I started trading forex on a demo account as I thought forex was permissible. After learning that there is no real trading of currencies going on and that all forex trades are CFDs, I have stopped.
However, I was wondering about prop firms which are companies that a person can pay a certain amount of money to get given an evaluation. For example, £250 to receive a 50k account. This evaluation is in 2 stages where the trader has to reach a certain % profit on a demo account. If both stages are passed they will receive a “funded account” and the cost of the test will be refunded. This funded account is just another demo account with virtual funds and 80-90% of the profit made on that account will be paid to the trader using money from people who failed and a trade copying algorithm that will copy trades that certain traders on the demo funded account make.
Would it be permissible for me to make money off this funded account as I would never be trading with real money and therefore never make any financial transactions?
"After a client becomes an FTMO Trader, they will be provided with a demo account with virtual funds.
An FTMO Account is a fully simulated account with real market quotes from liquidity providers. We copy the trades at our own discretion using aggregated orders thanks to our proprietary risk management algorithm. Clients are entitled to up to 90% of profits generated on the FTMO Account."
Salam Alaykum, I have also been looking for an answer to this question, as this is not involving any real funds and simply the profits generated are from the fees paid by those who have failed the challenge, it’s different to the normal forex model and doesn’t involve any interest. It’s as if the prop firm is a game and you’re being paid to trade charts without actually entering the market and dealing with leverage and interest etc. Would it be permissible to work with such prop firms?
Not all of the profits are generated that way. The man source of cash flow is through the use of a copy trading algorithm to copy the trades of consistently profitable traders. Considering that trading Derivatives is impermissible, it would be safe to assume that this would be impermissible due to the fact the money you recieve is generated from those haram derivatives.
prop firms most likely trade on huge scales, so huge that even if they trade a CFD they probably use a No dealer desk broker. No broker in their right mind would want to BBook a trade worth hundreds of thousands of pounds.
They only do Live Stock Trading but my issue is Leverage. How much Leverage is permitted? I’ve heard 1:3 is ok but I’m very conservative towards any interest