Fatwa

Leverage in Forex Trading

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

daruliftaazambia.com

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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.