As the population measure of 2020, there are almost 8 billion people are living in the world. Currently, 1.8 billion Muslims are living here. No one can escape them in any industry. The forex trading industry also makes special opportunities for them because there are many restrictions available for Muslims. Islamic religion doesn't allow usury in money; that's why they have to avoid it. There are millions of Muslim traders are trading in the Forex industry. Although some people are avoiding usury rules while trading in forex, a large number of Muslims wants to trade in forex without usury. Forex brokers are offering them a usury-free trading account. In this article, we are going to explore the Islamic accounts facilities and cons.
So, what is an Islamic account?
To put it as plainly as possible, the Islamic account is one of the main account types that allows Muslim traders to do overnight trading without interest rate commissions. And pretty much all Forex brokers offer it to their clients.
Restrictions on interest in Islam
One of the most fundamental restrictions in Islam that every follower must obey is abolishing the interest for any service. So, for instance, if you're taking a loan from a bank or an individual pawnbroker, they're not allowed to charge you interest for it.
This restriction has something to do with the divine nature of Islam: people shouldn't be focused on getting benefits from their charitable actions. Naturally, therefore, interest in any service is prohibited.
Trading with Islamic account
So, how does this Islamic account work? When compared to other live trading accounts, the Islamic account is usually the same in terms of the majority of its offerings.
For instance, it will probably have the same leverage, spread, and minimum deposit requirements as its parallel accounts. The same can be said about order types and execution policies.
With that being said, however, there's one other difference that may also come with an Islamic account. While setting up this type of account with your Forex broker, you might be asked to provide the documentation or any other kind of proof that verifies that you're a Muslim and you're eligible for a swap-free account.
What's more, while it may not share the same commission rates as its live counterparts, the Islamic account may come with slightly higher commission rates to balance out the absence of the swap charges.
All in all, you can use the Islamic account to your advantage to engage in overnight trading, although you need to prove that you're eligible for it.