Forex Trading For Muslim Accounts

Forex Trading For Muslim AccountsMuslim Forex accounts are popularly known as “No Riba” accounts. These accounts are structured to enable members of the Muslim community trade Forex, without breaking the teachings of Shariah law. The Islamic law dictates that Muslims should not expect anything in return, when they give. This means that a Muslim should not take any kind of interest, while doing any business transaction. This belief led to the development of Forex accounts for Muslims. Initially, the accounts were strictly reserved for practicing Muslims, to lock out the non-Muslims, and non-practicing Muslims. Nowadays, it is much easier to open the account, even if you are not a Muslim.

In Forex trading, interest is charged on accounts that are left overnight, by clients. These charges, also known as SWAPs or roll over fees, are charged to cover for the additional charges by banks, for leaving a transaction open through the night. The amount of roll over fees charged is based on several factors. Most prominent of these factors, is the currency trading pair being traded in. Since this charge is a form of interest, it varies from one bank to the next, and is revised regularly. A professional Forex platform, such as Lucror FX, can provide more information on bank-specific rates, and other relevant information.

It is not compulsory for you to be a Muslim, to open an Islamic Forex account. People may find the lack of interest charged, on these accounts, to be unfair. However, these accounts come with other charges, which are not incurred by ordinary accounts. Certain features of a Muslim Forex account include hidden charges, higher spreads, and limitations on the time traders are allowed to have an open position. These are slight checks and balances, to prevent holders of Muslim Forex accounts from having undue advantage, over holders of ordinary accounts.

Islamic Forex accounts are closely monitored for irregularities in trading activity. One common irregularity is having carry trades. This is a term which refers to a person holding both an Islamic Forex account and an ordinary account. The person then balances out the accounts, and takes the remaining money. This is usually the earned interest. Forex companies will detect this, and deactivate these offending accounts.

Holders of Islamic Forex accounts can also exploit the benefit of not paying roll over fees. Islamic Forex accounts are charged a flat rate, per standard lot. Afterwards, the account holder is allowed to keep the position open for an unlimited amount of time. They do this, and leave a position open for a long time, until the position gets into a profitable zone. This affects the Forex company, since it is left to pay the SWAPs to the bank. When the position becomes profitable, the bank charges a roll over fee. However, these fees cannot be charged to the Islamic Forex account, which forces the trading provider to absorb the SWAPs. The client then cashes the profit earned, at the expense of the Forex company. To get more information, visit LucrorFX, or seek a consultation with one of its Forex trading professionals.

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