Assalamualaikum! @Mufti_Faraz_Adam @Mufti_Billal
I am currently doing some research on trading and I came up with High Frequency Trading, where you trade for example Forex on a broker like “binarycent” without interests. And you don´t trade there with margin/leverage. So, my question is:
Is High Frequency Trading (HFT) like High Frequency Forex (HFX) permissible in Islam? And what about HFT with Crypto on brokers?
Could you please explain the ruling?
Thank you for your time!
Jazak Allahu Khairan
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Wa alaykum salaam,
It depends on the Shariah compliance of what you are trading as well as whether you are gaining complete ownership of what you eventually trade.
Walekum Assalam brother:
In Islamic Finance, one of the basic requirement is the owning/possession or delivery (physical/virtual) of goods/products/assets. In MT/HFT and HFX, there is no full payment but only a fraction is paid.
Therefore, these types of tnxs are not permitted. In a conventional equity/stock tnx, deliveries are T+2 (ie tnx day+2 days for physical delivery, with full payments). On day3, when you own the asset, you can resell. Thus forward trade without owning an asset is also not permitted (as far as I understood). In Crypto trade, the good thing is that, ALL tnx are spot/live when someone purchases or sells (the deal currencies are moving spot/live). In crypto trading, since possession of asset is spot/live, anyone can do same day trading, as many times as possible (as long as the basic tenet of possessing of an asset with full payment happened).
My personal opinion based on my Banking, Investment, Blockchain/Crypto and Islamic Finance knowledge. Mufti Adam and Mufti Bilal will give more guiding comments.
If you do High Frequency Trading (or binary options) with Forex you trade with options. I have read that some scholars are allowing trading with options because they don´t see that use as gambling.
Would it be permissible to do HFT (HFX) from that view of scholars like Dr. Mohammad Hashim Kamali? No interest and leverage involved.
Jazak Allahu Khairan!
@Mufti_Faraz_Adam @Mufti_Billal