Fatwa ID: 09337
Answered by Muftiyah Maryam Badshah
Question:
Assalamu alaikum wa rahmatullah,
I am seeking a Shariah ruling regarding a modern trading setup known as a “prop firm evaluation,” where the entire trading environment is fully simulated and no real trades occur at any stage.
- The environment is completely synthetic.
When I “trade,” the platform does not send orders to any real exchange (such as CME).
There is no real asset involved.
There is no real buying or selling of indices (like NQ) or commodities.
The price feed is synthetic, not a real market contract.
- Even the “funded account” is still simulated.
After passing the evaluation, I receive a “funded” account, but it remains entirely simulated and not connected to any actual exchange.
No orders are executed in real markets.
- How income is generated.
I pay a fee to participate in a trading evaluation inside this simulated environment.
If my simulated trades go in a profitable direction and I follow the risk rules, the company pays me based on the simulated profit shown in the synthetic account.
The profit is not from real market trading, because no real buying, selling, or execution occurs.
- About GOLD (XAU/USD).
I would like to start “trading” gold inside this same simulated environment, but before doing so, I want to know the Shariah ruling, since:
- it is not actual gold
- there is no possession
- no delivery
- no futures contract
- and no real asset exchange at any stage.
MY QUESTIONS
- In Shariah, does this setup count as a real trade or sale contract, considering nothing is truly bought or sold?
- If there is no actual trading, do the rulings relating to prohibited forms of sale, futures contracts, or ribāwī commodity rules (such as those applying to gold) apply in a completely synthetic and non-real trading environment?
- Is the income halal if it comes from simulated profit inside a synthetic account rather than profit from real trading?
- Is it permissible for me to start “trading” gold (XAU/USD) inside this synthetic environment, since no real gold transaction exists?
- How should this arrangement be classified in Shariah terms?
JazakumAllahu khayran for your time and guidance.
In the name of Allah, the Most Gracious, the Most Merciful
Answer:
From the description given, you appear to be referring to the funded simulated evaluation and verification stages conducted by a proprietary trading firm (prop firm), specifically under the category of foreign exchange (forex) where financial instruments, such as currencies, derivatives, CFDs, stocks, bonds and other monetary contracts, are “traded”. During the simulation stage of the evaluation, commonly known as a “challenge”, fictitious leverage is loaned to the trader, who must then “earn” a specified percentage of profit within the given time period. If the trader is successful in the evaluation they are given a reward in the form of real payment and granted a position as a trader in the live market where real leverage will be used. However, if the trader fails their payments are forfeit and they must re-subscribe in order to continue using the platform.
Islamic finance principles require transactions to be free from riba (usury/interest), gharar (uncertainties and ambiguities in the facts and terms of the transaction) and maysir (gambling), and for the asset to be in the possession of the seller. A transaction may be considered impermissible or void if any of these principles are found lacking. Taking this into account, simulated trading under prop is not permissible due to several factors:[1]
1) The vast majority of derivative trades are haram (impermissible) as a result of various aspects, including lack of asset possession and ambiguities in the trading details at the time of the trade.[2]
2) Payment is made for access to their services via the membership or evaluation fees. This includes resources on how to make impermissible trades of non-shari’ah compliant and riba-based assets.
3) Using the service entails teaching proprietary firms how to make impermissible trades. This is through the platform’s “challenges”, where a trader’s data is used by the firm to learn, teach and replicate a trader’s successful trade strategies in the live market for themselves. As such, making haram trades in this virtual environment will remain impermissible.[3]
4) Gambling on your performance with your payment for the access to their trading account/platform as forfeit. If a “trader” passes the evaluation challenge they “win” a payout and continued access to their account. However, if they fail to reach the challenge goals or incur “loss”, the account which they had paid for will be closed without a refund. The trader is essentially gambling to remain on the platform and to continue using their services.[4]
The Messenger of Allah (ﷺ) said: “Whoever sets a good precedent in Islam, then for him is it’s reward and the reward of those who act upon it after him, without any deduction from their reward in the slightest; and whoever sets an evil precedent in Islam, upon him is it’s burden and the burden of those who act upon it after him, without any deduction from their burden in the slightest.” (Sahih Muslim) [5]
In regards to “Futures contracts”, in the real market these are binding contract agreements made between two parties to either buy or sell a particular asset at a fixed price, on a specified future date. This price is set regardless of any change in worth (market price) of the asset by the time the contract expires, and both parties are obligated to fulfill the contract at closing. From the standard description, one may be mistaken to think that a Futures contract resembles that of a salam sale, with the delivery of the known asset being postponed to a later date. However, a salam sale requires the asset to be fully paid for on the opening of the contract and for the asset to be clearly defined, which Futures are usually not. This renders a Futures contract impermissible.[6]
In addition, Futures are used by the majority of investors for speculating price movements and hedging, rather than for the trade of assets. This leads to the contracts not reaching maturity (fulfillment). Instead, before the contract reaches its expiry date, it is “settled” with payments for the difference in value in order to avoid transferring the ownership of the asset, much like in CFDs. This resulting transaction is considered exchanging a debt for a debt (Bay’ al-Dayn bil-Dayn), which is impermissible. Futures contracts themselves can also be sold to a third party, which is also impermissible, as this constitutes to the sale of what one does not own.[7]
In conclusion, it would not be permissible to make haram trades on a proprietary trading simulated account, and it would also not be permissible to profit from or make use of these platforms.
