Home Business Is Forex Trading Legal (Halal or Haram) in Islam?

Is Forex Trading Legal (Halal or Haram) in Islam?

Is Forex Trading Legal (Halal or Haram) in Islam?
Is Forex Trading Legal (Halal or Haram) in Islam?

In the covid-19 scenario, online businesses are growing vastly, and jobless peoples uncover many easy ways to make money online. Freelancing, online shopping, and forex trading are on top of online businesses, but Forex trading is most popular because of its advertisement and way to make money fast.

What is Forex Trading?

Word Forex is derived from foreign exchange.  The foreign exchange market is a global centralized and over-the-counter market for the trading of currencies, commodities, cryptocurrencies, etc. Forex trading always trade-in pairs when you make a forex trade, you buy one and sell the other. For example, let’s say the exchange rate between the Gold and the U.S. dollar is 1 troy ounce of gold to 1800$. If you buy 1 troy ounce of gold, you would pay or sell $1,800 U.S. dollars. Forex trading is an easy way to make money online without a job.

Is Forex Trading Legal (Halal or Haram) in Islam?

As a Muslim everybody wants to invest in the Halal (permitted in Islam) business. In the early days of forex trading, its process and policy were not clear to Muslim Aalims, they are mostly denied to response on forex trading legal (Halal or Haram) in Islam. But in recent days Aalims of all Firka(Groups)  research on forex trading and announce a clear Fatwa (legal pronouncement) for forex trading. Here are some famous Aalims Fatwas to clear your mind on Islam judgment.

  1. Mufti Tariq Masood: In Islam, no one can sell his property without his seizure (Kabza). A man without taking complete control of the risk factor on the purchased property can’t sell to anyone. Profit and loss in forex is just a figures difference so it’s not Halal (allowed) in Islam. (it’s Gambling and SATA).
  2. Mufti Muhammad Zubair: its Gambling and SATA. Ujrat-al-kafala, interest and sell before transferring or seizure (Kabza) involved in forex, so that’s Haram in Islam.
  3. Mufti Ali Asghar Attari: Profit and loss in forex trading just figure differences exchange. Physically traded commodities, currency pairs, etc not exist. Business on up mentioned conditions is not allowed in Islam.
  4. Mufti Muhammad Amjad Rizvi: Forex, not Halal (allowed) in Islam. (it’s Gambling and SATA).
  5. Engineer Muhammad Ali Mirza: Trading with brokers regulated by the Securities and Exchange Commission of Pakistan (SECP) and with Halal products and companies is Halal (Allowed).

Is Forex Trading Legal In Pakistan?

There are as such no restrictions on forex trading in Pakistan. Although national regulations from the Securities and Exchange Commission of Pakistan (SECP) proposed to discourage forex trading because of fraud and money laundering, that’s why local brokers aren’t registered with the SECP.

As a result, people are required to open their accounts with international forex brokers. It’s legal for international brokers to offer accounts to Pakistani traders, though not every broker offers this. Here’s the basic setup method you’ll go through when you open an account with an international forex broker.

Choose a Broker:

Most forex traders in Pakistan prefer to open an account with an international broker in the United States, the United Kingdom, and Cyprus because they are strictly regulated. Select a broker to open an account with and apply with some basic information.

Account verification:

Account verification is necessary for all international brokers because of their regulation policy; the broker will ask for your identity and address proof, which is very simple,

  • Identity proof: Simply upload your national ID card or driving license front and back picture on a given web page or send it on a given email, it will take 1 to 2 working days to verify.
  • Address proof: like identity verification broker will ask for any utility bill or govt paper for address verification.

Select a Platform for Trading:

International forex brokers offer their own trading platform, you can select a more comprehensive platform like Meta Trader 4 or 5.

Fund Your Account:

After you open your real trading account and your broker verifies your personal information, you’ll need to Top-up your account. Most international brokers allow funding their account by debit card, credit card, or linking a bank account and converting rupees to USD, GBP, and Euro currency for trading. If you’re facing any difficulty in Top-up your account with the up-mentioned method you can fund it with online wallets like PayPal, Skrill, WebMoney, Bitcoin, Perfect Money, etc, and now the account is ready for your first trade.

How to make your first trade in forex?

First trade in forex


“Before starting your first trade you should have some basic knowledge of Forex Terminology, Indicators, fundamental new impact, and candlestick pattern.”

  • Forex Terminology
  • Candlesticks pattern
  • Technical Indicators
  • Fundamental News

Forex Terminology: Before you start forex trading, familiarize yourself with some of the most common forex trading terms

  1. Pip: Pip (a shortened version of percentage in point or price interest point) is the smallest unit of a currency being traded.
  2. Lot Size: Lot size is the total number of units of a currency you’re trading. A standard lot represents 100,000 units of any currency, whereas a mini-lot represents 10,000 and a micro-lot represents 1,000 units of any currency.
  3. Leverage: Leverage is the use of rented funds of your broker to increase trading position volume beyond the fund available in the trading account. However, it can increase both profits as well as losses, so be careful when using leverage.
  4. Scalping: Forex scalping is a short-term trading strategy ​that attempts to earn a profit in small price movements for a period of a few seconds or minutes.

Candlesticks Pattern:

A candlestick pattern is a signal that indicates a trend is changing. There are both bearish and bullish candlesticks. They indicate that a currency or commodity will stop falling or go up in value.

Technical Indicators:

Almost all Technical Indicators in forex trading work on an average of the last defined period and measure a sudden change in price value. Simple Moving Average (SMA), Exponential Moving Average, Bollinger Bands, Average True Range (ATR), Moving average convergence/divergence or MACD, Fibonacci, Relative Strength Index (RSI), Pivot Point and Stochastic are the top 10 best indicators in forex trading.

Fundamental News:

In forex trading, the price is assumed to reflect all Advanced and Modern countries’ news. The most common way to trade on forex news is to wait for big news ahead and trade the breakout on the back of the numbers.

“After a basic knowledge of forex you can start your first trade but it’s recommended that make a practice on a demo account, and get a proper course of forex trading from professionals because of its high level of risk, and is not suitable for all persons.”


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