Carry trade strategy example
However, with trading being done on a 24 hour basis, usually daily interest is added to a broker's account, and whether or not the broker then credits or debits the trader's account with interest, the very fact that this interest is payable or earned in a trading transaction results in the trade being Haram in a Muslim's eyes.
Suitable Trading Accounts To make trading accessible to Muslim clients, many brokers have now developed a Swap Free account which eliminates the concept of Riba from trading. Instead of using an automatically rolled over open market position which would make overnight interest payable, with this account type, any open position is closed by 17:00 New York time and reopened again immediately, thus avoiding paying any interest on the new 24 hour cycle.
An Islamic account must meet these conditions: Immediate trade execution Immediate transaction cost settlement No payable interest on trades It is important to note however that some Muslims still consider trading to be Haram as they believe it to be gambling. Also, as every trade or contract must have a loser and a winner, some Muslims think that as both parties cannot make a profit from the trade it is also not a suitable activity under Sharia Law.