Salaam,
I couldn’t found an explicit explanation from IFG on short selling so asking explicitly.
Is short selling haram?
It would be great if you can give example based on BINANCE model as it is the most used exchange for crypto.
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is borrowing in SHORT trade not similar to taking loan from someone to start a business? Should there be a question of ownership here? because in real world it is Halal to take a loan to start business.
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The amount given to you by the exchange for SHORT trade is always given according to your existing investment which means you can go in loss but you can never go negative and hence you will not owe anyone anything even after loss. Does this make it halal?
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Will the service charges/fees (time based) from the exchange for the duration of SHORT trade be considered interest? I personally believe it is interest because if we eliminate this interest model then nothing in today’s world will fit into criteria of Ribah. But kindly guide us with your knowledge.
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If point 3 makes it haram then will it make short selling Halal if there is an exchange (just assuming) which gives you loan for short trade without charging any time based fees?
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Based on point 1 and 3, does this make leveraging for LONG trades halal?(as in leveraging we are also borrowing money, we can never go in negative after loss and so we will not owe anyone anything in the end, exchange charges fees for the duration of leveraging)
P.S assumption is that LONG and SHORT trading is done based on algorithmic or some proper mechanism and not just like gambling.
Jazak Allah for your time.
Regards,
Ahad