Leverage Islam

Does Islamic leverage exist? Is using leverage halal in Islam? If yes, under what conditions? And in this case, what are the principles of halal leveraged investing or trading? What level of halal leverage should be used? With which financial instruments can halal margin trading be carried out? How to do Islamic leverage trading? How to choose a broker for Muslim halal leverage trading? What are the avantages and disadvantages of using halal leverage? This guide gives you the answers to all these questions, as well as valuable tips and tricks on the proper use of halal leverage.

What is Islam Leverage?

To be clear and concrete in the definition of leverage in Islamic trading, it must be said that it is a loan or credit granted by a broker conforming to Islam to the Muslim trader, so that the latter increases the size of its positions or its investment / trading capabilities.

The loan then plays the role of support which makes it possible to multiply the investment capacity of the trader. Thus, with an investment capacity of €100, the leverage makes it possible to multiply this, for example, by 10, and gives the halal trader an investment capacity this time of €1.

The Islamic leverage effect does not strictly speaking refer to the loan granted by the broker, but rather the increase in the investment capacity of the halal trader resulting from obtaining the loan granted by the Islam broker.

However, these definitions are actually transpositions of the definition of leverage and leverage in traditional trading in the field of Islamic trading. A true definition of Islamic leverage (i.e. leverage in accordance with Islam) is given in the following section (Is Leverage Halal in Trading/Investment in Stock market?), and we tell you what it takes to make leverage halal.
The level of leverage offered by an Islamic broker is usually noted in the form X:Y, for example 1:10. Y actually represents the value of your position after using the leverage, and X the investment necessary to get that position size, in other words the amount you pay out. Thus, 1:10 reads “disburse €1 to obtain a position or make an investment of €10”. Often the level of leverage can be noted as 10:1.

Anyway, regardless of the rating, the smaller value (1) denotes the amount you actually invest, and the larger the value by which your actual investment is multiplied. So 1:10 or 10:1 can simply be read as 10x, i.e. real investment multiplied by 10.
This clarification is necessary because some online definitions of leverage and leverage can be confusing. The Islamic leverage effect in the context of trading is indeed an effect (increase), and the element that allows this effect is a lever constituted by the loan of the Islamic broker. But does this mean that leverage is halal in Islamic trading?

Is Leverage Halal in Stock Market Trading / Investment?

Many Muslim traders concerned about investing in the stock market or trading in all its forms often ask many questions about the use of leverage in trading or investing in the Islamic stock market:

• Is leverage halal or haram?
• Is leveraged trading permitted in Islam?
• Is buying stocks with leverage halal?
• Is forex trading halal when using leverage?
• When can leverage be considered Islamic or Halal?

To answer all these questions, it must be said from the outset that leverage is halal or permitted in terms of trading and investing in the stock market, under one main condition: no interest should be charged in relation to the the sink.
In other words, Islamic or Halal leverage is leverage that does not give rise to the payment of interest to the broker. If a broker gives you a loan to increase the size of your positions (the principle of leverage), then the resulting leverage is only halal if the broker does not charge you any fees or interest associated with their loan / leverage, and whether they charge you swaps or position rollover fees.
Surely you must be asking yourself “why is leverage not haram”? In short, as we explained above, the leverage here is the loan that the broker makes. However, in Islamic finance, any loan is haram if interest is charged on it. Moreover, the Messenger of Allah (Rasûl Allah) curses all those who charge interest, are interested in interest, write contracts involving interest, or those who testify to the practice of interest.

However, with Islamic leverage, the broker gives you a loan but does not charge interest on that loan. So there is no practice of interest, and this is completely halal. You repay the broker exactly what you borrowed from them.

Therefore, whatever financial instrument you trade or invest in, you can use Islamic leverage and be in accordance with the precepts of Islam in your economic life.

Halal leverage trading is often confused with halal margin trading. For good reason, leverage is closely linked to the margin in trading. Margin refers to the amount needed to open a position or initiate a trade requiring leverage.

