The Islamic ruling on Binary Options and Forex should be sought in the statements of religious authorities (Maraji'). Each of these scholars has expressed a somewhat different opinion on these matters, based on Islamic principles regarding financial transactions.⚖️
One of the less frequently addressed topics is the compliance of virtual space transactions with Islamic jurisprudential and religious principles. Earning lawful income in the digital world is especially important due to its complexities.
The foreign exchange market, abbreviated as Forex or FX, is a global market for currency trading. Unlike stock markets, Forex has no centralized physical location, but major currency trading centers include the UK, the USA, and Japan.
Exchanging one currency for another, when the two are not of the same kind, is permissible as long as there is no legal prohibition. The profit earned is halal (permissible).
However, if brokers give credit as a loan to traders and expect interest in return, such a transaction is not religiously valid.
Forex is not permissible, as it does not meet the necessary Islamic conditions for valid transactions.
His eminence does not permit entering such transactions.
Transactions in the mentioned market are symbolic or virtual, and thus not valid.
The Forex market and its transactions do not have a valid Islamic form.
Binary Options is a virtual financial market where traders predict stock price movements.
If they correctly predict whether a stock will rise or fall, they can earn up to 90% profit.
If they guess wrong, they lose money. The basis of binary trading is “yes” or “no” decisions.
You're asked:
"The price of Company N's stock at 5 PM on June 1, 2019, is $35.50.
Do you think it will be $36 at 5 PM on June 2?"
You predict "yes" and invest $200.
If the stock rises above $36, you earn about 70% profit → You receive your $200 back + $140 profit.
If the stock fails to reach $36, you lose the entire $200.
Given this structure, Binary Options shares similarities with gambling.
In both, you lose money if you guess incorrectly.
However, some argue it's different because Binary Options are based on statistical analysis, whereas gambling depends on chance.
Binary Options involve no real exchange of goods.
Trades are purely speculative and virtual.
Traders don’t influence or own shares in any real way.
Transactions are based on win/loss outcomes, and losers incur actual losses.
👉 Therefore, Binary Options are considered a form of gambling, and earnings from them are not halal (permissible).
Such income is religiously problematic.
Question: Is it permissible to earn money via Binary Options where people predict stock movements and earn profits?
Answer: This method is invalid and you do not become the rightful owner of the income earned.
Since the traded currency or commodity is not actually delivered, the transaction is not valid and not permissible.
Question: Some argue this isn't gambling since it involves statistical prediction. Is earning money through this method allowed?
Answer: Because there's no actual exchange or delivery, it's not religiously acceptable.
Gambling and gambling-like trades are haram (forbidden).
However, if the losing party is a non-Muslim, using their money is not problematic, though it's still better to avoid such actions.
Binary Options are not permissible, and the trades involved are not religiously valid.
However, if the funds come from a non-Muslim, using that money is allowed, though the trade itself remains impermissible.
