The world is in transition. Many new financial models and modes of earning are evolving with the passage of time. They have made earning much easier for us as it involves less physical effort. One such model is forex trading, especially future trading. With easy access to the internet, anyone can easily benefit from these evolving models. By investing some amount, one can start trading. But, is future trading halal? If not, what makes it haram? Let us discuss this in this write-up.
I (the author) have done a lot of research on future trading. Not a single fatwa is available in favor of it. I will be as brief as possible in summarizing the arguments forwarded against future trading.
This subject is so vexed and unsettled. Youngsters are found asking this question frequently on different platforms. If readers have any solid arguments in favor of future trading, please mention them in the comment section.
Future Trading is Haram – Reasons
Future trading is like betting on future prices. If your bet goes right, you win and earn. If it goes wrong, you lose. So, it becomes a sort of gambling. Gambling is strictly prohibited in Islam. Thus, future trading becomes haram in Islam.
Many would argue that they open future trades after performing a thorough fundamental and technical analysis of the market. So, it is unfair to call them gamblers or future trading gambling. Okay! Let us for now accept their argument.
The thing is they cannot trade on the thing they do not own or possess. In future trade, you do not have cryptocurrency, stocks, or assets in hand. You merely speculate on the prices. Here again, Islam does not allow it.
Then there is the “interest” factor that also makes future trading haram. Exchanges or brokers provide you leverage for trading. It is simply a loan paid to traders for trading. If you lose you lose; they do not share your loss with you. However, if you win, you have to pay interest to the exchange or broker.
In future trading, many become millionaires or billionaires in weeks; many become bankrupt in hours or days. Islam cannot allow such practices that involve high risk based on mere speculations.
On the other hand, we have spot trading. In spot trading, we actually buy crypto or assets; we wait for their price to increase and then simply sell them out in the market.
Although spot trading does not make you earn as quickly as in future trades, it is safe and free from speculations and interest.
In short, three factors i.e. Gambling, Trading on assets we do not own, and Interest make future trading forbidden in Islam.
If you have arguments in favor of future trading, please mention them in the comment section.