Sharia Law on Binary Options

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Binary options trading is accessible to everyone around the world. As it grows, the industry and its major players have shown a willingness to adapt trading opportunities for traders with particular needs. Since Muslims make up a large part of the population eager to trade, brokers have had to modify certain trading practices to accommodate Sharia Law rules, since most people of the Islamic faith strictly abide by its principles.

In Arabic, the word Sharia means a pathway to be followed. As such, Sharia Law is at the heart of the Islamic faith as it dictates how Muslims live their lives across all spheres: It is the legal framework, which is comprised of several laws, around which these various spheres are regulated.

Sharia Law is based on the Koran, the main religious text of Islam. When it comes to business dealings and investments more specifically, Sharia Law is very clear: Because of this, any form of traditional forex or binary options investments are strictly forbidden. Instead, Muslims who partake in investments within the Islamic faith are to do so according to a concept of risk sharing. When trading binary options, traders often have positions left open overnight where interest is either earned or charged.

The nature of the market dictates this practice; since trading is done on a hour basis, all open positions at 5pm NY time are then rolled over to the next hour cycle.

Since this is a common occurrence within the binary options market, it puts Muslim traders at high binary options trading and sharia legal usa for entering a trading practice that is against their principles, and ultimately, against Binary options trading and sharia legal usa Law. In recent years, many binary options brokers have come to understand the particular needs of Muslim traders and as such, have created special trading accounts, which eliminate any earned or charged interest riba.

Since there is no rollover, there is no interest involved. Although certain aspects of Islamic trading accounts may vary according to binary options trading and sharia legal usa brokers, all abide by the same rules in order to comply with Sharia Law: Muslims who open an Islamic trading account gain access to binary options on the Saudi Stock Exchange called the Tadawul.

Since many Muslim traders are from Saudi Arabia, the ability to trade on this exchange is a great opportunity to capitalize on a familiar market. At first glance, Sharia Law appears to be prohibiting binary options, but with an increasing number of brokers offering Islamic trading accounts, Muslims binary options trading and sharia legal usa the world are now able to profit from this popular form of trading.

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Since the first binary options brokers enabled online trading as far back as , the binary options trading scene has grown rapidly in size and strength. There are now hundreds of binary brokers offering a wide range of services. The fact that this type of trade can be accessed by anyone has dramatically helped to increase its popularity. However, it has become apparent that, due to their religious beliefs, Muslims are unable to trade using the traditional binary account.

Thus has led to the rise of the Islamic binary options trading account. Muslims have always been great traders; they are known to have circumnavigated the globe and struck deals around the world. However, their culture is different from that in the western world. They have their own set of principles and will always follow the guidelines established by their religion; even in business matters. The average binary trader can earn interest by trading overnight or over the weekend when the markets are closed.

This is an important strategy and must be available to any trader. However, Muslims are forbidden from earning interest in any form; this means that a Muslim trader needs a special Islamic binary options account to ensure they do not fall foul of their religion.

As awareness of this issue rises, more and more brokers are offering the ability to trade without incurring any interest charges or even earning interest. Brokers who are offering an Islamic binary options account understand the importance of no interest being charged or even earned. This is a principle which is integral to the Muslim belief system. It is a reflection of the religious belief that giving should be done without expecting reward. In response to this the brokers are offering accounts which operate in much the same way as the traditional accounts but which are specifically designed to avoid the scenario of interest.

This is often tied in with closing trades before the end of the day or pausing them overnight. If you wish to utilize an Islamic binary options account you will need to understand that a halal account is one which is allowable under the Muslim guidelines, whilst a haram account is forbidden. A Halal account needs to operate on an instant basis; there can never be a delay which provides the opportunity to earn interest.

Equally, any profit generated must be immediately placed into the client account to prevent it earning interest.

It is also important to ensure that all payments are completed in one transaction and no interest has been earned or charge by any of the parties involved in the transaction. It is also important to recognize that a halal binary options broker will not allow you to bet or take chances with your funds; this is also forbidden by Islamic law. It is essential to understand the market you are speculating in and trade with caution at all times.

This means using self-control, utilizing all possible price charts and economic information and observing other traders. It does not mean undertaking risk free trades which are likely to make you take a chance. You must also be prepared to share your trading information with your family and other interested parties. Trying to trade when you are emotionally disturbed or simply to increase your wealth is strictly forbidden by Muslim law.

Equally not informing your family of your trades can be seen as a neglection of your duties under Islamic law. This also means you should not trade if you are addicted or if you are simply trading in an attempt to recover initial losses.

It goes without saying that you can never borrow funds to start trading. This is something which should apply to all traders not just those operating under Muslim law. There has been a gradual increase in the number of brokers offering Islamic binary options accounts. In general these accounts are created to run alongside the traditional style account and offer access to all the same features; except for anything which goes against Muslim law. To qualify as a halal account it is essential for an approved broker to ensure the accounts are Sharia compliant and all charges and earnings are declared openly to those who need to see them.

The trades must all be closed at midnight to ensure they are compliant with the interest regulations and the same assets should be available to Islamic traders as to any other traders. The ability to trade with these special accounts means that many thousands of Muslims are able to trade in binary options where they were not able to before.

Not all brokers offer an Islamic binary options trading account yet. However, should you locate one that does it is still essential to perform all the necessary checks. These include reviewing their offerings and statistics as well as checking what other people have to say about them.

When researching an appropriate broker it is essential not to be afraid to ask questions and move on if you have any doubts. It is possible to find a good trading platform which complies with Islamic law; in the same way that the Islamic bank has developed and provided a viable option for people of other faiths.

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Of course, if the tr Islamic Binary Options Trading If you are a Muslim or a member of the Islamic community you will probably be very interested to know whether it is acceptable to trade online with digital options.

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