The Forex market is quite a diverse trading arena. There are many different brokers, many different platforms, and many different schools of thought when it comes to Forex trading. One example of how diverse the Forex market really is, are the Islamic Forex trading accounts. While Islamic Forex is not what it sounds like and anyone can open an account with Islamic Forex brokers, it does go to show how the industry takes all demographics into consideration.
So if anyone can sign up with Islamic Forex brokers, what makes them Islamic accounts? Well, basically, Islamic Forex account is like any other regular trading accounts minus the interest payments that accompany most Forex trading accounts. Let’s back up a little.
According to Islamic law, the collection or payment of interest of any kind is strictly prohibited. Sharia law believes and dictates that Muslims should be giving for the sake of giving and not to receive something in return.
When it comes to Forex trading, this across the board prohibition of interest, affects certain aspects such as rollover fees. Rollover fees are interest payments that the trader pays when he/she leaves their positions open overnight. When opening an Islamic Forex account, these payments are waved.
While that might seem like a major selling point that would appeal to all traders, Islamic Forex brokers have been known to balance out that appeal with other disadvantages such as higher spreads than the regular Forex account.
In reality, many brokers we have all heard of, are also Islamic Forex brokers, which basically means that one of the many types of account they offer alongside a mini account, a micro account, a demo account, and others, is an Islamic Forex account.
Besides the advantage of not paying interest in an Islamic Forex account, the rest is pretty much the same. When choosing an Islamic broker, you still need to check out their customer support, put their trading platform to the test, and see how their trading features compare to the competition. The only thing is that Islamic Forex trading adds other criteria you want to look for. Most Islamic brokers will publicize this feature and if not, you can always ask if it is supported. A strong Middle East presence is also a good indication that a broker supports Islamic Forex accounts.