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Religious Muslim traders require a swap-free Islamic account to avoid a conflict of faith, as interest, or “Riba”, is haram or forbidden according to Shariah law.
These accounts allow Muslim traders to engage in leveraged trading while adhering to their religious beliefs. Among the Forex brokers offering swap-free Islamic accounts, some have geographic restrictions or require proof of faith. The best Islamic accounts provide unlimited swap-free trading, but most will have a time limit before expensive administrative fees apply. Therefore, Muslim traders must carefully read the terms and conditions to choose an Islamic account that treats them fairly and ensures competitive trading conditions.Not all brokers provide Islamic Forex accounts, but we've spotlighted those that do, offering millions of Muslim investors access to halal trading platforms. Below, find our expertly reviewed list of the top-valued Islamic brokers.
Top Islamic Forex Brokers at a Glance
- MultiBank Group, Deep liquidity with no trading restrictions.
- FP Markets, ECN trading with leverage up to 1:500.
- AvaTrade, Highly regulated, choice of fixed or floating spreads.
- Pepperstone, Great ECN execution on MT4/5, cTader, TradingView and Pepperstone proprietary platform.
- IFC Markets, 1:400 maximum Forex leverage with floating spreads from 0.4 pips.
Comparison of the Top Islamic Halal Brokers & Trading Accounts
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Regulators | ASIC, AUSTRAC, BaFin, BVIFSC, CIMA, CySEC, ESCA, FMA, MAS, TFG, VFSC | ASIC, CMA, CySEC, FSCA | ASIC, BVI, Central Bank of Ireland, FFAJ, FSCA, KNF, MiFID | ASIC, BaFin, CMA, CySEC, DFSA, FCA, SCB | BVI, FSCA, LFSA |
Year Established | 2005 | 2005 | 2006 | 2010 | 2006 |
Execution Type(s) | ECN/STP | ECN/STP | Market Maker | No Dealing Desk, NDD | ECN/STP |
Minimum Deposit | |||||
Average Trading Cost EUR/USD | 0.1 pips | 1.2 pips | 0.9 pips | 1.1 pips | $4.00 |
Average Trading Cost GBP/USD | 0.5 pips | 1.4 pips | 1.5 pips | 1.4 pips | $24.00 |
Average Trading Cost Gold | $0.02 | $0.16 | $0.29 | $0.15 | $45.00 |
Trading Platform(s) | MetaTrader 4, MetaTrader 5, cTrader, Proprietary platform | MetaTrader 4, MetaTrader 5, cTrader, Proprietary platform, Web-based | Other, MetaTrader 4, MetaTrader 5, Proprietary platform, Web-based+ | Other, MetaTrader 4, MetaTrader 5, cTrader, Proprietary platform, Trading View+ | MetaTrader 4, MetaTrader 5, Proprietary platform, NetTradeX |
Islamic Account | |||||
Negative Balance Protection | N/A | N/A | |||
| Visit Website | Visit Website | Visit Website | Get Started Visit Website75-95% of traders on margin lose | Visit Website |
MultiBank Group
In Summary Deep liquidity with no trading restrictionsMultiBank operates from 25+ offices and has its headquarters in the UAE. The MultiBank Islamic account offers swap-free trading, ensuring Muslim traders can trade in a manner cognizant of Sharia law. The $1M excess of loss insurance per account underwritten by Lloyd’s of London provided additional client protection. Beginners can start their Forex journey with 12 well-structured, multi-lesson courses and 11 e-books. Beginners can also earn up to $40,000 in bonuses, and MultiBank has a high-paying partnership program.
MT4/MT5 fully support algorithmic trading and platform customization. Passive account management is available via the in-house MultiBank copy trading service, which functions seamlessly with the MultiBank App. MAM/PAMM accounts cater to traditional account management. It places MultiBank among the best Islamic Forex brokers.
