5 Best Islamic Forex Accounts in 2021

Advertiser Disclosure
Affiliate Disclosure DailyForex.com adheres to strict guidelines to preserve editorial integrity to help you make decisions with confidence. Some of the reviews and content we feature on this site are supported by affiliate partnerships from which this website may receive money. This may impact how, where and which companies / services we review and write about. Our team of experts work to continually re-evaluate the reviews and information we provide on all the top Forex / CFD brokerages featured here. Our research focuses heavily on the broker’s custody of client deposits and the breadth of its client offering. Safety is evaluated by quality and length of the broker's track record, plus the scope of regulatory standing. Major factors in determining the quality of a broker’s offer include the cost of trading, the range of instruments available to trade, and general ease of use regarding execution and market information.

Not all brokers offer an Islamic Forex account, but those that do open up trading to millions of Muslim investors. See below the top valued Islamic brokers, thoroughly examined and selected by our expert analysts.

1
AvaTrade
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
High level regulation in multiple jurisdictions
Impressive range of tradeable assets including vanilla options and gold options
2
FP Markets
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
ECN-style trading
Daily market research and Autochartist access
3
eToro
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
Best social trading platform on the market
Excellent choice of options for crypto traders
4
FXTM
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
Best all around broker
High floating leverage + fast execution
5
Markets.com
The ratings shown on DailyForex.com are determined by hours of research from our editorial team into over 10 factors, including account fees, deposit/withdrawal options, regulatory status, tradable assets, and more.
Marketsi strategy builder helps traders trade smarter
Competitive trade execution with low slippage

Top Islamic Forex Brokers at a Glance

AvaTrade Highly regulated, choice of fixed or floating spreads.
FP Markets ECN trading with leverage up to 1:500.
eToro Best broker for social traders and crypto traders : 75% of retail CFD accounts lose money.
FXTM Best all-around: high floating leverage + fast execution.
Markets.com Excellent educational offerings.

AvaTrade
5.0/5 in this category
In Summary
Highly regulated, choice of fixed or floating spreads

AvaTrade was founded in 2006 in Dublin, Ireland. They are one of the largest and most famous Forex / CFD brokers in the world and became well-known for offering their clients a choice of fixed or floating spread cost of trading models. They enjoy an extremely high and strong level of regulation, making them a favorite for traders who are extremely nervous about the security of their deposit, which in Ireland can be protected by a strong investor deposit protection provision. AvaTrade is directly regulated in Ireland (and by extension, the European Union), Australia, Japan, South Africa, and the British Virgin Islands. Outside the European Union, Ava’s maximum leverage offered runs as high as 400 to 1.

Unique Features

Minimum Deposit

$100

Type of Platform

MetaTrader 4, MetaTrader 5, Proprietary platform, Web-based

In addition to their longevity and safe reputation, clients know that through AvaTrade they have access to a broad range of asset classes through which diversification can be achieved successfully: AvaTrade offers trading in over 55 different Forex currency pairs, 17 commodities, 20 equity indices, 14 cryptocurrencies, plus 66 individual stocks and shares. Even better, and unusually, 2 bonds and 6 ETFs are also on the menu. The diversity offered here stands out.

Whether you are located within the European Union or not, all branches of AvaTrade will offer you negative balance protection, above and beyond what is mandated by the law. This means that under no circumstances will any client of AvaTrade ever be held liable by the firm for an amount larger than their deposit.

 

AvaTrade Pros & Cons

Advantages

  • Well-regulated globally, with the Bank of Ireland, the primary regulator

  • Low minimum deposit and in-depth educational tools

  • Wide asset choice across seven sectors

  • Superior mobile trading platform

Disadvantages

  • Low leverage for retail traders

  • High quarterly inactivity fee

  • Unacceptable cost for AvaProtect

FP Markets
5.0/5 in this category
In Summary
ECN trading with leverage up to 1:500

fpmarkets is an Australian brokerage which launched in 2005. Headquartered in Sydney, Australia’s financial capitol, they have carved out a solid niche for themselves as the best Forex / CFD broker enjoying ASIC regulation. Australian regulators are much more relaxed about leverage than their counterparts in the U.S.A., U.K., and the E.U. and so fpmarkets can offer a maximum leverage as high as 500 to 1.

For most traders, the standout unique selling point of this broker lies in the incredibly wide range of tradable assets offered, providing an opportunity to trade over ten thousand individual stocks and shares. These go beyond the typical U.S.A. and U.K. companies and include a good selection of publicly traded shares on the Hong Kong and Sydney exchanges, as you might expect from an Australasian-facing broker like fpmarkets. Also, over 60 Forex pairs and crosses, 11 equity indices, the major commodities, and 5 cryptocurrencies including Bitcoin are also on the menu here.

