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Websites like eToro offer services where you can buy and sell currencies, commodities(gold, silver, oil, etc.) and indices(SPX500, NSDQ100, DJ30, UK100, FRA40, GER30, etc).

It's basically an online trading platform. The way it works is that, for example, you buy gold or euro at a price from the current market and later sell it for a higher price(if the price goes up). Now, you predict the market and think that euro may rise against dollar or vice versa, which may or may not happen.

I don't know much about Interest or Riba and I wonder if the above trading is Halal in Islam? Detailed answers with authentic references are appreciated.


The comments to this question convinced me that it was Halal, until I read the following on eToro.

Both FX and commodities are traded in the spot market for 24 hours. At 5:00 pm New York time, all open positions are rolled over for the next 24 hours and the daily interest is added to the company’s accounts every 24 hours. The company can then either pay the interest or charge the client’s account to cover the fees.

With an Islamic account we make sure that there is no Riba in any form throughout the duration of the contract. In the FX market, if you don't close the trade before 5:00 pm New York time, all open trades will be automatically rolled over, which normally poses a problem for those following Islamic law, due to the possibly usurious interest charged for the rollover. However with an eToro Islamic account, all your positions will be closed at 5:00 pm (10:00 pm UST) and you can then reopen them immediately in order to avoid all interest problems and trade according to Islamic Sharia law. If the client chooses to reopen a trade immediately, the client will not pay any usurious interest.

There's no doubt that currency trading is one of the most difficult dilemmas in Islamic jurisprudence (Faqih). On the one hand, it requires the simultaneous exchange of currencies, which makes it a kind of hand to hand exchange. On the other hand, contemporary scholars consider the record of money transferred to or from a bank account as delivery. To resolve the issue, several decisions and fatwas have been issued. According to these decrees, the conditions for trading currency are:

  1. Immediate buying and selling without delay

  2. The currencies needs to be transferred from the account of the seller to that of the buyer and vice versa

  3. The cost of the trade should be paid without delay

  4. No interest on trades. In the case that there is any usurious interest, the contract will be invalid, void and Haram.

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Speculating is a problem, as it is very similar to gambling. However, if you invest without speculating, that is fine (i.e. you don't just guess, you do lots of research in the direction of the company you are investing in, and not just throwing money because you have a good feeling that the company will do well). Commodities are also fine, but indices can be risky as they can involve companies which muslims cannot invest in. –  oshirowanen Sep 12 '12 at 12:07
see also:islam.stackexchange.com/questions/121/… –  NesreenA Sep 12 '12 at 12:45
@oshirowanen: changed speculate to predict. –  Noah Sep 12 '12 at 15:03
his trading in commodity market sepcially in gold, silver , crde oil is haram or hallal pls clearfy –  user2208 Mar 3 '13 at 7:23
Salaam and welcome to Islam.SE, We suggest you read the FAQ. We are glad to have you as part of our community. Please take a look around at highly upvoted questions and answers, as well as the FAQ to get an idea of what we expect here. We typically expect answers to comprehensively address the question that was asked, backed with references and proofs. Once you build up some reputation points, you can leave comments (like this one) on a post. –  Abdullah Mar 3 '13 at 8:30
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5 Answers

I see two potential issues, that could make trading in shares, share indexes or foreign exchange haraam. These are the possibility of riba, and the question of whether these activities constitute gambling.

Any company will operate a bank account for its day to day expenses. Unless it's a specifically Islamic company, this bank account will be an interest-bearing account, and the interest will count towards the company's profit. When you own shares in such a company, you are therefore making gains from riba, even if you lose money from your investment in the company. In western countries, most companies will also have money invested in term deposits, which are classic vehicles for riba.

So if you wish to invest in the share market and avoid riba, you should only trade shares in Islamic companies. I'm not sure how easy this would be for an investor in a western country to achieve.

It should be possible for you to invest in foreign exchange without earning riba, if you are careful not to leave any of your traded currency in a bank account overnight. This may be difficult to organise, but it seems to me that the site that you are considering using has a way of achieving this.

That leaves the issue of gambling, which is unambiguously outlawed by (2:219) and (5:90-91). Every time you buy shares or foreign currency, there is a chance that what you buy will increase in value, and a chance that it will decrease in value.

