Question
I wanted to ask if leverage is halal. Like when you are doing financial trading. I mean forex trading online through online brokers. Like where you use a 1:20 option. E.g. your $100 can be used to buy forex worth $2000 hoping you’ll earn that much ($2000) worth of money.
Answer
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Firstly, it is not permissible to engage in online Forex trading.[1] Accordingly, leverage in forex trading – which is a secondary matter – is not permissible as well.
And Allah Ta’āla Knows Best
Checked and Approved by,
Mufti Nabeel Valli.
Darul Iftaa Mahmudiyyah
Lusaka, Zambia
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[1] The impermissibly is due to the infringement of many Shar’i rulings:
- Selling a commodity that one does not possess or own.
- Dealing in currency with fluctuating rates.
- Enacting two transactions in one go, with the two being inextricably interlinked.
- Buying and selling prior to taking possession.
- Setting off one debt against another.
- Sharing of unspecified profits with a broker.
- Lack of possession after purchase.