Halal Binary Options

Is binary options trading halal or haram? Binary options are an increasingly popular method of trading online, including in the Muslim world. Fortunately, a growing number of platforms now offer Islamic accounts. In this tutorial, we explore how to trade binary options in a way that is compatible with Islam and we consider the top online brokers. Find out how to start trading halal binary options today.

Note, this article does not provide religious advice – it presents various views from market commentators. Speak to a local religious leader for further guidance.

Halal Binary Options Brokers

  1. IQ Option - IQ Option is a top-rated binary options and digital trading broker. Trade on a user-friendly platform with a low starting deposit. Simply decide whether the price of an asset will go up or down to win a predetermined payout up to 90%+.
  2. Grand Capital - Trade high-low binary options contracts on currencies, metals and cryptos with high payouts. Binaries offer a straightforward bet on the short-term direction of an asset.
  3. Dukascopy - Dukascopy offers binary options on currency pairs, stocks and indices, alongside powerful trading tools and market insights. User gets flexible contract sizes and deposits are protected by EU law, though the $1000 starting investment is higher than alternatives.
  4. World Forex - World Forex offers binary options where you simply decide the stake, price direction and contract timeframe. The payouts are high at up to 100% on American contracts and 85% on European, which also offers a partial refund to traders who close contracts before expiry.
  5. Olymp Trade - Olymp Trade offers fixed time trades (FTT) on a diverse but modest range of markets, from OTC currencies to composite indices. FTT commissions are charged between 5%-10% and you can trade with ultra-short time frames from 5 seconds. Payouts are available up to 93% for those who can afford the $2000 'Expert' status deposit.

#1 - IQ Option

Why We Chose IQ Option

IQ Option is a top-rated binary options and digital trading broker. Trade on a user-friendly platform with a low starting deposit. Simply decide whether the price of an asset will go up or down to win a predetermined payout up to 90%+.

"IQ Option is a good broker for beginners with a slick platform and low minimum investment. New users can also open an account in three easy steps."

- DayTrading Review Team
  • Minimum Deposit: $10
  • Payout %: 91%
  • Copy Trading: No
  • Platforms: Own
  • Instruments: Stocks, Forex, Crypto

About IQ Option

IQ Option is a trusted broker with multi-asset trading on its user-friendly proprietary platform. The broker provides trading on forex, stocks, cryptos, indices, commodities and ETFs with competitive fees and a good suite of extra features and educational content. You can also open an account with just $10.

Pros

  • High payouts on binary options
  • Excellent range of payment methods
  • Reliable 24/7 multilingual support

Cons

  • No MetaTrader 4 integration
  • €10 inactivity fee after 90 days

#2 - Grand Capital

Why We Chose Grand Capital

Trade high-low binary options contracts on currencies, metals and cryptos with high payouts. Binaries offer a straightforward bet on the short-term direction of an asset.

"Grand Capital is a good broker for traders familiar with MetaTrader plus passive investors interested in copy trading and LAMM solutions. On the downside, the broker's regulatory credentials lag behind competitors."

- DayTrading Review Team
  • Minimum Deposit: $10
  • Payout %: 86%
  • Expiry Times: 1 minute - 48 hours
  • Bonus: 40% deposit bonus
  • Copy Trading: Yes
  • Platforms: MT4, MT5
  • Instruments: Stocks, Forex, Crypto

About Grand Capital

Grand Capital is a MetaTrader broker with welcome bonuses, trading competitions and an intuitive copy trading service. Several account types and 400+ assets provide trading opportunities for various types of investors and strategies. New users can also open an account and start trading in a matter of minutes.

Pros

  • Fast and easy account opening
  • Wide selection of payment methods and account currencies
  • Accessible minimum deposit starting from $10

Cons

  • Limited regulatory oversight
  • Basic education and market research
  • High spreads on some assets

#3 - Dukascopy

Why We Chose Dukascopy

Dukascopy offers binary options on currency pairs, stocks and indices, alongside powerful trading tools and market insights. User gets flexible contract sizes and deposits are protected by EU law, though the $1000 starting investment is higher than alternatives.

"Dukascopy will appeal to active day traders with fee rebates and the JForex platform for automated trading."

- DayTrading Review Team
  • Minimum Deposit: $100
  • Payout %: 90%
  • Expiry Times: 3 minutes - 1 day
  • Bonus: 10% Equity Bonus
  • Copy Trading: No
  • Platforms: MT4, AlgoTrader
  • Instruments: Stocks, Forex, Crypto

About Dukascopy

Dukascopy is an online broker operated by a Swiss-regulated banking group. It offers a good selection of 500+ markets, with forex, stocks, gold, ETFs, indices, bonds and cryptocurrencies available. It also offers flexible trading opportunities through the choice of CFDs or binary options. Traders will use MetaTrader 4 or a proprietary platform that is well-suited to automated trading.