Mathematically, the margin refers to the difference between the size of your position with leverage and the amount that the broker lends you.

For example, a halal leverage of 1:20 means that you are only charged €1 for an investment of €20 (your investment is multiplied by 20). The sum that the broker lends you is then €20 (size of the position) – €1 (amount actually committed) = €19.

Therefore, the margin in this case is: €20 (position size) – €19 (money lent by the broker) = €1. In practice, the margin is expressed as a percentage. €1 therefore corresponds to a margin of 5%, i.e. €1 / €20.

You can see that the margin in this case is simply the trade resolution of the leverage level!

In addition, there is another type of margin: the now margin. The first margin above allows you to open the position with leverage, and the maintenance margin allows you to keep your position open when prices move against your predictions. When your funds in account no longer correspond to the maintenance margin, the broker makes a margin call (it notifies you and asks you to top up your funds to keep your position open).

On which Financial Instruments can an Islamic Leverage be used?

The financial instrument you trade or invest in on the stock exchange must also be halal. So, in which financial instruments can you invest using Islamic leverage?

The following table lists the main financial instruments in which you can invest using Islamic leverage.

What Level of Islam Leverage to Use?

Knowing now on which products a Muslim trader can use halal leverage, it would be interesting to know what level of leverage to use. In short, the value of halal leverage to use depends on the experience of the Muslim trader, his degree of risk aversion, the capital he has, his strategy and his investment / trading horizon .

What Level of Halal Leverage for Beginner Muslim Traders?

A beginner Muslim trader can use leverage to invest or trade in a halal way, but he should not immediately resort to high leverage.
Concretely, for a beginner Muslim trader, it is better to start with a small leverage of 2 (or 1:2), then move to higher leverages as he masters and experiences the stakes of the effect of halal lever. He should still stop at a leverage of 5 (or 1:5), and only exceed this level of leverage if he no longer considers himself a beginner.
For Muslim traders who are really starting from scratch, we recommend that they practice a bit with a demo account using leverage, if only to see how it works in practice and what it entails (in terms of probable gains and losses).

What Level of Halal Leverage for Experienced Muslim Traders?

The level of Islamic leverage used by an experienced Muslim trader can be high (1:10) or even very high (1:500, 1:1). He can afford it because, in principle, he is used to it, he controls the risks it generates, and he applies adequate money management for this kind of practice (high leverage trading).

After having opened positions with halal leverage, the pro Muslim trader can use his expertise to manage his positions according to the evolution of prices.
However, even as an experienced Muslim trader, one must, in order to stay true to one's faith, avoid taking excessive risks, and avoid trading as if it were a game of chance.

What Level of Halal Leverage According to its Degree of Risk Aversion?

Your perception of risk and your behavior towards it can help you determine the islam leverage ratio you are willing to use.

Without taking excessive risks and deviating in this way from the precepts of Islam, some Muslim traders will totally avoid any risk, others will accept to take it moderately, while others will take a little more.

Similarly, some Muslim traders/investors will prefer to make moderate gains being almost sure of making them, while others will prefer making large gains being less sure of making them (but not qualifying as gharar or butir, when the trader considers his activity as a real investment / business).

The higher the level of risk, the higher the likely return, but also the higher the likelihood of engaging in a haram transaction. Even when opting for a high level of halal leverage, one should not intend to speculate.

In short, you must determine what type of Muslim trader you are (based on the explanations in the paragraphs above), and choose the appropriate level of leverage.
If you are risk averse, you get stressed very quickly, you cannot accept failure or the loss of part of your money, or if you prefer to make moderate and safe gains, limit yourself to 2 to 4 (1:2 to 1:4).