Pros & Cons
- 20,000 assets offering broad coverage of financial markets
- Raw spreads from 0 pips and maximum leverage of 1:500
- Regulated by 17+ financial authorities, including multiple Tier 1 bodies
- ECN trading with deep liquidity and no requotes
- Access to raw spreads requires a $10,000 minimum deposit on the ECN account
FP Markets
In Summary ECN trading with leverage up to 1:500FPMarkets presents one of the top Forex and CFD brokerage options for Islamic traders all over the globe. Based in Australia, FPMarkets features both Web-based and IRESS platform along with MetaTrader 4 (MT4) and the MetaTrader 5 (MT5) platforms. Established in 2005, FPMarkets is regulated through the Australian Securities and Investments Commission (ASIC) as well as by the Cyprus Securities and Exchange Commission (CySEC), with additional regulation through the Financial Services Authority of St. Vincent and the Grenadines. Interestingly, Australia’s financial regular, ASIC, is somewhat more lenient than regulators in the USA or EU, when it comes to leverage. This leniency towards leverage has allowed FPMarkets to offer Islamic traders leverage as high as 500:1.
Pros & Cons
- Choice of trading platforms and auxiliary trading tools
- Very competitive cost structure and excellent asset selection
- Low minimum deposit requirement and leverage of up to 1:500
- Well-regulated and trustworthy
- Availability of Iress geographically restricted
AvaTrade
In Summary Highly regulated, choice of fixed or floating spreadsAvaTrade is widely regarded as a trustworthy broker, and in fact was one of the first online retail Forex / CFD brokers. While its primary regulator is the Bank of Ireland, the Australian Securities and Investments Commission (ASIC), Financial Services Agency (FSA) of Japan, the Financial Sector Conduct Authority (FSCA) of South Africa, British Virgin Islands Financial Services Commission (FSC), the Abu Dhabi Global Market Authorities Financial Services Regulatory Authority (FSRA), and the Investment Industry Regulatory Organization of Canada (IIROC), complete the global framework. AvaTrade offers an Islamic account option, not as a standalone account, but rather as an Islamic version of any other account type.
Pros & Cons
- High quality educational offering via AvaAcademy
- Excellent choice of trading platforms catering to various trading needs
- Broad asset selection and cross-asset diversification opportunities
- Well-regulated and trusted broker with oversight from a central bank
- Trading costs competitive but nothing special
Pepperstone
In Summary Great ECN execution on MT4/5, cTader, TradingView and Pepperstone proprietary platformPepperstone provides Islamic accounts to residents of Albania, Bangladesh, Burkina Faso, Bahrain, Brunei, Brunei Darussalam, Algeria, Egypt, Indonesia, Jordan, Kyrgyzstan, Kuwait, Morocco, Mauritania, Maldives, Malaysia, Niger, Oman, Pakistan, Qatar, Sierra Leona, Turkey, Uzbekistan, and Kosovo. Swap-free trading is available five days before an administrative fee of $100 on Forex and precious metals positions applies.
The Islamic account is available for the commission-free Standard account with minimum spreads of 1.0 pips or $10.00 per 1.0 standard lot. The minimum deposit is $200, and Pepperstone allows micro lot trading without strategy restrictions, making it one of the best Islamic Forex brokers.
Pros & Cons
- Excellent choice of trading platforms consisting of MT4/MT5, cTrader, TreadingView and Pepperstone Platform
- Market-leading MT4/MT5 upgrade package, Autochartist, and API trading
- Social trading support via Signal Start, MetaTrader Signals, Copy Trading by Pepperstone, DupliTrade
- Leverage of up to 1:400 depends on jurisdiction and superb trade execution
- Demo accounts have 60-day time limits
IFC Markets
In Summary 1:400 maximum Forex leverage with floating spreads from 0.4 pipsIFC Markets maintains a well-balanced asset selection, including synthetic assets, and has an excellent regulatory track record. Muslim traders can request a swap-free Islamic trading account, but it has a 14-day time limit. IFC Markets will automatically close positions after the swap-free limit expires. So, I rank IFC Markets among the best Islamic Forex brokers for short-term traders.