Pros

  • Multiple account currencies including USD, EUR and CHF
  • Low minimum deposit of $100
  • Heavily regulated brokerage including oversight from Swiss FINMA

Cons

  • No Islamic trading account
  • Time-consuming registration process

#4 - World Forex

Why We Chose World Forex

World Forex offers binary options where you simply decide the stake, price direction and contract timeframe. The payouts are high at up to 100% on American contracts and 85% on European, which also offers a partial refund to traders who close contracts before expiry.

"World Forex provides both highly leveraged CFDs and digital contracts, making this a good broker for clients who want flexible and rewarding ways to trade. The copy trading service will also appeal to newer traders."

- DayTrading Review Team
  • Minimum Deposit: $1
  • Payout %: 100%
  • Expiry Times: 1 minute - 7 days
  • Bonus: 100% Deposit Bonus
  • Copy Trading: Yes
  • Platforms: MT4, MT5
  • Instruments: Stocks, Forex, Crypto

About World Forex

World Forex is an offshore broker registered in St Vincent and the Grenadines, offering commission-free trading with a $1 minimum deposit and 1:1000 leverage. Digital contracts are also available, offering beginners a straightforward way to speculate on popular financial markets.

Pros

  • VPS hosting
  • Copy trading solution
  • Low deposit of $1

Cons

  • No negative balance protection
  • Withdrawal fees apply
  • Weak regulation

#5 - Olymp Trade

Why We Chose Olymp Trade

Olymp Trade offers fixed time trades (FTT) on a diverse but modest range of markets, from OTC currencies to composite indices. FTT commissions are charged between 5%-10% and you can trade with ultra-short time frames from 5 seconds. Payouts are available up to 93% for those who can afford the $2000 'Expert' status deposit.

"Olymp Trade remains a good choice for beginners looking for a user-friendly bespoke platform and mobile app, plus 24/7 customer support. The $10 minimum deposit makes it easy to get started, however, the range of additional day trading tools trails competitors."

- DayTrading Review Team
  • Minimum Deposit: $10
  • Payout %: 93%
  • Expiry Times: 5 seconds - 23 hours
  • Copy Trading: No
  • Platforms: Olymp Trade Platform
  • Instruments: Stocks, Forex, Crypto

About Olymp Trade

Olymp Trade was established in 2014 and now boasts over 89 million traders. With a presence in over 130 countries and support in 13 languages, the brand offers a stable platform and attractive rewards for new traders. Olymp Trade also offers fixed time trades (FTT) over a diverse range of markets. The brand is licensed offshore by the VFSC.

Pros

  • Beginner-friendly blog section with analytics, trading education and market news
  • 24/7 customer support via the broker's hotline, email or live chat
  • Fixed time trades (FTT) on popular markets with payouts up to 93%

Cons

  • The best conditions are available only to those who can deposit at least $500
  • Commissions charged on all assets - up to 15% on standard trades and up to 10% on FTT
  • Only one proprietary platform available, with no access to popular third-party software such as MT4 or cTrader

Are Binary Options Compatible With Islam?

The issue of whether binary options trading is halal or haram has been debated by Muslim scholars. Many say that, yes, it is possible to trade binary options whilst remaining true to Islam. According to Shariah law, charging riba (interest) is haram (forbidden). This includes interest applied to overnight positions. Islamic finance is governed by the concept of “risk sharing”, with the “Murabaha” system developed to incentivise banks whilst remaining halal.

Thanks to the growing popularity of online trading, many brokers offer Islamic accounts to appeal to the Muslim market. This includes brokers who provide halal binary options trading.

Islamic, or swap-free accounts, are designed to completely remove riba from trading. All halal accounts must immediately execute trades, instantly settle any transactional costs, and have no interest payable on trades. Several binary options brokers offer halal Islamic accounts.

Halal binary options trading

Despite the above, it must be noted that some scholars have declared binary options to be haram as they consider it a form of gambling. In response, many argue that trading binary options using a strategy is no longer gambling and can therefore be permitted.

How To Start Trading Halal Binary Options

Step 1: Choose A Halal Broker

For most Muslim traders, it is important to find a broker that offers an Islamic trading account. These accounts are designed to ensure that Muslim traders operate within the parameters of Shariah law.

