is as you wish, i.e. like for like is not a condition, but the exchange
is a condition .The word "categories" was mentioned generally in all
usurious categories, i.e. the six, and nothing is excluded from it except
by a text, and where there is no text, the ruling is that wheat is
permissible for barley or wheat for gold, or barley for silver, or dates
for salt, or dates for gold, or salt for silver, etc…no matter how
different the exchange values and prices are, but hand to hand, i.e. it is
not a debt. And what applies to gold and silver applies to paper money
by virtue of the common cause (cash, i.e. its use as a price and wages).]
End.
By studying how this online trading in buying and selling gold is done,
it became clear that the collection or settlement is delayed for a day or
two... from the date of the contract, and this is contrary to the agreed -
upon condition of exchange, which the Prophet ﷺ stipulated in his
saying: “Hand in hand.” Al -Bukhari narrated on the authority of Al -
Bara’ bin Azib, who said: We asked the Prophet ﷺ about that, and he
said: «“Take what was from hand
to hand and leave what was on credit.” Muslim narrated on the
authority of Malik ibn Aws ibn al -Hadathan that he said: I came and
said: Who is exchanging dirhams? Talhah ibn Ubaydullah said while he
was with Umar ibn al -Khattab: Show us your gold, then come to us
when our servant comes and we will give you your money. Umar ibn
al-Khattab said: No, by Allah, you must either give him his money or
return his gold to him, for the Messenger of Allah ﷺ said: «
رِباً إِلََّ هَاءَ وَهَاءَ Gold and silver are usury, except for this and that...”

Accordingly, it is not permissible to trade the euro, dollar, and other
forms of currency over the Internet because there is no immediate
exchange) End quote from the answer. I hope this is sufficient, and
Allah Knows Best and is Most Wise. 11 Rabi' al -Akhir 1446 AH
Corresponding to 14/10/2024 CE] End of quote from the previous
answer.
Therefore, since the transaction, as explained above, is invalid, the
contract to perform the aforementioned work is also invalid.
This is what I believe to be the most preponderant view on this matter,
and Allah Knows Best .
Your Brother,
Abu Yasin
11 Jumada Al-Awwal 1447 AH
2 November 2025 CE