Answered by Shaykh Yusuf Badāt
Question:
Is it permissible to deal forex, stocks and shares to make money?
Answer:
In the Name of God, Most Merciful, Most Kind
Thank you/ Jazāk Allāh Khayr for your question.
It is permissible to deal in forex, shares and stocks transactions, provided all the Islamic guidelines of business and trade are upheld.
Islamic jurists have outlined some of the key guidelines for dealing in stocks, shares, foreign exchange etc. as follows;
- The primary purpose of the company’s involvement is in an islamically permissible trade. i.e. 50% or more of the company’s income should be from permissible avenues.
- One must take complete possession of the assets, which means that if the price of the commodity, currency or shares increase or decrease, the owner will either profit or lose. This could manifest in various forms. Each market and trade will be determined accordingly.
- One must assure that trading does not result in buying or selling cash for cash. If exchange occurs in the same currency or stock, then the company should have some non-liquid-able assets, such as land, machinery, building structure etc; if the company only has liquid assets, then it may only be traded as face value.
- One should dispose of any profit derived from interest-related sources during the trade.
(For details, see: Fatāwa Dār al-’Ulūm Zakarīyya and Fatāwa Uthmānī)
And Allāh Knows Best