Forex Prop Firm Accounts

Assalamulaikum wa rahmatullah wa barakatuh, hope all is well

After months of research and back & forth I believe “Prop Firm Trading” to be halal, but I have not jumped into it fully as I’d like one final discussion.

Now, the general consensus is that Normal Forex Trading is Haraam. I agree.

The use of CFDs where you don’t own the asset, potential Riba, etc etc would make this a grey area/ haraam. It’s best to be avoided.

HOWEVER, Prop Firm Trading and Normal Forex Trading are two different things. In summary, a trader will pay a Prop Firm a fee to take a challenge in order to trade with a certain amount of “capital” (money) given by the Prop Firm. They will test the trader to make a certain amount of profit and if successful they will be able to trade and make profit on, for example a $100,000 account. The “profits” are then split between the Trader and Prop Firm.

But understand this, and this is where my argument stands:

  1. All accounts given by the Prop Firm are DEMO accounts. You would not be trading REAL MONEY. All Prop Firms say this.
  2. You are not trading on the LIVE markets therefore you are not engaging in CFDs, Leverage, etc etc with a broker. The market conditions are simply simulated.
  3. The “profit split” is not real profit. Stats show that 99% of traders who pay for these challenges fail. If they win, only an excruciatingly small percentage even get to the first payout. Prop Firms make MILLIONS as everyone is trying to get rich quick but keep paying for multiple challenges and failing them. Prop Firms pay successful traders from this revenue.

So, if I’m not trading real money and profits are coming from revenue and not the actual markets, where is the haraam?

Well there are some other arguments people put forward:

A) “Prop Firms copy your trades and this is assisting in evil.” In the Quran it says “…Each soul is responsible for its own actions; no soul will bear the burden of another…” 6:164 - If I’m trading in what’s seemingly a halal method and the prop firm use my expertise to do what’s haraam, why would I bare the sins of what they do?

B) “Prop Firms copy our trades and pay us from this”. This is not the business model of Prop Firms. The ratio of money made from failed challenges in comparison to copying profitable traders doesn’t match up; they make waaaay more from the failed challenges. This would also mean that prop firms would need to actually risk upwards of $50,000 to give a seemingly profitable trader a real account.

It’s like making money from a game. Skilled streamers make money from a virtual game like Fifa, Call of Duty, etc.

Would like to hear ur thoughts