Day trading is the practice of buying and selling stocks, options, or other financial instruments within the same day.
It is a popular trading strategy that is increasingly becoming more common, allowing traders to take advantage of short-term market price movements.
But this trading strategy has generated a lot of debate, especially from the Islamic community, where it is seen as being haram.
In this article, we’ll answer is day trading haram or halal in Islam and discuss the implications for Muslim traders. Let’s clear the doubts.
Is Day Trading Haram?
The answer to this question is a bit complicated, as it really depends on which school of thought you adhere to within Islamic law.
According to some scholars and Islamic groups, day trading in stocks is haram and seems like gambling.
This is because Islam teaches us to sell only what we own. In the case of day trading of stocks, it takes about 24 hours to own the stocks, and still, if you sell them in a few hours, you don’t own them.
Along with that, some scholars also say day trading is like gambling because you are not sure about the outcome, and it is based on speculation.
On the other hand, some scholars have argued that day trading is Halal because you buy the stocks intending to make a profit, and it is not based on luck but rather on knowledge and skill.
According to well known Islamic teachers, including Dr. Zakir Naik and Assimalhakeem, they have opined that day trading is haram. This is because it seems like gambling and is based on speculation.
Well, if you buy a stock for long-term investment but sell it in a few days or hours because of some circumstances, then it is not haram. It is because your intention was to own the stock and sell it in the future with profit.
Note: If you ask our opinion, we would say it is better not to involve in day trading so that you can stay away from any kind of haram activity.
You can also read is investing in stocks haram if your vision is long-term.
Why Avoid Day Trading?
On the other side, day trading is a high-risk activity involving a lot of speculation.
Even if you have knowledge and skill, it is not easy to make a profit from day trading consistently.
The losses are also high in the case of day trading, and you could lose all your money if you don’t follow the right strategy and manage your risks properly.
In Islam, anything that involves speculation is considered haram. So it is better to avoid day trading and look for other Halal investment options such as the long-term stock market, mutual funds, gold, etc.
Lastly, day trading doesn’t fit in with Islamic principles of investing. Instead of making quick profits, focusing on long-term Halal investments that will grow slowly and steadily over time is better.
Alternative Investment Options For Muslims
As you can see, day trading of stocks is not recommended for those who are looking to invest according to Islamic laws. Fortunately, plenty of investment options are still available that comply with Islamic laws.
One of these options is Sharia-compliant long-time share market investing, which involves buying and keeping stocks for a long time and selling. This way, you own the shares and are thus able to sell them without going against Islamic laws.
Another option is investing in real estate. Real estate investments comply with Islamic laws as long as you own the property and don’t speculate in the market.
Thirdly, you can invest in gold and other physical assets. Gold is a great option due to its price stability and being free from interest rates or speculation.
Finally, you can also invest in offline business. Investing in offline business is a great way to create wealth, provided you abide by Islamic laws and ethical standards.
You may also like reading is staking crypto haram.
Q. Is day trading halal?
A. It depends on which school of thought you adhere to within Islamic law and your intention when buying or selling stocks. According to most scholars, day trading is haram.
Q. Is day trading crypto haram?
A. According to most Islamic scholars, The same rules apply to day trading crypto as with stocks, so it is haram. However, some scholars say it is halal.
Q. Is intra day trading haram?
A. Intra day trading is similar to day trading, so it will be haram according to most Islamic scholars.
Q. Is day trading halal or haram?
A. Most Islamic scholars say that day trading is haram as it involves speculation and looking to make quick profits. It is better to focus on long-term Halal investments.
Q. Why is day trading haram?
A. Day trading of stocks is not recommended for Muslims because Islamic laws forbid the gain of money through speculation, which is essentially what day trading is.
Q. Is crypto day trading halal?
A. Crypto day trading is not recommended for those who are looking to invest according to Islamic laws, as it involves a lot of speculation and is not recommended by Islamic religious laws.
Q. Is short term trading halal?
A. Short term trading is not recommended for Muslims as it involves a lot of speculation and is not recommended by Islamic religious laws.
To summarise, most Islamic scholars see day trading as haram because it involves speculation and looking to make quick profits. It also doesn’t fit in with Islamic principles of investing.
If you are a Muslim trader, focusing on other Halal investments, such as long-term stock market, mutual funds, gold, etc, is better.
The decision of whether to day trade or not ultimately rests with you, but in our opinion, it is better to avoid day trading and look for Halal investments that will grow slowly and steadily over time.
I hope your query is day trading haram in Islam has been answered. For more questions related to Islamic investing, please visit our website or contact us.