If, on the other hand, you tolerate risk (without taking excessive risk, otherwise your activity would no longer be halal), know how to accept losses and like to make significant gains, then you can use halal leverage from 1:10 to 1:50, or even 1:500 and 1:1.
In these last two cases (leverages of 500 and 1), it is your intention that will determine whether your activity is still halal (even if it is assumed at the base that you are using islamic leverage on halal products) , because games of chance (butir) and intentional excessive risk-taking (gharar) are forbidden in Islam.

What Level of Islam Leverage according to its Available Capital?

Muslim traders with small capital can use high leverage (1:10, 1:20, 1:50, 1:100, 1:500, etc.) to dramatically increase their position sizes. The risk of capital loss is high, but the likely return is also very high, especially for a small capital invested in a position.

Muslim traders with larger capital can use small to medium leverage (1:2 to 1:10 or even a bit more). They can still also use high leverage (1:20, 1:50, etc.), while adopting appropriate strategies to cover the risk of losing the large capital invested (by clearly defining their stop loss level by example).

What Level of Leverage Islam according to its Horizon and its Investment / Trading Strategy?

Islamic day traders and all Muslim traders adopting short-term trading / investment approaches will preferably use very high leverage (1: 50, 1: 100, 1: 500, even 1: 1). This allows you to take great advantage of very small price movements during the day or in the short term.
It should be noted that day trading or even intraday trading are basically haram in Islam, because of their goal of achieving rapid profits. However, these trading strategies are halal when the Muslim trader considers them as real business practices, like a trader who buys goods in the morning to sell them throughout the day. Buying and selling assets on the same day or in the short term is not haram.
Muslim traders adopting medium / long term approaches (swing trading, buy and hold or buying and holding securities, etc.) will opt for small leverages: 1: 2, 1: 3, 1: 4, and at most 1 : 5. For good reason, it limits probable losses, and it is better to be more careful when investing in the long term, especially since long-term trades or investments are generally larger than trades. short term.

In this case of long-term trading / investing with Islamic leverage, the Muslim trader would benefit from placing his stop loss at a level far from his starting investment. This will not necessarily cause you to lose a good part of your investment; a stop loss away from the initial investment rather protects you against small losses due to small price movements against you.

Your position should therefore not be unwound just because the market has moved a little and your stop loss level has been reached. Long-term investing should not focus too much on these small short-term market movements.

What Level of Halal Leverage Is It Really Possible to Use?

As we have just seen in the previous section, the choice of the level of leverage to use is up to you. However, this choice is actually made in all the possibilities offered by the broker or the regulations.

In practice therefore, the level of leverage that a Muslim trader can actually use is a function of the following variables (so the choice he will make, as indicated in the previous section, will also depend on the following variables):

• The type of halal instrument traded: not all halal instruments are accessible with the same leverage levels, and these levels are sometimes defined by regulators and/or brokers. Stocks, for example, will allow lower leverage than currencies, and even between currencies, not all pairs allow the same level of leverage.
• The type of client you are: a private Muslim trader will not always have access to the same leverage levels (especially very high leverage levels) as a professional or institutional trader. These latter two types of clients/traders benefit from the highest leverage levels, which makes sense since it is assumed they have a thorough understanding of the market.
• Your location: Financial market regulators may set limits on the levels of halal leverage for residents of a geographical area (the one over which these regulators have authority).
• The Islamic broker you trade with: regulators usually set limits on leverage levels for the brokers they regulate, and it is up to the broker to decide, within the limit set by the regulator, what levels of Islamic leverage they can grant you, and these levels may be different from the levels offered for non-Islamic accounts.
• Regulators' requirements: the majority of the above criteria are generally defined by regulators.

For example, brokers for Islamic accounts regulated by the European Securities and Markets Authority ESMA (European Securities and Markets Authority) – as is the case with the broker with halal account eToro – must offer the following levels of leverage at most:

• 1:30 for all major Forex currency pairs
• 1:20 for all non-major Forex currency pairs, major indices and gold
• 1:10 for commodities, excluding gold and non-major indices
• 1:5 for stocks

These restrictions actually concern instruments of the type CFD. However, as stated above, these limits do not apply to you if you are a professional Muslim trader. If necessary, you benefit from leverage levels 1: 100, 1: 500 and more depending on the broker. To have the status of professional trader, you must meet certain conditions (have a portfolio worth more than €500, prove your professional experience in finance, etc.).

