Trading is undoubtedly the most effective way to increase wealth. With the trading methods, we can surely earn more in profits that can be invested further. It can eventually lead to asset multiplication. However, trading is often viewed as dangerous, and people often advise against it. It is because they lack insight and knowledge for the same. Moreover, it is commonly mistaken with betting, which is not true. Instead, trading is the ideal way to profit maximization, and the world’s economy thrives on it.
Trading has been there for ages and promoted by various cultures across the globe. But, the newest way of doing it is nothing else than Binary Options. Since it is a form of online trading, misconceptions often arise. Also, a new trader might be misguided in the name of religion and culture. Binary Options is nothing but an exotic financial option. It offers only two outcomes, which makes it peculiar among other methods. The outcomes can either end in a fixed monetary reward or nothing at all.
Therefore, before coming to a verdict, we must carefully understand everything related. For example, whether a popular trading method like Binary Options is acceptable by culture or religion needs assessment. It becomes clear only after that.
Regarding the acceptability of Binary options, we often hear the term Halal or Haram. Those are typical terms for the middle eastern countries, especially. Also, it is a fact that the GCC countries are nothing less than a hub for all types of trading. Hence, drawing a clear vision can help long a trader’s journey.
What Do Halal and Haram Signify?
The terms Halal and Haram are some basic principles in Islamic teachings. They mean nothing complicated. Instead, Halal translates to acceptable and Haram as not acceptable. So, they essentially depict the idea of what should not be accepted and what should be in their lifestyle. Therefore, the followers embrace them according to that way of life.
The Halal and Haram concept is not limited to activities like trading in Binary Options. However, it is commonly heard for food choices and other activities against the teachings. Halal and Haram are not strict prohibitions but should be religiously followed by those who embrace them. Moreover, what is acceptable is not formed without any justified cause. For instance, some people believe Binary Options is Haram. They claim so because, technically, the money belongs to the company after you invest. On top of it, the account manager makes a commission out of it.
The association of Binary Options with Halal and Haram is also due to the idea that it is similar to gambling. Gambling is a method of testing luck to multiply the betted money. Although, even in gambling, one needs to have skills to win. The Islamic teaching prohibits destructive lifestyle habits such as gambling, alcoholism, etc.
As a way of life, such activities are discouraged in it. On the contrary, it intends to show a dignified path to a peaceful life. Hence, mainly because of such a mass notion, Binary trading is often classified as Haram by some. We can better understand these principles from their origin and significance.
Haram
The term draws its origin from the Arabic language. The primary source for this concept is the holy Quran, just like all other areas of Islamic teachings. It signifies what is lawful and mainly concerns Islamic dietary laws. We must have seen at food stalls written Halal instead of Haram. That means the food served is lawful and acceptable by the strict followers. Although the focus is on food choices and lifestyle habits, the concept of Haram can be generalized. Because of that, there arises a need to scrutinize trading in Binary Options also.
Halal
Halal is a contrasting term to Haram. Whatever is acceptable by the teachings of the Quran comes under it. It is used for all such aspects of life that are not forbidden. If there is a fulfillment of the conditions, we can say that even activities like trading can fall into it.
Is Binary Options Halal or Haram?
Binary Options are a modern way to trade and earn profits. But, it may not occur to many that there are demanding cultures in the world. Such cultures prefer their followers to stick to the age-old traditions. So, even a modern way to get profits and increase financial status might have to go under its judgment. They may have to choose according to their customs. But, if the process turns out to be acceptable, then it is not less than a bonus. That’s because the trader will become a good follower and earn profits simultaneously.
When it comes to acceptance by different cultures and religions, Islam is one of them. Therefore, even Binary Options has to qualify as Halal for a religious follower of Islamic teachings. No matter how profitable and futuristic it may be.
It is common knowledge that the teachings of the Quran guide the life of a good Muslim. Just like any religious practice Quran also shows the ways to live a noble life. However, we should know that the Islamic tradition is bound with Sharia law when it comes to that. It is nothing but an Arabic word that means the followable pathway. Since Sharia law is also a personal law, it covers household, economic and financial activities, etc.
We can have a deeper insight into Sharia law with its application in banking matters. Under this law, money lending is forbidden if it involves an interest rate. Therefore, investment enthusiasts were compelled to find an alternative way since no matter how noble that thought is, an economy cannot work that way.
The investments are made based on the risk-sharing concept in the Islamic world. We can see the references for that in the principles of Bai’ al ‘inah which means sale and buy-back agreement, Bai’ muajjal (credit sale), Mudarabah (Profit Sharing), etc. The also include Murabahah and Musawamah.
Islamic tradition cannot accept the interest rates. It is a clear fact, therefore when the law is applied to Binary Options, it calls for concern. There are interest rates charged for an overnight position in Binary trading. Since the interest rate itself is Haram, meaning even in Binary Options, it must be prohibited to make it a Halal practice. Therefore, a good Muslim who is sentimental towards the traditions can come under a dilemma while trading in Binary Options.
Since this trading method involves the interest earned or payable during a trading transaction, it makes the trade a Haram in its first impression. But traders can resolve this issue with the help of Islamic trading accounts.
Islamic Trading Accounts for A Good Muslim
Any trader can feel the need for Binary Brokers in an ideological conflict such as Binary Being Haram or Halal. Some innovative brokers have formulated the concept of Islamic trading accounts. It is an effective way to resolve this crisis. The main feature of it is that it’s a swap-free account. That means it can eliminate the Riba of any form during trading. Riba means an unjust gain. Since it is the main refraining factor, Islamic trading accounts aim to solve it.
With the help of Islamic trading accounts, good Muslims worldwide can trade peacefully. They can rely on them and explore Binary Options without regret. Traders can eliminate the fear of getting involved in gambling or betting or getting a Riba.
But, for the Islamic trading accounts to make Binary Trading a Halal process, it should also ensure certain parameters.
- Immediate execution of trades should take place in such accounts
- Brokers shall settle the transactional cost immediately after the trade. It should not get delayed.
- Finally, there shall not be any payable interests on the trades.
If the Binary brokers fulfill such conditions while providing the Islamic trading accounts, it can be claimed Halal.
What Are the Best Islamic Brokers?
When it comes to opening an Islamic account, the trader must always ensure the trustworthiness of the brokers. Since Binary Options is primarily an OTC trading method, brokers can play the role of the market itself. Therefore, deciding a reliable broker needful to avoid unwanted risks such as frauds, trade manipulation, etc. Some of the best binary brokers offer Islamic trading accounts for good Muslims are as follows:
Quotex
It is a relatively new broker in the Binary market. However, despite being founded in 2020, it has risen as a big name. The broker operates from Seychelles and is a go-to option for Islamic trading accounts.
IQ Option
Being one of the fastest-growing binary brokers, IQ Option is not behind in offering Islamic trading account. There is no extra charge for opening and closing an account. Moreover, traders can hold on to a position without any charges.
Pocket Option
It is a Binary broker that entered the competition in 2017. But, it is one of the prime brokers now. It offers a simpler withdrawal process, and having assets of more than 100 types is another feature. Offering the Islamic trading account for the benefit of the faithful followers is not excluded from the offering at Pocket Option.
Conclusion
The principles of Haram and Halal can give a tough time to the religious traders. Therefore, the use of Islamic trading accounts comes in handy in such scenarios. It helps both the brokers and users. Moreover, with the proper implementation, Binary Options can be termed Halal as it fulfills all the conditions. Therefore, even a religious Muslim trader can reap full benefits from it.
English