Islamic accounts in binary options trading
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. When Sharia law is applied to Binary options trading, this means interest that is earned or charged for an overnight position is prohibited as well.
In the spot financial markets, trading is done on a 24 hours basis. By 5 pm New York time, all open market positions are then rolled over to the next 24 hours cycle. This situation puts Muslim traders on a collision course with their religious beliefs. For example, instead of having an open market position rolled over automatically making overnight interest payable, open positions in Islamic trading accounts are closed by 5 pm New York time and then reopen immediately hence avoiding any interest payable for the fresh 24 hour cycle.
To help traders in their selection of brokers that offer Islamic trading accounts, we have compiled a list of leading binary brokers that offer Islamic trading accounts. It should be noted that the list above is by no means exhaustive but is just a guide. If someone used a Halal binary options account, but had little or no knowledge of what or how to trade, then they would be using binary options to gamble — and this would certainly be Haram.
Only the individual trader can know whether this is the case. Please note that this site — binaryoptions.