Also, if you are trading with a non-ESMA broker (not regulated by ESMA or a European regulator), then all the leverage limits above no longer apply, whether you are a retail or professional trader. The broker will then apply the limits defined by its regulator.

So with Vantage for example, especially for its unregulated branch in Europe (but in Australia) and accessible to the French, you benefit from a leverage of up to 1:500 with the Islamic account.

The Principles of Halal Leverage Trading

As can be seen in the previous sections of this guide, two main principles condition the use of Islamic leverage by any stock market investor or Muslim trader wishing to remain in compliance with the recommendations of Islam:

• The leverage effect must not give rise to the payment of interest, swap or fees in any form.
• When so halal (without interest and associated fees), leverage should only be used on halal instruments (presented in a table above).
• The Muslim trader who uses halal leverage must however avoid carrying out transactions that are too risky, even speculative.

Examples of Trading with Halal Leverage

Consider the basic case where you want to invest in a halal cryptocurrency, or rather in AAA HLAL stock (via a CFD). By conducting your research and performing analysis, you believe that the price of this stock will go up. You therefore decide to invest €5 in the purchase of these halal stock CFDs, but commit just €000 of your money to the account. So you decide to use a halal leverage of 500:1.

You are therefore buying AAA HLAL stock CFDs by investing €500 and selecting a leverage level of 1:10. So you are actually buying these stock CFDs for €500 x 10, or €5.

Later, the share price AAA HLAL (the underlying) rises by 5%, so you basically make a profit.

If you had not applied leverage to your trade, your profit would have been €500 x 5% = €25.

Since you have applied the leverage of 1:10, your profit is instead €5 x 000% = €5 (or €250 profit without leverage x 25 which is the level of leverage = €10). With the leverage of 250:1, you are investing €10, not €5. It therefore appears that the leverage of 000:500 will have multiplied your profit by 1.

Halal Leverage: Tips and Advice for Using it Well

Even Islamic leverage presents avantages and risks (as we will see below). Unlike classic leverage, Islamic leverage presents, in addition to financial risks, a risk in terms of the trader's Muslim faith. Here are some valuable tips and advice for using Islamic leverage effectively and hedging yourself against the risks it presents.

• Understand the issues of the Islamic lever before resorting to it

Before using the leverage offered by your Islamic broker, take a little time to understand what exactly halal leverage is, how it works, examples, its uses.vantages, its risks, etc. You already do well to check out this guide now, because we cover all of these items here.

• Always intend to do normal business, never to speculate or bet

Despite the many arguments about the halal nature of Islamic leverage, your leveraged investing or trading activity will only remain truly halal if your intention is religiously pure. Even if you use very high halal leverage (1:100, 1:500), never intend to bet or speculate. Otherwise, you enter the gharar and the butir, all prohibited by Islam.

• Only use halal leverage on halal instruments

It is a reminder, but this reminder is important. You must remain 100% halal in your transactions. Using even the smallest of levers (1:2) on an instrument is haram is haram.

• Do not exceed a halal leverage of 1:5 if you are a beginner

A Muslim trader who is new to the stock market or trading should use low levels of leverage, including a maximum of 1:5. As you get the hang of it and can accept taking on more risk, you you can move to higher leverages (1:10, 1:20, 1:30, 1:50, etc.).

• Always consider the volatility of the underlying asset itself

When you invest in CFD halal for example, the volatility of the CFD's underlying asset should tell you roughly what level of leverage to use. The lower the volatility of the underlying asset, the higher the level of halal leverage to be used, and vice versa.