Unique Features

Regulation

CySEC, ASIC

Minimum Deposit

$100

Type of Platform

MetaTrader 4, MetaTrader 5, Web-based, IRESS

They offer an unusual hybrid ECN/STP execution model which means that their clients can choose between ECN style of execution giving a very high level of speed, and a “straight through processing” execution style which allows for more “natural” spreads.

Traders can scalp and hedge at this broker, whose fast ECN execution speed makes it a natural home for scalpers. Clients may choose between the MetaTrader 4 and MetaTrader 5 platforms, and shares can be traded through the IRESS trading platform which includes access to level 2 exchange data.

FP Markets Pros & Cons

Advantages

  • Choice of trading platforms and auxiliary trading tools

  • Very competitive cost structure and excellent asset selection

  • Low minimum deposit requirement and leverage of up to 1:500

  • Well-regulated and trustworthy

Disadvantages

  • Availability of Iress geographically restricted

FP Markets is an Australian multi-asset broker with more than $1 billion in daily trading volume, serving clients from 80+ countries. Founded in 2005 in Australia, FP Markets grew into a trusted brand over the past 15+ years with more than 100 employees. The upgraded MT4/MT5 trading platforms, via the Trader Tools consisting of twelve plug-ins, present clients with a competitive edge. We have conducted an in-depth review of this CFD broker to provide traders with a complete overview of the trading environment at FP Markets.

eToro
4.5/5 in this category
In Summary
Best broker for social traders and crypto traders : 75% of retail CFD accounts lose money

eToro was founded in the early days of the online retail Forex era, in 2007 – this broker occupies a unique space as the king of social and copy trading. eToro has a long track record and unique reputation to protect, although this image is more focused on its copy trading model than on any other individual feature, except maybe its special relationship with cryptocurrencies. 

Unique Features

Regulation

CySEC, FCA, ASIC

Minimum Deposit

$200

Type of Platform

Proprietary platform

eToro is regulated in Cyprus, the U.K., Australia, and the United States although its U.S. offering is firmly differentiated from its offering to the rest of the world.  

eToro guarantees several benefits to anyone opening an Islamic account: no rollover interest or commissions on any trade contracts lasting for longer than 24 hours will be charged, and no commissions or fees are charged to Islamic accounts for account management. Notably, interest-free leverage is also offered to Islamic account holders. 

eToro is a leading cryptocurrencies CFD broker. Following its 2019 acquisition of Danish blockchain company Firmo and Belgian crypto portfolio tracker application Delta, it released its cryptocurrency wallet for mobile devices. The proprietary sentiment indicator for digital assets based on Twitter activity presents a social trading tool millennials favor.

eToro Pros & Cons

Advantages

  • Excellent equity asset selection and broad cryptocurrency choices

  • Cryptocurrency wallet for Android and iOS

  • Twitter-based digital asset sentiment indicator

  • Simple social trading procedure

Disadvantages

  • Below average educational resources

  • Internal withdrawal fees plus higher core trading costs

  • MT4 trading platform not supported

  • Low leverage and higher minimum deposit

FXTM
4.5/5 in this category
In Summary
Best all-around: high floating leverage + fast execution

We have made FXTM our top-rated broker because in addition to its lengthy track record, it enjoys a very high level of regulation and reputation, and it offers a highly competitive fee structure which tends to keep down the cost of trading.

Unique Features

Regulation

CySEC, FCA, FSC, CMA

Minimum Deposit

$50

Type of Platform

MetaTrader 4, MetaTrader 5

FXTM, or “ForexTime”, has been around for a long time: they were founded in 2011. Recent years have seen them continue to steadily expand their business, and they are well- regulated by the U.K., Cyprus, Mauritius, and South Africa. The brand is owned by private companies incorporated in the U.K., Cyprus, and Mauritius. Customers of FXTM have access to more than 57 Forex currency pairs and crosses, precious metals, the major energies, equity indices, big cryptocurrencies, and a few individual American stocks. Talking of stocks, FXTM are quite unique in the area of trading stocks, as they enable direct trading through real legal ownership, not just wrapped as CFDs like almost every other similar brokerage offers.

FXTM offers traders a choice between two of the most popular execution models: customers may open either an ECN-type account, or one that trades by “straight-through processing”. Clients have a straight choice between two trading platforms, with both MetaTrader 4 and MetaTrader 5 on offer.

