Is Binary Option Trading Allowed in Islam?
Because Muslims also want to be able to participate in the financial markets. many wonder is binary option trading allowed in Islam? It is a good question, because no one would wish to break their religious beliefs just for the sake of a few dollars of profits. In addition, many of the countries that follow Sharia law make any violations a legal matter as well as a religious one. Most notable of these is Saudi Arabia, with its large population and even larger economy and wealth.
The problem with most trading under Sharia law is that the trading accounts accrue interest and charge fees overnight when a position is held. These profits from interest and fees are strictly prohibited under Riba. As a result, for many years there was no financial trading, especially not in binary options, in countries which follow Sharia law. However, the binary option brokers wanted to find a solution that would allow Muslims to trade, and they did exactly that.
At any of the largest and longest running brokers you will find that they are able and willing to create special Islamic accounts. These accounts are similar to typical trading accounts, but they differ in one very important feature. These Islamic accounts do not charge fees or accrue interest, thus they are in accordance with Sharia law. This change has allowed Muslims from all over the world to participate in the financial market and has finally answered the question is binary option trading allowed in Islam. The answer is yes.
One other condition for the Islamic accounts is that they offer options on the Saudi Stock Exchange, which is called the Tadawul. This makes perfect sense for many Muslim traders as they are located in or near Saudi Arabia and are familiar with the movements of the Tadawul. It doesn’t hurt that the market is also one of the most profitable in the world, and has a market capitalization of over $370 billion. Made up of 168 different companies, many of which are in the financial and oil sectors, it is one of the strongest markets in the world.
In addition to offering binary options on the Tadawul, most brokers with Islamic accounts also offer forex trading in the SAR crosses. The availability of trading the SAR is another benefit to Muslim traders.
It is important to note that with the exception of the removal of fees and interest from Islamic accounts, trading binary options in such is not all that different from trading binary options in a regular account. One benefit that some Islamic traders has seen is that the lack of fees actually makes them more profitable in comparison with traders whose accounts are subject to such fees. And since Suadi Arabia is one of the world’s strongest economies, Muslim traders benefit from that as well, since they are most familiar with the SAR and the Tadawul exchange.
This post is also available in: Italian. Spanish