• Hedge your positions

With good money management and above all always using orders stop loss whenever you use halal leverage, you can hedge your positions against large losses in case things don't go as you hoped.

To properly limit losses with the stop loss for trades with halal leverage, place the stop loss at a value close to your invested amount when the leverage used is high (otherwise, even small price movements can cause you to lose a lot money), and at a much lower value than your invested amount when you use low leverage (small price movements this time will not be amplified very much by leverage and cannot cause you to lose enough money ).

In addition, please also use commands take profit to protect your profits, to determine at what level of favorable price the broker will have to automatically unwind your positions.

• Do not take revenge for your losing trades

Do not double the level of leverage or the initial investment to try to catch up on your losses too quickly. These are habits not to adopt when using the halal lever. Remain calm, accept your losses, and continue to seize opportunities for gains, without intending to make up for the loss you have suffered all at once.

• Use leverage levels that work for you

You must be comfortable and comfortable with the halal leverage ratio you have chosen. If you do not tolerate too much risk and are of a conservative nature, then do not exceed leverages of 1:10. Otherwise, you can go up to 1:500, 1:1 and more depending on what the broker offers , if you are risk-tolerant and aim for high performance.

How to Leverage Halal Trading / Trading with Halal Leverage

If with all this information and advice you want to get started in Islamic leverage trading, here are the steps to follow.

Step 1. Find a broker offering a leveraged Islamic account

We discuss in another section below the choice of an Islam broker with halal leverage. To illustrate these steps, we use the halal broker Vantage, which is one of the few brokers with true Islam compliance certifications for its Islamic accounts and for leveraged Islam trading (or margin trading, margin trading in English).

So join Vantage or one of the others best islamic trading brokers in the first step. All you have to do is go to the broker's official website (CLICK HERE to go to the official website of Vantage) and register.

When you land on the official site, it may be in English. You can click directly on the red “Start Now” button or on the one labeled “Live Account” (top right of the page) to go to the next step.

Alternatively, if you prefer another language, such as French, please first click on the UK flag next to which it says 'ENGLISH', then select FRANÇAIS. You will thus have changed language and will be able to continue the procedure in French.

After clicking on FRENCH, you will therefore have to click on the red button entitled “Start Now” or on the one entitled “Live account” (at the top of the page on the right). It is also on one of these buttons that you must click directly if the site is displayed in French when opened.

Step 2. Complete the registration form and complete your personal information

In the form that will appear when you click on one of the red buttons indicated above, please fill in your first name, last name, country of residence, code and telephone number, and e-mail address. Then select the type of account you are requesting (account for an individual or an account for a company), validate by clicking on the red button entitled “Open a real account”.

After the form, you will need to fill in some personal information about yourself before moving on to the next step.

Step 3. Fill in your financial information

Please click "Next" when you complete this step.

Step 4. Choose your account type

Since you are a Muslim trader, you have to choose between the two accounts "Swap-Free" or "Swap-Free", so Islamic accounts: either Swap Free Standard STP or Swap Free Raw ECN.

As you see in the image, you also need to choose your platform (MetaTrader 4 ou MetaTrader 5) and your base currency. Click "next" when you complete this step.

The maximum Islamic leverage is identical on the two types of Islamic accounts offered by Vantage. But if you are hesitating between these two types of halal accounts, the following table highlights the characteristics of each of them and can help you make your choice.

Step 5. Confirm your identity and address

Step 6. Fund your account

Click on “Funds”, then on “Deposit funds” and follow the deposit procedure.

Note that at Vantage and even with its Islamic accounts, deposits are completely free, there are plenty of deposit options, and the minimum deposit is $200.

Step 7. Select your Halal leverage level

If you haven't been prompted for the level of leverage you want to use so far, you can select it or change it (if you had already specified one) from your account.

To do this, click on “Account Management”, then on “Live Accounts”. You will see below the platform indicated during registration your account details, as well as the level of halal leverage. To change the latter, click on the arrow located right next to the box indicating the level of leverage, as you see in this image.