Through their Mauritius regulator, FXTM offer leverage as high as 1000 to 1. In the U.K. and Cyprus, they are limited by law from offering more than 30 to 1.

If you are looking for a broker with a good copy trading program, it is worth taking a serious look at FXTM’s “FXTM Invest” copy trading program.

FXTM Pros & Cons

Advantages

  • Excellent client deposit protection

  • Low minimum deposit

  • Free MT4 add-ons and VPS hosting

  • Good educational tools

Disadvantages

  • No cryptocurrencies or exotic currencies

  • Low leverage for retail traders

  • Internal withdrawal fees and an inactivity fee

Markets.com
4.5/5 in this category
In Summary
Excellent educational offerings

Markets.com, part of UK-publicly listed and FTSE 250 constituent Playtech PLC, offers traders one of the most trusted, secure, and competitive brokers. It operates four subsidiaries regulated in the UK, Cyprus, Australia, and the British Virgin Islands, with the latter two presenting the best trading conditions. Markets.com serves traders via Marketsx and investors through Marketsi. Besides its proprietary trading platform, Markets.com deploys the MT4 and MT5 trading platforms. Traders also have access to fourteen quality trading tools, consisting of sentiment, technical, and fundamental indicators. They provide clients of Markets.com with a notable competitive advantage.

Unique Features

Regulation

CySEC, FCA, ASIC, FSCA

Minimum Deposit

$100

Another benefit at Markets.com remains its asset selection. Forex traders have a choice of 67 currency pairs and 25 cryptocurrency pairs. Equity traders get access to 2,027 equity CFDs, 60 ETFs, and 40 index CFDs. Completing the selection are 28 commodities, 23 in-house created blends (in-house thematic portfolios), and four bonds. Markets.com also provides Forex traders with one of the best commission-free cost structures starting from 0.6 pips on the EUR/USD currency pair. It translates into $6.00 per lot or $12 per round lot. Equity traders pay a fixed commission of $10 or a currency equivalent per side for a total cost of $20 per trade. Other noteworthy advantages include the personalized financial live-stream service XRay, its Investment Strategy Builder, its outstanding order execution statistics, and its transparency.

 

Markets Pros & Cons

Advantages

  • Very Competitive Forex Fees

  • Very Wide Choice of Assets

  • Choice of Trading Platforms

  • Excellent Customer Support

Disadvantages

  • Commodities and Indices Fees Higher than Forex Fees

Top Brokers Overview

Scroll horizontally to see the whole table.

Our Rating

 

 

 

 

Retail Loss Rate

79.0%

75.0%

74.0%

73.9%

Undisclosed

Primary Regulators

Bank of Ireland, ASIC, FSCA

FCA, CySEC, ASIC

FCA, CySEC, FSCA

FCA, CySEC, ASIC

ASIC, CySEC

Minimum Deposit

$100

$200

$10

$250

$100

What is an Islamic Forex Account?

 According to Islamic law, often referred to as Sharia law, Muslims are prohibited from earning interest on their giving. This law also applies to interest earned on any banking or investing. Many brokers offer these traders the possibility of trading Forex according to Sharia law by opening an Islamic Forex account where interest-free Forex trading is made available. This is also called a ‘No Riba Forex’ account.

The team at Daily Forex examined the top Muslim friendly Forex brokers and has compared them in an easy to read list where you can determine which Islamic Forex broker is the best one for you.

Today, many brokers around the world are keen to offer Islamic Forex accounts for those who want to comply with Sharia law. This article will help you choose the best Islamic Forex broker for you and shine some light on the criteria you should be using as you make your choice.

An Islamic Forex Account is a Forex trading account that abides by Islamic law, known as the Sharia. Those who follow this law are guided by the Quran, the sacred book of Islam, and they must obey certain standards and practices to maintain lawfulness.

What makes a Forex Islamic account halal? Forex brokers wishing to attract Islamic clients have are a few basic principles they must apply to at least segment of their offering, thus creating the Islamic account. These concepts are a bit different from what the western world might understand as traditional banking or trading. Below, we explain three of the key concepts of Islamic law most relevant to the question of an Islamic Forex account.

Riba

“Riba” means increase, excess or addition and it refers to financial interest. It is seen as a type of usury and selfishness that can lead to hoarding. The charging of usurious interest as a business practice is deemed to have an adverse effect upon the Islamic ideal of fellowship in the community and is therefore prohibited under Sharia law.