With shares, the chance of an increase will be higher than the chance of a decrease, that is, you are more likely to profit than to lose money. Most investors will not just buy shares in one company, but in a whole range of different companies – maybe dozens of companies, maybe hundreds. They expect that some of those shares will increase in value and some will decrease, but that overall, they will experience an increase in the value of their investment. By investing in lots of different companies, they greatly increase the probability of a nett gain, and decrease the probability of a nett loss. But both possibilities still exist – it is possible to lose money as well as to gain it in the share market, no matter how carefully you invest. Indeed, many investors experienced this around five years ago, when very many companies all around the world lost value at the same time, for reasons that were well outside of the control of the individual investors.

Because the possibility of a loss always exists, no matter how careful or skilled the investor; buying shares is always gambling. Without exception.

With a share index, you are essentially gambling on a whole lot of shares all at once, that is, those whose prices contribute to the index. You profit when any single one of the companies in the index profits, and this includes profit by riba. All of the indexes that you mentioned in your question include companies which profit by riba, so when you trade in any of these share indexes, you cannot avoid riba; and of course, you are also gambling.

Buying foreign currency is similar to buying shares, except that the chance of an increase in value is not necessarily higher than the chance of a decrease. To do well at trading foreign currency, you need to have some special insight into which currencies are likely to do well, and which are likely to do badly. There will always be many factors that affect the value of a currency, that are outside what you can learn by studying the news about a particular country. Unless you are a truly expert investor, you are far less likely to profit from trading currencies than you are from investing in shares.

Undoubtedly, by careful and skilled investing, you can weigh the odds in your favour; but ultimately, you are still gambling. Every time you buy or sell any foreign currency, you are gambling, because there is no certainty over whether you will gain money or lose it.

So the short answer to your question is that investing in the share market and trading foreign currencies and share indexes are all haraam, even if you somehow manage to avoid riba. Commodities, I am less sure about, but I would advise extreme caution.

If you have spare money, and you are looking for some way of investing it, you could give it to the poor instead. The long term rewards of doing so far outweigh the return on any earthly investment; and this is a certainty, not a gamble.

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Thank you for the answer. Lets see what others say:) –  Noah Dec 1 '12 at 10:16
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From Muftisays.com


Al-jawab billahi at-taufeeq (the answer with Allah's guidance)

Trading in stocks is permissible in the Shari'ah subject to the following conditions:

  1. The main business of the company is not violative of Shari‘ah. Therefore, it is not permissible to acquire the shares of the companies providing financial services on interest, like conventional banks, insurance companies, or the companies involved in some other business not approved by the Shari‘ah, such as companies manufacturing, selling or offering liquors, pork, Haram meat, or involved in gambling, night club activities, pornography etc.

  2. If the main business of the companies is Halal, like automobiles, textile, etc. but they deposit their surplus amounts in an interest-bearing account or borrow money on interest, the share holder must express his disapproval against such dealings, preferably by raising his voice against such activities in the annual general meeting of the company.

  3. If some income from interest-bearing accounts is included in the income of the company, the proportion of such income in the dividend paid to the share-holder must be given in charity, and must not be retained by him. For example, if 5% of the whole income of a company has come out of interest-bearing deposits, 5% of the dividend must be given in charity.

  4. The shares of a company are negotiable only if the company owns some illiquid assets. If all the assets of a company are in liquid form, i.e. in the form of money they cannot be purchased or sold except at par value, because in this case the share represents money only and the money cannot be traded in except at par.

(An introduction to Islamic Finance, by Mufti Taqi Uthmani (DB))

With regards to Spread betting, this is a form of gambling, which is Haram. Thus, any spread bets on shares, commodities are also Haram. Also it will not be permissible to trade in companies such as IG index which involves spread betting deals.

Forex trading is not permissible. Please see the Fatwaa of Mufti Taqi Uthmani (DB): http://www.albalagh.net/qa/Forex_currency_trading.shtml

And Only Allah Ta'ala Knows Best. -------------------------------------- Moulana Qamruz Zaman London, UK

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What's spreading betting? In simple terms. –  Noah Apr 10 '13 at 14:14
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As you know already interest is haraam, I probably don't need to provide any hadith or quranic verse to prove that. If I do need to prove this first, please let me know as it won't take long.