Then you can select (as you see in the following image) the level of islam leverage that suits you and that will be used for your trades on the trading platform.

Step 8. Download the trading platform

Click on "Downloads", and download the trading platform of your choice (MT4 or MT5), depending on your operating system. The download link is also sent to you in the e-mail notification of the creation of your account.

Step 9. Login to the platform and start trading with islam leverage

Once the platform is downloaded, run / launch it (it opens automatically at the end of the procedure, and (This is not the mql5 page that opens in the browser), then log in by entering your login information which was sent to you by email: login (account number), password and server (already indicated, and indicated in the welcome email).

Once logged in, you can choose the asset to trade from the far left box at the top of the platform (for MT4) by double clicking on it. You can also click directly on "New order", or press "F9" on your keyboard.

This page is displayed (example for the EUR/USD pair).

All you have to do is fill in the details of your order, then click on “Sell at market” or “Buy at market” when you are trading with “Execution at market”, or on “Place” when you are trading with “Pending order”.

Then click on "Ok" when a transaction success notification is displayed, or on "Print" if you wish.

On MT4, you can see the evolution of your positions by clicking on the "Trading" section in the bottom taskbar, and your leverage/margin levels appear when you hard click on the "Exposure" section.
You can always change your Islam leverage level from your account Vantage (as we showed in step 7 above) before placing new trades.

How to Choose a Halal Leveraged Broker

To select a broker with which to trade with Islamic leverage, the Muslim trader must above all take into account the criteria related to the compliance of this broker's offer with the principles of Islamic finance. These criteria are as follows:

• No interest and fees on leverage.
• No swaps or fees on rollover positions
• Execution without delay (immediate) of trades
• Possibility to invest only in halal instruments with your Islamic account

The administration fees and the spreads are completely halal, since they remunerate the services of the broker and do not involve interest.
Moreover, if the conformity of the offer to Islam is a necessary and preliminary condition, it is not enough to find the best broker with halal leverage. The following other criteria should also be considered:

• Serious regulations
• Low spreads
• Easy-to-use platforms and applications
• Numerous and useful analysis tools
• Great quality and quantity of educational content
• Security of data and funds
• Availability and efficiency of customer service

In general, brokers offering genuine Islamic or swap-free accounts fulfill the conditions of compliance of the offer with Islam. However, significant differences exist between these Islam trading brokers not only in terms of total compliance, but also in terms of criteria that do not concern compliance with Islam as we have just seen.

This is why we have in our other guides on halal trading, made a comparison of Islamic trading brokers and a selection of best islam trading brokers. All these islam trading brokers offer islam leverage.

Avantages and Disadvantages of Halal Leverage

❓What is Leverage in Trading?

In trading, as in finance as a whole, the leverage effect refers to the increase in the trader's investment capacity which results from obtaining a loan granted by the broker. The broker therefore grants a loan to the trader, which allows the latter to multiply his investment capacity, to open more positions or positions of very large sizes compared to what he could afford with his capital of departure without a loan from the broker.

Leverage can take values ​​ranging from 1:2 to 1:1, or even more. 000: 1 for example meaning that the trader brings in €1 to open a position of €000, so the broker lends him €1.

What is Halal Leverage in Trading?

Halal leverage also refers to traditional leverage, ie the increase in the trader's investment capacity resulting from obtaining a loan granted by the broker. However, islam leverage does not give rise to interest or swap payments to the broker.

If a broker gives you a loan to increase the size of your positions (the principle of leverage), then the resulting leverage is only halal if the broker does not charge you any fees or interest associated with their loan / leverage, and whether they charge you swaps or position rollover fees. Lending is halal in Islam, but any loan involving the payment of interest in any form is haram. This is why halal leverage does not involve the payment of interest or fees; it is a free loan, for which the Muslim trader repays exactly the sum borrowed.

