We have heard, seen or read about the issue of investing in Forex, Binary Options, or similar trading products. Some scholars in the Muslims community says likewise to the other within the group. However, Non-Muslims organization also labels this platform of investing differently, GAMBLING VS INVESTING. To understand more, we need to take a look at these 2 particular popular system. Forex and Binary Options.
|Profits||Based on returns per
|Pips different are multiplied
by lots opened
|Closure||Time Expiry-Based|| When user choose to close
|Trade amount clearly
reflects traders profit/Risk beginning of trade
| Traders apply stop loss
or take profit in conjunction to lot opened.
|Fees||No commission or fees.
Traders profit is based on % returns.
|Depends on the broker.
Brokers like XM applies NO fees and swaps are optional.
Spread is based on BID/ASK price per
Grand Ayatollah Khamenei (may Allah grant him long life):
There is no problem in exchanging one currency with another non-homogenous currency insofar as the law of the country does not forbid it. The profit which is earned is halal but the agents validating the capital of the trader, if it is in the form of a loan given to the trader which is definitely interest-bearing, in this case the transaction is not permissible according to Shari’ah law.
Grand Ayatollah Saafi Gulpaigani (may Allah grant him long life):
Since the transaction in the currency market is formal and there is no real transaction conducted, therefore the transaction is not valid. (source: http://www.islamquest.net)
Judging by this definition, a lot of what we do in daily life is gambling. Binary options are gambling much like other financial instruments, tangible or intangible.
“Are Binary Options a Form of Gambling?” ( FinanceMagnates ), 30/07/2014Indeed, opening an overleveraged Fx position with a micro-account, opening a leveraged CFD position without stop-loss on a stock the trader does not have a profound knowledge about, going into a derivative while not building a real hedge does not seem getting any further from gambling in the common perception of that concept. You may have grasped that the common trait of the last 3 examples is poor risk management. (Source: http://www.nasdaq.com/article/binary-options-gambling-or-financial-instrument-cm560900#ixzz4aYz6glHo)
The Financial Conduct Authority (FCA) has announced the impending transition of the regulation of binary options in the United Kingdom from an online gambling service to a financial product. (source: http://www.leaprate.com)
Circumstances will decide. How you manage your risk vs profit ratio. How you understand a particular commodities, PAIRS, assets and its movements before you make a decision to buy or sell. If you treat it like a business, it will be a business. If you Gambled your whole fortune, it will be the best gamble of your life. Take a look at our money management guides here: MONEY MANAGEMENT GUIDE
Please share your thoughts with us your views in this FINANCIAL PRODUCT.