Whenever the economy struggles like it has recently, there have always been some opportunistic people that have managed to consistently increase their wealth and assets. Trading on the foreign exchange market has recently become one of the ways such people have continued financial growth. However, as this is done in various countries around the world, there must be options embedded in the Forex system to accommodate investors of different cultures and religions. Because Islamic custom forbids the collection of interest in business transactions, the Forex market has allowed for special accounts for practicing Muslims.
When a Forex trader leaves a position open overnight, he or she will usually pay interest to the broker. If you are exchanging currencies, you will pay interest on the currency you are selling and receive interest on the currency you are buying. The exact currencies being traded and the brokering business being used will determine the rate of the interest.
However, most businesses swap positions instead of calculating interest.
By keeping a specific position open, a firm can roll the position over to the next value day, wherein it can then immediately buy and sell the pair for that day's value. So, for example, a trader buys one million Euros and sold the counter of 1.4 million US dollars on Monday, which is valued for Wednesday; the Forex broker or firm, acting on behalf of the trader, rolls this position over to Thursday, the next value date. If it just so happened that the interest between the two were the same, and the bidding and asking interest rates were also the same, then there would be no cost or gain for the rollover. Yet, the interest rates of the effectiveness really are higher than those of the dollar, so the trader will then receive a small profit by holding that position of short dollars and long Euros overnight.
The Forex firm will allow Muslim traders to hold their positions without being charged or receiving gains, while also booking the profits or losses of the daily swap. While the exchanging of interest is banned under Islam, even many non-Muslim traders see having not interest charges or gains as less of a burden, less to be concerned about. More and more Forex traders of other religions and cultures are seeking this type of swap-free trading.
Though Islamic Forex accounts are not charged any interest, there are other fees that must be paid. Still, Islamic Forex accounts are certainly a good option for traders, and the only option for devout, practicing Muslims.
When a Forex trader leaves a position open overnight, he or she will usually pay interest to the broker. If you are exchanging currencies, you will pay interest on the currency you are selling and receive interest on the currency you are buying. The exact currencies being traded and the brokering business being used will determine the rate of the interest.
However, most businesses swap positions instead of calculating interest.
By keeping a specific position open, a firm can roll the position over to the next value day, wherein it can then immediately buy and sell the pair for that day's value. So, for example, a trader buys one million Euros and sold the counter of 1.4 million US dollars on Monday, which is valued for Wednesday; the Forex broker or firm, acting on behalf of the trader, rolls this position over to Thursday, the next value date. If it just so happened that the interest between the two were the same, and the bidding and asking interest rates were also the same, then there would be no cost or gain for the rollover. Yet, the interest rates of the effectiveness really are higher than those of the dollar, so the trader will then receive a small profit by holding that position of short dollars and long Euros overnight.
The Forex firm will allow Muslim traders to hold their positions without being charged or receiving gains, while also booking the profits or losses of the daily swap. While the exchanging of interest is banned under Islam, even many non-Muslim traders see having not interest charges or gains as less of a burden, less to be concerned about. More and more Forex traders of other religions and cultures are seeking this type of swap-free trading.
Though Islamic Forex accounts are not charged any interest, there are other fees that must be paid. Still, Islamic Forex accounts are certainly a good option for traders, and the only option for devout, practicing Muslims.
Try an Islamic Forex Account to Grow Wealth Within Faith
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