In the name of Allah, the Inspirer of Truth,
Forex trading is often marketed as a quick and accessible way to make money from changing currency prices. But how does it actually work — and is it something a Muslim should get involved in?
This guide explains what’s really happening behind the scenes when you trade forex online, how those trades work, and why they raise serious concerns in Islamic law.
If you've ever used a Forex app or trading platform, it might look like you're buying and selling real currency — like exchanging pounds for dollars or euros.
But in most cases, that’s not what’s happening.
What’s really happening is that you’re entering a deal with the platform:
“If the price goes up, you win money. If it goes down, you lose money.”
It feels like trading — but no real money is exchanged between currencies. You're not buying dollars, and you're not selling euros. You're just making a bet on how the price will move.
This setup is called a CFD (Contract for Difference) or sometimes spread betting. These tools are designed to mirror real markets, but you never touch the actual currency.
💡 So even though it looks like a currency exchange, no real currency changes hands. Your profit or loss is just a number on the screen.
There is such a thing as real forex trading — it's called spot FX, and it’s how banks, hedge funds, and big institutions actually buy and sell currencies with each other.
These trades involve:
But this kind of trading isn’t available to most people. It requires large amounts of capital, institutional access, and special platforms — not the apps and websites most people use.
Short answer: 👉 Usually not—most retail Forex platforms do not connect you to the real currency market.