In addition to the algorithmic trading platforms MT4/MT5, IFC Markets presents its proprietary NetTradeX alternative, which has lower trading fees than MT4 and features the patented PQM asset generation technology. Improper usage of an Islamic account results in its cancellation.
Pros & Cons
- Excellent regulatory track record and secure trading environment
- Outstanding asset selection and patented PQM asset generation technology
- Extremely competitive commission-free trading cost structure
- Valuable research and educational section, low minimum deposit, and high leverage
- No direct support for social trading
What is an Islamic Forex Trading Account?
Sharia law prohibits Muslims from earning interest, including in banking and investing. Therefore, most Forex brokers offer Islamic trading accounts, also known as “No Riba Forex” accounts. We have compared the best Islamic Forex brokers to help you pick the best one for you.
An Islamic Forex Account complies with Sharia law, but what makes a Forex Islamic account halal?
Forex brokers wishing to attract Islamic clients must apply a few fundamental principles to their offering.
Below are the core concepts of Islamic trading accounts:
- Riba is the increase, excess, or addition of financial interest, which Sharia law prohibits, as it views it as a type of usury, a form of exploitation, and as greed that can lead to wealth hoarding.
- Gharar refers to risk and describes the sale of what is not present. It is haram (forbidden), as Muslims may not gamble or engage in short selling (in the traditional sense commonly referred to in stock trading).
- A Mudharabah Arrangement is an arrangement or partnership between the provider of capital and the entity managing that capital. The former invests, the latter controls the money, but the arrangement remains restricted, as the investor will place limits on what the manager can do.
- A Musharakah Arrangement is a type of partnership where both parties will benefit from earnings in a trade. It equally applies to potential losses. This arrangement does not violate Riba.
What is a Swap-Free Islamic Account in Forex?
A swap is a fee that is charged to those who leave a position open for more than 24 hours. It is a type of interest and therefore, it is not allowed for those who comply with Sharia. The solution for most brokers is to apply fixed fees or commissions on Islamic trading accounts & platforms that maintain longer-term overnight positions.
No-Swap Period
Some brokers will only allow you a limited amount of time in which you can trade swap free. This is known as no-swap or swap free periods. Only the better Islamic Forex trading brokers will allow unlimited swap free trading.
Terms & Conditions
It is always important to read the terms and conditions published by any Islamic Forex broker because that is where the small print is. For example, the broker may not charge an interest rate, but there will most likely be a commission instead, so it is important to be sure of all such terms as these will probably affect your cost of trading when you open an Islamic trading account.
Islamic Prohibitions
According to Sharia law, there are a number of prohibitions applicable to Islamic traders. These reflect Islamic guidelines aimed at ensuring a prosperous and peaceful community. The major prohibitions are outlined below:
Overnight Rollovers
Overnight rollover is the interest that a trader is charged (or sometimes paid) for holding a position overnight. As an Islamic trader you will probably be charged a fixed commission per trade instead to make up for not being charged a commission. It is important to note that in most cases, each currency will have a different interest rate and therefore most likely differential commission rates, so it might be a good idea to look at the applicable fee before opening a position in a particular Forex currency pair or cross.
Interest on Margin Deposits
A margin deposit is an interest based on the cash deposit made with a Forex broker, which a few brokers offer to larger clients. Since margin trading involves a higher risk, the trader must present an initial amount before opening a leveraged position. Interest on margin deposits is not permitted in an Islamic Forex account since it goes against the “no Riba” principle.
Loans
Those who are compliant with Sharia law may not receive or give loans with interest.
Margin Trading
The Riba principle is broken by any trading on margin because margin involves the loan of money at interest given out by a lender who seeks benefit. Even if it has 0% interest, it still arguably may be a loan where the broker seeks benefit (an end profit made by the exchange).
Short Sales
Short sales (in the sense of shorting an equity) go against the Gharar principle because a true short seller is selling something they do not own. The Gharar principle is against “the sale of what is not present”.
