A variety of trading accounts exist to fill the needs of the different types of Forex traders. One such account is what is referred to as Islamic Forex accounts. The Islamic or Shariah forex accounts are not exclusively for Muslims. However, there are number of rules which these accounts follow to meet the needs of the Islamic community.
According to Islam it is forbidden to expect anything in return for giving, and it is therefore not allowed to pay or accept any sort of interest. Therefore, the Islamic Forex accounts offer “No Riba Forex” (Forex with no interest). This applies to rollover fees, the interest fees Forex traders pay when leaving a position open overnight. They are referred to as SWAPs and are intended to cover the fees that the banks charge for leaving transactions open overnight.
The traders can abuse the Islamic accounts by implementing the carry trade strategies. If discovered, the broker closes both accounts and bans the trader.
In summary, the Islamic accounts are characterized by
1) Swap Free Forex (see the above).
2) No Riba: giving or taking interest on transactions is strictly forbidden. With Forex Islamic accounts, all "Riba" charges are canceled.
3) Musharaka: This term refers to a collaboration between two players. The profits and losses are split based on a predefined ratio. We recommend InstaForex, XEMarkets or AvaFx to open the Swap Free Islamic account.
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