Is Leverage Haram or Halal?

Leverage is haram if it gives rise to payment of interest or fees of all kinds related to the loan granted by the broker to the trader within the framework of this leverage effect. If there is no interest, no swap or position rollover fees, then the leverage is halal.

However, in order for an Islamic leverage to remain halal (even if it does not involve any interest or fees), the Muslim trader, in his stock market investment or halal leveraged/margin trading activity, must have halal intentions; in other words, he must not take excessive risks (Islamic prohibition of gharar), nor consider his activity as a game of chance (Islamic prohibition of maisir), and also try to trade only halal instruments with this effect of leverage.

Is Trading Halal?

Just as Muslims are permitted to buy and sell commodities for profit, they are also permitted to buy and sell assets in financial markets. Trading is therefore halal, but under certain conditions. Indeed, as for the activities of the real economy, trading is only halal as the instruments traded are halal (no stocks or CFDs of companies involved in alcohol, smoking, pornography, etc. .; no speculative instruments; no very risky instruments; etc.), if the Muslim trader has halal intentions (no high risk taking, consideration of his activity as a real investment and not as a bet or a game by chance, etc.).

❔How to Invest in Halal?

To invest in halal when entering the financial markets, you must always have halal intentions (no high risk taking, consideration of your activity as a real investment and not as a bet or a game of chance, etc. ), deal only with halal instruments (no shares or CFDs of companies involved in alcohol, smoking, pornography, etc.; no speculative instruments; no high-risk instruments; etc. ), go through halal brokers (swap-free account, no interest on transactions, no interest or fees on leverage, immediate execution of transactions)…

In short, ensure that the principles of Islamic finance are always respected (no interest, risk sharing, no deferred transactions, no too risky assets, no assets from haram sectors). All these principles are also valid for investments outside the financial markets, both with regard to the activity in which one invests, and the intermediary and the intentions of the Muslim (therefore, one should not, for example, invest in activities haraam).

How to Do Halal Trading with Leverage?

Here is a summary of the steps you need to follow to get started in halal trading on Islamic margin or leverage: find a broker offering a 100% halal Islamic account, open an account with this broker, make a deposit, choose the instruments or the halal instrument to trade, configure your transaction by indicating the level of halal leverage to use (on Vantage for example, the halal leverage level is configured directly from your account, and not when placing an order on the trading platform), validate your order. Among some Islam brokers like Vantage, you will need to download a trading platform before actually starting to trade, while with others like eToro, you will be able to trade directly online from the broker's integrated platform.

How to do Halal Margin or Leverage Trading?

Here are valuable tips to apply to make good use of halal leverage, that is to say to trade on halal margin while remaining in accordance with the precepts of Islam and while limiting the risks involved the halal leverage effect: Understand the issues of Islamic leverage before resorting to it; Always intend to do normal business, and never to speculate or bet; Only use halal leverage on halal instruments; Do not exceed a halal leverage of 1:5 if you are a beginner; Always consider the volatility of the underlying asset itself; Cover your positions with stop losses and even take profits; Don't take revenge for your losing trades; Use leverage levels that work for you.

❓What are the A’svantages of Halal Leverage?

Halal leverage allows the Muslim trader to borrow without paying interest on the loan, to roll over his positions without charge, to multiply his profits considerably, to invest large amounts with very small sums, to open large positions for many assets at once with little money in the account, and even trade down.

⁉️What are the Disadvantages of Halal Leverage?

Using halal leverage to trade / invest means having the possibility of defying the prohibitions of gharar and maisir if you do not control your intentions. It also means running the risk of losing a lot of money if the prices move against you (you must therefore use stop losses to limit probable losses). Moreover, the halal leverage does not make it possible to hold real shares of halal companies and to benefit, for example, from dividends.

Are you a Muslim trader and use (or want to use) halal leverage to open your positions? Feel free to share your experience with us in the comments!