In the name of Allah, the Most Merciful, the Most Compassionate. Praise be to Allah, Lord of the Worlds, and peace and blessings upon the Messenger of Allah and the Seal of the Prophets.\n
\nClarifying the ruling on margin-based currency trading requires, first, a discussion of currency trading in general; second, an explanation of how the margin system is applied in such trading; and finally, a considered judgment in light of these points.\n
\nCurrency Trading\n
\nForeign currency trading means treating currencies as a commodity for sale and purchase, like other goods. Traditionally, the contract governing this transaction is known as the \u1e63arf contract (exchange).\n
\nIn Islamic law, \u1e63arf is the exchange of two monetary countervalues. The authentic Sunnah regulates this contract with two conditions:\n
\nEquality in amount when the exchanged currencies are of the same type, based on the Prophet\u2019s \ufdfa saying: \u201c\u2026 like for like, without increase \u2026\u201d\n
\nImmediate mutual possession of both countervalues, without delay, as the Prophet \ufdfa said: \u201cDo not sell the deferred for the immediate,\u201d and in another narration: \u201c\u2026 hand to hand,\u201d and in another: \u201cHere and now \u2026\u201d This condition applies whether the currencies are of the same type or different.\n
\nFrom this it follows that no deferment or options are permitted in \u1e63arf. Thus, of the four theoretically possible modes of exchange:\n
\nSpot exchange of one present currency for another.\n
\nSpot exchange of a present currency for a deferred one.\n
\nExchange of a deferred currency for a present one.\n
\nExchange of a deferred currency for another deferred one.\n
\nOnly the first form is valid in Shar\u012b\u02bfah.\n
\nClassical jurists also recognized the special nature of this contract and its subject matter: money. For them, money was not an end in itself, but a means of exchange, unlike ordinary goods whose purpose is direct consumption. Ibn Rushd notes: \u201cThe intent of gold and silver is transactional, not for their own use.\u201d Ibn \u02bf\u0100bid\u012bn states: \u201cPrice (money) is not intended in itself but is a means, as tools are for craftsmen.\u201d Similarly, Ibn Taymiyyah described money as \u201cpurely instrumental \u2026 a medium of exchange, and hence a standard of value.\u201d\n
\nAccordingly, \u1e63arf is a subsidiary contract, serving necessary purposes such as facilitating international trade or enabling travelers to transact in foreign lands. It was never intended as an independent field of speculative profit. Ibn al-Qayyim even warned against turning money itself into merchandise, for this undermines its function as a stable standard of value and leads to injustice and corruption. Al-Ghaz\u0101l\u012b similarly condemned trading money for money, describing it as \u201ca misuse of wisdom\u2019s design \u2026 treating money as a commodity to be hoarded is injustice.\u201d\n
\nThus, the clear conclusion from Shar\u012b\u02bfah objectives is: \u201cNo commodification of money!\u201d\n
\nMargin Trading\n
\n(Based mainly on the beginner\u2019s guide \u201cForex for Beginners,\u201d available at fx4beginners.com and many other sites.)\n
\nAt its core, the margin system allows a speculator with limited capital to trade with sums far exceeding his actual funds, through leveraged financing. His losses are capped at his margin deposit, while his potential gains are unlimited (after commissions). This resembles a lottery structure: one risks a small ticket (margin) for a chance at disproportionately large returns.\n
\nIn practice:\n
\nA trader with only $3,000 cannot buy the standard lot (worth $100,000).\n
\nThrough a broker, he deposits his $3,000 as margin.\n
\nThe broker divides this into used margin (say $1,000) and usable margin (say $2,000).\n
\nThe used margin is leveraged 100:1 to allow a $100,000 position.\n
\nLosses are cut off when they consume the usable margin; if the trader does not close his losing trade, the broker forcibly liquidates it.\n
\nIn reality, the purchased asset is not the trader\u2019s outright property; it is held by the broker as collateral for the loan that enabled the trade.\n
\nBrokers profit through:\n
\nInterest on loans (explicit or implicit). Some waive it for same-day trades, but then charge \u201crollover\u201d (overnight) interest, or embed costs elsewhere.\n
\nRollover fees (swap\/interest) for overnight positions. Some brokers market \u201cIslamic accounts\u201d with no swaps but still earn via hidden charges.\n
\nCommissions for providing technical facilities and market access.\n
\nSpreads or kickbacks from market makers.\n
\nCurrency conversion fees as traders constantly flip between currencies, magnifying broker profits.\n
\nAppraisal of Margin Trading\n
\nThis activity is not simply \u1e63arf; rather, it is margin-based speculative gambling. Its contractual structure involves:\n
\nMu\u1e0d\u0101rabah-like arrangements with investors. But this is invalid since the underlying activity (margin speculation) is not Shar\u012b\u02bfah-compliant.\n
\nLoan contracts from brokers, which are:\n
\nRiba-based (interest-bearing or interest-substituting).\n
\n\nConditional and restrictive (loan tied to specific speculative use).\n
