Aside from the commodities market, the forex market is the only other spot market which trades 24 hours a day during weekdays. What happens is that when it is 5pm in NY, all open forex positions get rolled over to the next trading day with interest getting added to the firm’s account every day. The broker then has the option to shoulder the interest or pass it on to the traders.
An Islamic account differs from other forex accounts because it specifically doesn’t have Riba. Therefore, most Islamic forex accounts automatically close at 5pm New York time. The trader can then opt to open the position immediately after it closes so as to avoid any interest levied on the account. This type of account provides an opportunity for Muslims to dabble into forex trading in according with the Sharia law. A forex trader who opts to immediately open a closed position isn’t charged any usurious interest on his forex account.
The Islamic account is a special forex account which provides for hand-to-hand forex transactions. This means the buying and selling of foreign currencies occur simultaneously without any further delay. The currencies are transferred to the buyer’s account from the seller’s account instantaneously. Any trading costs are also settled the same way without delay. This forex account, in order not to be considered Haram, void, and invalid, mustn’t be levied any interest in every transaction.
I’ve been trading foreign currencies with forex.com’s Islamic account ever since forex trading caught my attention. I can say that I haven’t been charged any interest at all thus making this account follow any Sharia law. Also, customer service is superb. I get replies to my concerns in a timely manner.