Halal trading accounts must meet three conditions:

  1. Immediate execution of trades: Muslim teachings state that hand-to-hand exchanges should be prompt
  2. Immediate settlement of transaction costs: This avoids open trades being rolled over to the next day, which may incur interest
  3. Zero-interest: Charging riba (interest) is considered haram

If a broker’s Islamic trading account does not meet these conditions, it may not be legitimate, so make sure you do your research.

Note, there is no ‘one-size-fits-all’ choice of broker: different platforms will suit the needs of different clients. Factors to consider when choosing a halal binary options broker include:

Choice Of Underlying Asset

Binary options trades can be made on a variety of assets, from crude oil to cryptocurrencies. To ensure halal binary options trading, check out the assets that a broker offers – some consider it inappropriate to trade binary options on shares of an alcohol producer, for example. Fortunately, most stocks, shares, currencies, and commodities are considered halal.

Deposits & Withdrawals

The best halal binary options brokers have easy, low-cost deposits and withdrawals. Some brokers require a minimum deposit, typically ranging from $0 to $100.

Fees on withdrawals are charged by some bitcoin binary options brokers. However, if you fancy keeping all of your hard-earned cash, many platforms charge zero withdrawal fees.

Some brokers also offer interest on deposits placed into live trading accounts. However, halal binary options brokers should not practice this since it is forbidden in Shariah law.

Security

Sadly, scams are all too common in the world of binary options. Some fraudulent platforms will steal traders’ deposits or unfairly manipulate trading conditions in their favour. To avoid losing your capital, treat all brokers with caution, no matter how professional they appear. Some top tips for avoiding online scams include:

Tools

Technical analysis forms a vital part of any successful halal binary options strategy. A good binary options broker will offer a wide range of easy-to-use charts and indicators. Popular tools include candlestick charts, moving averages, and the money-flow index (MFI). Some halal binary options sites also facilitate copy-trading, which allows you to mimic the actions of successful traders.

Step 2: Choose A Product

Most halal binary options brokers offer several suitable contracts:

Halal binary options strategies

A beginner Islamic trader may want to stick with simpler contracts like over/under, before moving on to the high-payout formats. Uncomplicated trading will help you to get a feel for the market.

Without a halal binary options strategy, you will likely lose money. Traders who base their decisions based on intuition or emotion may be breaking Shariah law by gambling. Strategies make your trading repeatable and quantifiable. This will aid your development as a trader in the long run. It can be worth researching basic binary options strategies before you start trading.

Step 3: Pick An Expiry Time

Halal binary options can last from 30 seconds up to a whole day. Generally speaking, the longer the option, the smaller the risk. However, short-term options will increase your trading volume. Most day-traders tend to use expiry times of 5 to 30 minutes.

On longer-term trades, an asset’s price movement can be caused by external factors, such as a news announcement. It is worth keeping an eye on news or social media feeds to look for price-affecting events.

Step 4: Decide How Much To Stake

Sensible money management is important for halal binary options trading, as it helps Muslim traders avoid greed and minimise risk. It is also crucial to successful trading from a financial standpoint. Never invest more than you can afford to lose.

One simple scheme to ensure that you never run out of money is the “percentage method”: always investing a fixed percentage of your total funds, for example, 2%. This will also mean that your profits grow with your capital.

Step 5: Take A Position And Time Your Entry

How is the asset’s price going to behave before the option expires? This call will decide what type of binary option you buy. Once you’ve chosen a bullish (price will rise) or bearish (price will fall) position, it is time to enter the market. In halal binary options trading, timing your entry will depend on your technical strategy.

Final Word On Halal Binary Options

The issue of whether binary options trading is halal or haram has been debated by scholars. However, many feel that by trading binary options strategically, Muslims can avoid gambling. In addition, several brokers now offer halal binary options accounts to help traders stay within Shariah law.

Halal binary options are now more accessible than ever for Muslim traders, providing an uncomplicated way of trading online. Use our list of halal binary options brokers to get started today.

FAQs

Is Binary Options Trading Halal Or Haram?

By trading binary options strategically using an Islamic account, many argue that it can be made halal. In this way, traders avoid both gambling and paying interest.

How Can I Start Trading Halal Binary Options?

The most important step in trading halal binary options is choosing a broker that offers an Islamic account. This helps Muslims to trade in a way that complies with Shariah law.

Will Binary Options Brokers Charge Riba?

Halal binary options brokers that offer Islamic trading accounts should not charge riba. Check the small print of any Islamic account to make sure that it complies with your principles.

Are Halal Binary Options Gambling?

Halal binary options can be traded using a technical strategy. This style of trading helps Muslims to make successful decisions and avoid gambling.