\nCoupled with commissions, making them loan-plus-service contracts forbidden by Shar\u012b\u02bfah.\n
\nFlawed pledges (rahn): margins and assets pledged without valid ownership.\n
\nIjarah contracts for facilities, contaminated by the impermissibility of the underlying purpose.\n
\n\u1e62arf contracts that lack genuine possession, aiming only at exploiting price differentials.\n
\nTo treat each component separately and attempt to \u201cIslamize\u201d them is artificial\u2014similar to justifying \u02bf\u012bnah or bay\u02bf wa-salaf by dissecting them.\n
\nBroader Economic and Social Harms\n
\nEven if individual contracts were sanitized, the system as a whole produces grave harms:\n
\nMassive monetary inflation through extreme leverage (1:100 or more).\n
\nDrainage of domestic capital to international speculative markets, contrary to local development needs.\n
\nMisallocation of resources away from real sectors (agriculture, industry, housing) toward sterile speculation.\n
\nDollarization and subjugation of national currencies to global imbalances.\n
\nVolatility and financial crises spilling into the real economy.\n
\nSpread of parasitic mentality, encouraging idleness, easy gains, and unjust wealth concentration.\n
\nFraud and exploitation of na\u00efve participants, lacking legal protections.\n
\nHere is a joke my colleague Dr. Mu\u1e25ammad Bani \u02bf\u012as\u0101 once told me, which I now relate with some functional adaptation but without distorting its meaning:\n\nA swindler wanted to seize the villagers\u2019 savings. But he realized that one night would not be enough to raid all the houses \u2014 and that such an attempt carried great risk of exposure.\nSo instead, he prepared small transparent envelopes, filled them with plain dirt, and wrote on them in elegant handwriting: \u201cPure Soil \u2013 Price: One Dinar Only!!\u201d Then he displayed them for sale in his shop.\n\nOf course, no one in their right mind would need such dirt \u2014 in fact, one would imagine that people wouldn\u2019t take it even for free, let alone pay a dinar for it!\n
\nConclusion\n
\nMargin-based forex trading is, in essence, an organized form of gambling, structured through exploitative contracts and producing systemic harms. It neither fulfills the valid objectives of commerce nor serves the public good. Rather, it falls under what Allah described in the Qur\u2019an regarding intoxicants and gambling: \u201cIn them is great sin and some benefit for people, but their sin is greater than their benefit\u201d (al-Baqarah: 219). And in clear prohibition: \u201cIndeed, intoxicants, gambling, [sacrificial] stones, and divining arrows are abominations of Satan\u2019s handiwork, so avoid them \u2026\u201d (al-M\u0101\u2019idah: 90).\n
\nHence, this activity should be firmly barred from Muslim economic life.<\/p>\n
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\u0648\u0646\u0642\u0648\u0644 \u0641\u064a\u0647\u0627 \u0645\u0627 \u0642\u0627\u0644 \u0631\u0628\u0646\u0627 \u062a\u0639\u0627\u0644\u0649 \u062e\u0637\u0627\u0628\u0627\u064b \u062a\u0643\u0644\u064a\u0641\u064a\u0627\u064b: “\u0625\u0646\u0645\u0627 \u0627\u0644\u062e\u0645\u0631 \u0648\u0627\u0644\u0645\u064a\u0633\u0631 \u0648\u0627\u0644\u0623\u0646\u0635\u0627\u0628 \u0648\u0627\u0644\u0623\u0632\u0644\u0627\u0645 \u0631\u062c\u0633 \u0645\u0646 \u0639\u0645\u0644 \u0627\u0644\u0634\u064a\u0637\u0627\u0646 \u0641\u0627\u062c\u062a\u0646\u0628\u0648\u0647…” (\u0627\u0644\u0645\u0627\u0626\u062f\u0629: 90). \u0625\u0646 \u0641\u064a \u0630\u0644\u0643 \u0644\u0630\u0643\u0631\u0649 \u0644\u0645\u0646 \u0643\u0627\u0646 \u0644\u0647 \u0642\u0644\u0628 \u0623\u0648 \u0623\u0644\u0642\u0649 \u0627\u0644\u0633\u0645\u0639 \u0648\u0647\u0648 \u0634\u0647\u064a\u062f. \u0648\u0633\u0628\u062d\u0627\u0646 \u0631\u0628\u0643 \u0631\u0628 \u0627\u0644\u0639\u0632\u0629 \u0639\u0645\u0627 \u064a\u0635\u0641\u0648\u0646\u060c \u0648\u0633\u0644\u0627\u0645 \u0639\u0644\u0649 \u0627\u0644\u0645\u0631\u0633\u0644\u064a\u0646\u060c \u0648\u0627\u0644\u062d\u0645\u062f \u0644\u0644\u0647 \u0631\u0628 \u0627\u0644\u0639\u0627\u0644\u0645\u064a\u0646.<\/p>\n Abduljabbar Al-Sabhany \u0628\u0633\u0645 \u0627\u0644\u0644\u0647 \u0627\u0644\u0631\u062d\u0645\u0646 \u0627\u0644\u0631\u062d\u064a\u0645\u060c \u0627\u0644\u062d\u0645\u062f \u0644\u0644\u0647 \u0631\u0628 \u0627\u0644\u0639\u0627\u0644\u0645\u064a\u0646\u060c \u0648\u0627\u0644\u0635\u0644\u0627\u0629 \u0648\u0627\u0644\u0633\u0644\u0627\u0645 \u0639\u0644\u0649 \u0631\u0633\u0648\u0644 \u0627\u0644\u0644\u0647 \u0648\u062e\u0627\u062a\u0645 \u0627\u0644\u0646\u0628\u064a\u064a\u0646 \u0648\u0628\u0639\u062f:…<\/p>","protected":false},"author":1,"featured_media":962,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_kadence_starter_templates_imported_post":false,"_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"footnotes":""},"categories":[17],"tags":[],"class_list":["post-1106","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-17"],"yoast_head":"\n\n
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\nFor translation, use, or republication
\nCitation of the source is required:
\nal-sabhany.com<\/p>","protected":false},"excerpt":{"rendered":"