Forward Sales
A forward sale is an agreement between two parties to buy or sell an asset at a specified price at a future date. Again, it is contrary to the Gharar principle.
How Islamic Accounts Differ from Regular Accounts
The core difference between Islamic and regular accounts is the absence of swap rates to comply with Sharia law and allow Muslim traders to engage in leveraged overnight trading without violating their faith. Time limits on leveraged overnight positions exist at most brokers before fixed fees apply, but special restrictions for Islamic accounts are broker-dependent.
Here are other notable differences between Islamic and regular accounts:
- Some brokers substitute the absence of swap rates with fixed fees to compensate for the loss of income or increase spreads, which can make them more expensive than regular accounts
- Islamic accounts may face trading or platform restrictions
- Muslim traders may face asset restrictions, as not all trading instruments are available as a swap-free option
- Islamic accounts may receive less trading leverage than regular accounts
How to Choose an Islamic Forex Account
Traders have unique requirements, but the below must apply to every genuine Islamic Forex broker.
Ensure your Forex broker excels in the following:
- A regulatory license from a trader-friendly regulator with a good track record exceeding seven years.
- Competitive trading fees with acceptable Islamic account markups, as Forex brokers usually replace the fee with flat administration fees or higher spreads.
- A balanced asset selection that suits your trading strategy.
- A cutting-edge trading platform that supports algorithmic, copy, and mobile trading.
- 24/5 customer support in Arabic, and ideally a website in Arabic.
How to Open an Islamic Trading Account?
- Choose the broker you wish to open an Islamic trading account with by making a shortlist of potential brokers and examining the offering of each, as outlined above on this page.
- When you have decided which broker to open an Islamic trading account with, contact them and make sure you get answers to any unresolved questions you have about them about what they offer, their fees, and how trading with them works.
- Ask about the details of their Islamic account, especially any downsides. How much higher are the trading fees to make up for the lost swap fees? Are there any restrictions on trading styles or choice of assets?
- When you are satisfied with their answers, it will probably be smart to open a demo account with the broker and “test drive” an account.
- When you are feeling comfortable and are profitable, start the process of opening a real money account. You can usually do this online quickly. You might be asked by the broker to present a few documents, such as your ID and a document as proof of your faith.
- When the account is confirmed as opened, you should follow the instructions for funding it with at least the minimum deposit. The broker might not offer your preferred payment solutions, but if the other factors look good, you should try to work with that if possible.
- Now you are ready to start trading! Stay focused and disciplined, it is easy to lose your head when you start trading with real money. Keep reading and learning.
Tips for Successful Trading Using an Islamic Account
While trading strategies always depend on traders, their preferences, personalities, and skill sets, the tips below for successful trading using an Islamic account will benefit all Muslim traders irrespective of their strategy.
Here are tips for successful trading using an Islamic account:
- Read the terms and conditions of the Islamic account and learn how many swap-free trading days you have before administrative fees apply
- Muslim traders without time restrictions can consider longer-term strategies, including swing trading, position trading, and keeping trades open over the weekend
- Muslim traders with time limits on swap-free trading should only consider intra-day trading to lower risk and avoid holding a position past the allowed swap-free period
- Most leveraged trading strategies close positions during the session to avoid unexpected overnight events, and Islamic traders should follow that rule
- Always deploy proper risk management, understand how leverage impacts risk management, and how lot sizes impact risk management
- Muslim traders who want to keep overnight leveraged positions should consider adjusting their risk management settings by tweaking their stop-loss and take-profit-levels, partially closing positions to decrease their exposure, or hedging their positions
Costs Associated with Islamic Accounts
The same primary costs apply to Islamic accounts as to non-Islamic accounts - spreads and commissions (in commission-based accounts). The core difference is the absence of swap rates on leveraged overnight trades. Therefore, most Forex brokers either increase the spread, the commission, or replace the absence of swap rates with fixed administration costs per asset. Islamic traders must carefully compare the fees between non-Islamic and Islamic accounts to ensure fair treatment.
