Answer
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
Prop firm Forex trading is halal when it uses virtual money, involves no interest, and serves as a skill-based assessment rather than real trading. It becomes haram if live accounts introduce Riba, non-halal instruments, gambling-like structures, or deceptive contract terms.
Responding to your question, Sheikh Ahmad Kutty, a senior lecturer and an Islamic scholar at the Islamic Institute of Toronto, Ontario, Canada, states:
When Is Prop Firm Forex Trading Considered Halal?
Forex prop-firm “demo/evaluation” trading can be permissible when conducted as a skills test rather than actual trading, provided the terms are Shari`ah-compliant.
Conditions That Make Prop Firm Evaluations Permissible
- You trade on a virtual account (no real money is involved in the markets).
- There is no Riba (no swaps/interest or margin interest) and no gambling-like rules.
- Any fee charged is clearly for platform access or assessment, not a wager.
- Payouts are based on demonstrated skill and performance, not chance.
Situations Where Prop Firm Trading Becomes Haram
- Subsequent live accounts involve interest, impermissible assets, or deceptive/exploitative terms.
- The model resembles gambling (e.g., luck-based payouts, unfair resets, hidden traps).
If you decide to “go live,” ensure:
- You have interest-free accounts, only halal instruments, and transparent contracts.
- If uncertain, have the terms reviewed by a qualified Shari`ah advisor.
Final Islamic Ruling on Prop Firm Forex Models
- The demo/evaluation phase is halal if it is free from Riba, Gharar (excessive uncertainty), and gambling.
- Live trading is halal only if actual trades and account terms comply with Islamic conditions:
“Whoever is mindful of Allah—He will make a way out for him and provide for him…” (At-Talaq 65:2–3)
For further clarification, please consult a qualified Islamic-finance scholar. You may also reach out to Dr. Monzer Kahf via his official website or verified professional channels.
Explore more Islamic rulings on modern trading practices:
- Is Forex Trading Allowed in Islam?
- Working for and Promoting Foreign Exchange Trading Company: Permissible?
- Is Trading Online Permissible?
- Is Stocking Haram?
Almighty Allah knows best.