If you are a Muslim and wish to trade on the Forex market, there are plenty of options available to you. Most practicing Muslims often try to avoid the Forex market due to the interest rates. However, many brokers that deal in Forex accounts and binary options have begun to provide their customers with the option of opening Islamic accounts. In order to understand how Islamic forex accounts work, you need to develop a sound understanding of the Sharia law, which is the law followed by most practicing Muslims.
The Sharia law provides detailed guidance about different parts of life, and has a whole section pertaining to banking and finance. According to the teachings of the law, a Muslim is prohibited from accepting interest or any loan fee in monetary or other form, whether the payment is floating or a fixed amount. In Islam, this is known as riba or usury.
As of today, there are more than 1.6 billion Muslims in the world. By 2009, more than 300 banks and 250 mutual funds across the globe were using the Sharia law. Just last year, that figure rose to represent around 1% of the total world assets, equaling an amount of just around $2 trillion in funds. It is important to note that not every Muslim practices Sharia law firmly. According to Ernst and Young, only a small percentage of Muslims follow the law. However, Islamic banking has grown considerably in the past few years (at a rate of 17.6% annually between 2009 and 2013). If projections are to be believed, Islamic banking will grow at an accelerated rate of around 19.7% per year until 2018.
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