How Islamic Account Changes Forex Trading
Islamic account possibility increases the interest of traders in forex trading market. It brings several benefits and friendlier environment for Muslims to trade. Islamic law called sharia prevent Moslems to accept interest from any loan on both floating and fix payment. This law gives impact when applied on financial trade like forex.
Friendlier Money Lending
Applying Islamic law means no interest or fee acceptance after a money lending. In order to make it possible in trading system, traders are allowed to trade on positions their money can afford. They can expand but the loan given by broker is offered without any interest. This enlarges the possibilities to Moslem traders to play on the game on most acceptable way to them. Many people also see this option as beneficial especially when cost in taking a loan is a lot lower. This concept gives every financial transaction more profitable condition. However, there are rules constituting this law to avoid trouble makers.
Different Trading System
Unlike the traditional system, working on forex trading market gets a little different with Islamic law is applied. Brokers are allowed to bid on all positions. However, considering the law, traders will likely get shared profit instead of solid one as we usually know. This is also based on sharia law application on financial transaction to share risks instead of transferring it to only one party. By proxy, it happens the same way in earning forex trading market profit. Moslem traders can earn the same amount in more spreading positions.
Different Broker Movement
Mainly, Islamic account is offered in swap free kind of account. Commonly, broker will also raise the amount of spreads on the particular accounts. Alternatively, brokers also raise the amount of fee and commission given to them. More spreads make it possible for broker to help Moslem traders and earning the usual profit in the same way. Other traders can still trade on the usual account at the same broker offering this account. However, not many of those brokers are ready with these accounts yet. Considering the trends and the increasing profit, it is highly possible that every broker will offer the account.
Application of Hiba
Hiba means giving donations or gifts to particular party in voluntary movement. This concept is used to solve earning problems for brokers offering Islamic accounts. The application doesn’t go differently at all. Basically, Moslem traders have the possibilities and all features to donate part of their profit to broker. Commonly, Moslem traders like this idea and they use their right very wisely. They don’t just forget the right and give nothing to broker. Many traders may find this concept a little risky considering not all people have the good attitude and ethic. It triggers additional agreement upon this concept between traders and brokers.
Considering the numbers of Moslems who become traders, the possibility to open an Islamic account to trade will be beneficial. It adds the interest on trade. If broker wants to win competition against other brokers, allowing Moslems to open an Islamic account will be helpful. We should see more of them in the following months.