Gharar

“Gharar” refers to risk, more precisely defined as “the sale of what is not present” and is a haram (forbidden) practice in Islam, forbidden by Sharia law. Those who abide by the Sharia may not gamble, sell short (in the traditional sense commonly referred to in stock trading), or conclude agreements which might involve uncertainty or chance.

The Mudharabah Arrangement

A “Mudharabah arrangement” is an arrangement or partnership between two parts: the financial role and the management of the funds. The financial role will invest, and the other will control the money.

However, in Sharia law, the Mudarabah Agreement can be restricted. This means the investor will only allow the one who manages the funds to administer them in a certain type of business or location. If it is unrestricted, it indicates that the management of the funds have no constraint.

Musharakah Arrangement

“Musharakah” means “to share”, and it is another type of partnership permitted by the Sharia law where both parties will benefit from earnings in a trade. In this way, the financial part will earn without having to go against the rule against Riba.

Losses must also be shared by those in a Musharakah Arrangement, but the amount of such will depend upon the amount of invested capital. On the other hand, the divided profit is previously set according to the agreement on the contract.

Back to top ⬆

How to Choose an Islamic Forex Account?

If you would like to choose one of the best Islamic Forex accounts, there are some important elements to keep in mind. We have added below some of the essentials to consider.

Regulations

Regulations are important for all traders when choosing from a list of the best Islamic Forex brokers. Regulations will guide, restrict, and instruct brokers on how to administer accounts.

The relevant regulatory bodies will protect traders from fraud or any other illegal misconduct. It is common that the top Islamic Forex brokers are compliant with more than one regulatory body. Islamic banks emit a guarantee to confirm the liability of the client’s financial position and religious faith. Also, there are certifications for Forex Islamic accounts in Halal.

What is a Swap-Free Islamic Account in Forex? How do Commissions on Islamic Trading Accounts Work?

A swap is a fee that is charged to those who leave a position open for more than 24 hours. It is a type of interest and therefore, it is not allowed for those who comply with Sharia. The solution for most brokers is to apply fixed fees or commissions on Islamic trading accounts that maintain longer-term overnight positions.

No-Swap Period

Some brokers will only allow you a limited amount of time in which you can trade swap free. This is known as no-swap or swap free periods. Only the better Islamic Forex brokers will allow unlimited swap free trading.

Terms & Conditions

It is always important to read the terms and conditions published by any Islamic Forex broker because that is where the small print is. For example, the broker may not charge an interest rate, but there will most likely be a commission instead, so it is important to be sure of all such terms as these will probably affect your cost of trading when you open an Islamic trading account.

Islamic Prohibitions

According to Sharia law, there are a number of prohibitions applicable to Islamic traders. These reflect Islamic guidelines aimed at ensuring a prosperous and peaceful community. The major prohibitions are outlined below:

Overnight Rollovers

Overnight rollover is the interest that a trader is charged (or sometimes paid) for holding a position overnight. As an Islamic trader you will probably be charged a fixed commission per trade instead to make up for not being charged a commission. It is important to note that in most cases, each currency will have a different interest rate and therefore most likely differential commission rates, so it might be a good idea to look at the applicable fee before opening a position in a particular Forex currency pair or cross.

Interest on Margin Deposits

A margin deposit is an interest based on the cash deposit made with a Forex broker, which a few brokers offer to larger clients. Since margin trading involves a higher risk, the trader must present an initial amount before opening a leveraged position. Interest on margin deposits is not permitted in an Islamic Forex account since it goes against the “no Riba” principle.

Loans

Those who are compliant with Sharia law may not receive or give loans with interest.

Margin Trading

The Riba principle is broken by any trading on margin because margin involves the loan of money at interest given out by a lender who seeks benefit. Even if it has 0% interest, it still arguably may be a loan where the broker seeks benefit (an end profit made by the exchange).

Short Sales

Short sales (in the sense of shorting an equity) go against the Gharar principle because a true short seller is selling something they do not own. The Gharar principle is against “the sale of what is not present”.

Forward Sales

A forward sale is an agreement between two parties to buy or sell an asset at a specified price at a future date. Again, it is contrary to the Gharar principle.

Back to top ⬆

How to Open an Islamic Trading Account?

In order to open an Islamic Forex account, you might be asked by the broker to present a few documents, such as your ID and a document as proof of your faith.

Who is an Islamic Trading Account for?