Other fees to consider are inactivity fees, deposit and withdrawal fees, and currency conversion costs. Not every broker applies non-trading fees, and deposits are usually free of internal charges, but third-party costs may apply. Withdrawal fees vary by broker, with many brokers offering fee-free options. Currency conversion fees are a hidden fee of which most traders are unaware. They apply whenever a trader conducts a trade in which there is a mismatch between the asset currency and the account currency, for example, buying shares in a company quoted in Euros from a US Dollar account.
Is Forex Halal or Haram for Muslims?
Both Halal and Haram are terms that are applied by Islamic doctrine to all aspects of life. Haram means anything that is forbidden by the Islamic law. Halal, on the other hand, are all the practices that are allowed by the Sharia. We have examined this question elsewhere in detail.
What Can I Trade with an Islamic Account?
Islamic accounts can offer any markets for trading if the asset itself is compliant with Sharia law, as long as the basic principles against Riba etc. are honored. However, some assets are not. For example, an Islamic account could not offer trading in the shares of a company which manufactures alcoholic beverages as such beverages are forbidden in Sharia and no Muslim should profit from them.
Advantages & Disadvantages of Islamic Accounts
Advantages
- One of the best advantages of Islamic accounts is that those who are Sharia compliant can trade without going against their beliefs.
- No overnight swap fees will be charged. This can make long-term trading styles, such as trend following, truly economical.
- The Mudarabah Agreement applied, where both the broker and trader will share profit and loss.
- Islamic accounts are sometimes more transparent than other accounts in terms of the fees and charges incurred,
Disadvantages
- A potential disadvantage of an Islamic account is that you may sometimes need to pay quite a lot in spread/commission to make up for the missing overnight swap fees.
- Some brokers impose trading restrictions to prevent the swap-free nature of the account from being overly exploited.
- Some brokers restrict the range of assets offered for trading in an Islamic account, reducing choice.
Is Commodity Trading Halal?
Most Islamic scholars agree that commodity trading can be sharia-compliant if certain conditions are fulfilled:
- The trader takes physical possession of the commodity when they own it.
- The transaction does not involve riba (interest).
- The trade should not involve excessive uncertainty (gharar).
- The commodity being traded must be halal (for example, pork belly futures trading could not be halal).
- The trade must take place under fair and transparent conditions for all parties.
Is Futures Trading Halal?
Most Islamic scholars agree that futures trading is unlikely to be halal because futures trading does not usually involve actual physical possession of the underlying asset. However, some authorities have argued that physical delivery of the underlying is mandated by a futures contract at expiry, so if the trader has at least the intention to possibly take physical delivery, it might be considered to be halal.
Apart from this factor, the points above about commodity trading also apply to the question of whether futures trading is sharia-compliant. Many futures have commodities as underlying instruments.
Is Day Trading Halal in Islam?
There are two major reasons why day trading might not be halal in Islam, as well as the usual considerations outlined above in the section about commodity trading.
- Islam forbids excessive speculation and uncertainty in trading, and many see day trading as little more than gambling. However, someone who demonstrates a profitable track record as a day trader could argue that what they are doing is neither gambling nor overly speculative.
- Day traders are unlikely to take actual physical ownership of what they are trading, which is a problem in Sharia law.
Bottom Line
Islamic Forex accounts, also known as swap-free accounts, are designed to comply with Sharia law by eliminating interest charges on overnight positions, and by not offering loans of any kind. These features can make them suitable for Muslim traders seeking to engage in Forex trading without violating Islamic principles. Some brokers do not offer Islamic Forex accounts, but most do.
Islamic Forex accounts can differ between brokers, so it is important when opening one to enquire about the exact terms and conditions. The most vital thing to look at is usually the trading fees, which are always higher to make up for the loss of overnight swap fees. The trading fees will be higher than in the brokers non-Islamic account, but they should not be exploitatively higher.