Based on your research, I can clearly see that you think the stock market is very difficult for muslims, and you're right, it is!

Based on my own research, here are the problems:

  1. The company must not have a product which is forbidden in islam, alcohol, interest based loans etc etc

  2. The company must not be in debt, i.e. it must not be paying interest on a loan

  3. The company must not be using money from shareholders and sticking that money into an interest based account and earning interest on it

These 3 points rule out most of the stock market...

However, you can still find companies through which you can still get into the stock market in a halaal manner. For example, HSBC Amanah Freedom Plus accounts, let you do just that. For example, they have scholars who monitor the funds and make sure they are halaal. As soon as they are found to be haraam, a particular stock from a fund is removed. Plus anything related to interest is automatically removed from the funds and given to charity.

For more info, check out this link: http://www.expat.hsbc.com/1/2/jerseyfundinvestments/hsbc-amanah

I don't know how many of these types of companies there are around the world, this is the only one I have found with a little research.

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Assuming the definition of riba is not derived from ra-ba-wa (to grow) as hinted by Allah SWT at 30:39, where by there is no notion of growing in riba, but rather riba would have something to do with ra-ya-ba or uncertainties such as futures, hedging, etc. The abuse of ra-ya-ba to the point of harming others is what i define as riba.

So in the case of futures, as long as it's for the good of others it's ok. Cases like anticipating a hardship season to come, would be an example of a good for others. Cases like insider trading would be bad for others and be categorized as riba.


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business is all about managing risks (ra-ya-ba or uncertainties), a business that harm others is what i would define as riba –  johan.i.zahri Dec 2 '12 at 7:58
Salaams and welcome to Islam Stack Exchange. Unlike a typical internet forum, here we're attempting to build a high-quality library of questions and answers; as such, we typically expect answers to be referenceable. As written, this post looks like mere personal opinion and should be backed up by evidences or it risks deletion. See also this blog post. –  goldPseudo Dec 3 '12 at 1:03
This post also instigated the following question: What is the root of ربا? –  goldPseudo Dec 3 '12 at 1:04
i did clarify my position: there are some who hold the opinion that some letters are interchangeble such as ba and meem; ya , waw and alif; etc such as the usage of bakkah and makkah; etc –  johan.i.zahri Dec 3 '12 at 4:24
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From AskMufti in South Africa (Mufti Elias):


Assalam-o-Alaikum I have a bit different question regarding Forex account. I am familiar that opening an online forex account (Standard, Micro, Mini) is HARAM because it contain Riba, Interest.

I read many fatwa's on this issue and I am satisfied with them. But I have not been able to get an answer for what I was looking for. Your reply to my question will help every Muslim investor. Nowadays, some brokers are providing Islamic Forex account for Muslim investors which they claim that these accounts comply with Shariah laws and do not accumulate interest or swap fees.

Some common Islamic forex trading account conditions include: Swap Free Forex Account: In Forex trading, when traders leave positions open overnight, it is referred to as a rollover. This usually entails rollover fees, but when trading with a Forex Islamic account, these fees are waved.

No Riba Policy: According to Islamic law, giving or taking interest on transactions is strictly forbidden. This of course presents a problem when dealing with banks or other financial institutions.

With Forex Islamic accounts, all "Riba" charges are canceled.

Musharaka or commonly called joint venture: This refers to a partnership or joint venture for a specific business with a profit motive, whereby the distribution of profits will be apportioned according to an agreed ratio.

In the event of losses, both parties will share the losses on the basis of the agreed ratio also known for Islamic MT4 trading platform. Now my question is that:

Q; Can we trade in Islamic Forex Account as it contains no interest fee on them?

Q: Do they really comply with Shariah rulings?

Q: Can I do Istekhara for this to get a consent from Allah SubhanaoTallah.?

Please answer these questions as, your assistance on ruling set in Shariah Law, will help and protect Muslim investors from investing in what is called as an Islamic Forex account. I wish to get an answer from you. Atlast, please solve the problem with yor website so that people like me can raise questions easily. Allah Hafiz


1) Yes

2) Looks legal

3) Yes

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