An Islamic trading account attempts to apply Islamic Sharia law to online Forex trading. Therefore, it is for Muslims; those who wish to follow the teachings of the holy Quran. The Quran prescribes a religious law known as the Sharia that has certain rules on how humans should live in society. It includes principles of behavior on finance, family matters, nutrition, and more.

Is it Halal or Haram for Muslims to Trade Forex?

Both Halal and Haram are terms that are applied by Islamic doctrine to all aspects of life. Haram means anything that is forbidden by the Islamic law. Halal, on the other hand, are all the practices that are allowed by the Sharia. We have examined this question elsewhere in detail.

What Can I Trade with an Islamic Account?

Islamic accounts can offer any markets for trading if the asset itself is compliant with Sharia law, as long as the basic principles against Riba etc. are honored. However, some assets are not. For example, an Islamic account could not offer trading in the shares of a company which manufactures alcoholic beverages as such beverages are forbidden in Sharia and no Muslim should profit from them.

Advantages & Disadvantages of Islamic Accounts

One of the best advantages of Islamic accounts is that those who are Sharia compliant can trade without going against their beliefs. Also, without any swap fees, traders can go a long time without being required to make any interest payment. Another benefit is the Mudarabah Agreement where both parts will share profit and loss.

A potential disadvantage of an Islamic account is that you may sometimes need to pay quite a lot in commission in place of overnight swap fees.

Back to top ⬆

Islamic Forex Brokers in Malaysia

Malaysia is an emerging Asian economy, and Forex trading is gaining popularity there. The Securities Commission of Malaysia (SCM) is the financial regulatory body, issuing a Capital Markets Services License (CMSL) to international brokers. While all brokers are allowed to accept traders from Malaysia, those holding a CMSL offer an additional layer of security and a dispute resolution mechanism that can hold the broker accountable in case of malpractice and fraud.

Since the SCM published a new directive for contracts of difference (CFDs), amending the Capital Markets Services Act of 2007, which took effect in July 2018, more brokers are pursuing a CMSL to validate their standing among a growing number of retail traders. The SCM maintains a Public Register of License Holders on its website, and traders may check the Malaysian website of their preferred international broker and cross-reference the given license number with the SCM database.

Bank Negara Malaysia, the country’s central bank, directly regulates Forex brokers and issued guidelines on cryptocurrencies, an asset class enjoying increased popularity, especially among younger retail traders. Some confusion exists over the legality of Forex trading in Malaysia. It is legal for Malaysians to trade with offshore brokers, as long as they are compliant with domestic laws. They include RM10 million in up-paid capital and adjusted net capital of RM500,000, which is an estimated $2.5 million and $125,000, respectively.

There are three things Malaysian traders should seek from their broker. Primarily, an Islamic account compliant with Sharia law. It is essential to read the terms and conditions carefully, as sometimes the minimum deposit is increased, or the swap-free offer is time-limited. Local bank transfers in the Malaysian Ringgit will ensure easy money management to and from the broker, while mobile trading remains a fast-growing trend across the Malaysian retail sector. More brokers offer all three core elements to gain a more prominent market share of the expanding Forex market in one of Asia’s fastest-growing economies.

FAQs

What is an Islamic trading account?

An Islamic trading account is a trading account which operates in compliance with Islamic Sharia law. Islamic trading accounts have certain principles they must adhere to in order to respect Islamic social fellowship.

Is Forex halal or haram?

Trading Forex through an appropriate Islamic Forex trading account can be halal not haram.

What does Islam say about online Forex trading?

Islam does not say anything specific about Forex trading, although it does have rules governing commerce and exchanges of value, which must be “hand to hand”.

What is a swap free account in Forex?

A swap free account in Forex means that you will not be charged or paid swap interest if you decide to keep a trade position open overnight. You will be charged the difference, more or less, another way, most likely by commission.

Back to top ⬆

Huzefa Hamid

I’m a trader and manage my own capital. I trade the major Forex pairs, some Futures contracts, and I rely entirely on Technical Analysis to place my trades. Today, I am also a Senior Analyst for DailyForex.com. I began trading the markets in the early 1990s, at the age of sixteen. I had a few hundred British pounds saved up (I grew up in England), with which I was able to open a small account with some help from my Dad. I started my trading journey by buying UK equities that I had read about in the business sections of newspapers. The 1990s were a bull market, so naturally, I made money. I was fortunate enough in my early twenties to have a friend that recommended a Technical Analysis course run by a British trader who emphasized raw chart analysis without indicators. Having this first-principles approach to charts influences how I trade to this day.

Sample Dynamic Content Placeholder dfp-placeholder