Only Allah ﷻ knows best.
Written by Muftiyah Maryam Badshah
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
References:
[1]
لِمَا رَوَى أَبُو حَنِيفَةَ عَنْ عَمْرِو بْنِ شُعَيْبٍ عَنْ أَبِيهِ عَنْ جَدِّهِ أَنَّ رَسُولَ اللَّهِ ﷺ «نَهَى عَنْ بَيْعٍ وَشَرْطٍ» وَالنَّهْيُ يَقْتَضِي فَسَادَ الْمَنْهِيِّ فَيَدُلُّ عَلَى فَسَادِ كُلِّ بَيْعٍ وَشَرْطٍ إلَّا مَا خُصَّ عَنْ عُمُومِ النَّصِّ؛ وَلِأَنَّ هَذِهِ الشُّرُوطَ بَعْضُهَا فِيهِ مَنْفَعَةٌ زَائِدَةٌ تَرْجِعُ إلَى الْعَاقِدَيْنِ، أَوْ إلَى غَيْرِهِمَا، وَزِيَادَةُ مَنْفَعَةٍ مَشْرُوطَةٍ فِي عَقْدِ الْبَيْعِ تَكُونُ رِبًا وَالرِّبَا حَرَامٌ، وَالْبَيْعُ الَّذِي فِيهِ رِبًا فَاسِدٌ وَبَعْضُهَا فِيهِ غَرَرٌ «، وَنَهَى رَسُولُ اللَّهِ ﷺ عَنْ بَيْعٍ فِيهِ غَرَرٌ» وَالْمَنْهِيُّ عَنْهُ فَاسِدٌ، وَبَعْضُهَا شَرْطُ التَّلَهِّي وَأَنَّهُ مَحْظُورٌ، وَبَعْضُهَا يُغَيِّرُ مُقْتَضَى الْعَقْدِ وَهُوَ مَعْنَى الْفَسَادِ، إذْ الْفَسَادُ هُوَ التَّغْيِيرُ وَاَللَّهُ ﷾ أَعْلَمُ
Badā’i’ Al-Ṣanā’i’ (Vol.5, pg.175-6, Dār Al-Kutub Al-’Ilmiyyah)
وَذَكَرَ فِي الدُّرَرِ أَنَّ النَّهْيَ عَنْ إلْقَاءِ الْحَجَرِ أُلْحِقَ بِالْأَوَّلَيْنِ دَلَالَةً (قَوْلُهُ لِوُجُودِ الْقِمَارِ) أَيْ بِسَبَبِ تَعْلِيقِ التَّمْلِيكِ بِأَحَدِ هَذِهِ الْأَفْعَالِ
Raddul Muhtār (Vol.5, pg.65-6, Dār Al-Fiqr)
وَ) فَسَدَ (بَيْعُ سَمَكٍ لَمْ يُصَدْ) لَوْ بِالْعَرْضِ وَإِلَّا فَبَاطِلٌ لِعَدَمِ الْمِلْكِ صَدْرُ الشَّرِيعَةِ (أَوْ) (صِيدَ ثُمَّ أُلْقِيَ فِي مَكَان لَا يُؤْخَذُ مِنْهُ إلَّا بِحِيلَةٍ) لِلْعَجْزِ عَنْ التَّسْلِيمِ (وَإِنْ أُخِذَ بِدُونِهَا صَحَّ) وَلَهُ خِيَارُ الرُّؤْيَةِ (إلَّا إذَا دَخَلَ بِنَفْسِهِ وَلَمْ يَسُدَّ مَدْخَلَهُ) فَلَوْ سَدَّهُ مَلَكَهُ
Raddul Muhtār (Vol.5, pg.60, Dār Al-Fiqr)
وَأَمَّا شَرَائِطُ الصِّحَّةِ فَعَامَّةٌ وَخَاصَّةٌ فَالْعَامَّةُ لِكُلِّ بَيْعٍ مَا هُوَ شَرْطُ الِانْعِقَادِ؛ لِأَنَّ مَا لَا يَنْعَقِدُ لَمْ يَصِحَّ وَلَا يَنْعَكِسُ، فَإِنَّ الْفَاسِدَ عِنْدَنَا مُنْعَقِدٌ نَافِذٌ إذَا اتَّصَلَ بِهِ الْقَبْضُ، وَمِنْهَا أَنْ لَا يَكُونَ مُؤَقَّتًا، فَإِنْ أَقَّتَهُ لَمْ يَصِحَّ بِخِلَافِ الْإِجَارَةِ، فَإِنَّ التَّأْقِيتَ شَرْطُهَا، وَمِنْهَا أَنْ يَكُونَ الْمَبِيعُ مَعْلُومًا وَالثَّمَنُ مَعْلُومًا عِلْمًا يَمْنَعُ مِنْ الْمُنَازَعَةِ فَالْمَجْهُولُ جَهَالَةً مُفْضِيَةً إلَيْهَا غَيْرُ صَحِيحٍ كَشَاةٍ مِنْ هَذَا الْقَطِيعِ وَبَيْعُ الشَّيْءِ بِقِيمَتِهِ وَبِحُكْمِ فُلَانٍ، وَمِنْهَا خُلُوُّهُ عَنْ شَرْطٍ مُفْسِدٍ وَهُوَ أَنْوَاعٌ شُرِطَ فِي وُجُودِهِ غَرَرٌ كَاشْتِرَاطِ حَمْلِ الْبَهِيمَةِ…
Al-Bahr Al-Rāiq (Vol.5, pg.281, Dār Al-Kitab Al-Islami)
[2]
وَأَمَّا التِّبْرُ فَهَلْ يَصْلُحُ رَأْسَ مَالِ الشَّرِكَةِ؟ ذُكِرَ فِي كِتَابِ الشَّرِكَةِ وَجَعَلَهُ كَالْعُرُوضِ وَفِي كِتَابِ الصَّرْفِ جَعَلَهُ كَالْأَثْمَانِ الْمُطْلَقَةِ؛ لِأَنَّهُ قَالَ فِيهِ: إذَا اشْتَرَى بِهِ فَهَلَكَ لَا يَنْفَسِخُ الْعَقْدُ، وَالْأَمْرُ فِيهِ مَوْكُولٌ إلَى تَعَامُلِ النَّاسِ، فَإِنْ كَانُوا يَتَعَامَلُونَ بِهِ فَحُكْمُهُ حُكْمُ الْأَثْمَانِ الْمُطْلَقَةِ، فَتَجُوزُ الشَّرِكَةُ بِهَا وَإِنْ كَانُوا لَا يَتَعَامَلُونَ بِهَا فَحُكْمُهَا حُكْمُ الْعُرُوضِ، وَلَا تَجُوزُ فِيهَا الشَّرِكَةُ
Badā’i’ Al-Ṣanā’i’ (Vol.6, pg.56, Dār Al-Kutub Al-’Ilmiyyah)
بَابُ الصَّرْفِ عَنْوَنَهُ بِالْبَابِ لَا بِالْكِتَابِ؛ لِأَنَّهُ مِنْ أَنْوَاعِ الْبَيْعِ (هُوَ) لُغَةً الزِّيَادَةُ. وَشَرْعًا (بَيْعُ الثَّمَنِ بِالثَّمَنِ) أَيْ مَا خُلِقَ لِلثَّمَنِيَّةِ وَمِنْهُ الْمَصُوغُ (جِنْسًا بِجِنْسٍ أَوْ بِغَيْرِ جِنْسٍ) كَذَهَبٍ بِفِضَّةٍ (وَيُشْتَرَطُ) عَدَمُ التَّأْجِيلِ وَالْخِيَارِ وَ (التَّمَاثُلُ) – أَيْ التَّسَاوِي وَزْنًا (وَالتَّقَابُضُ) بِالْبَرَاجِمِ لَا بِالتَّخْلِيَةِ (قَبْلَ الِافْتِرَاقِ) وَهُوَ شَرْطُ بَقَائِهِ صَحِيحًا عَلَى الصَّحِيحِ (إنْ اتَّحَدَ جِنْسًا وَإِنْ) وَصْلِيَّةٌ (اخْتَلَفَا جَوْدَةً وَصِيَاغَةً) لِمَا مَرَّ فِي الرِّبَا (وَإِلَّا) بِأَنْ لَمْ يَتَجَانَسَا (شُرِطَ التَّقَابُضُ) لِحُرْمَةِ النَّسَاءِ (فَلَوْ بَاعَ) النَّقْدَيْنِ (أَحَدَهُمَا بِالْآخَرِ جُزَافًا أَوْ بِفَضْلٍ وَتَقَابَضَا فِيهِ) أَيْ الْمَجْلِسِ (صَحَّ، وَ) الْعِوَضَانِ (لَا يَتَعَيَّنَانِ) حَتَّى لَوْ اسْتَقْرَضَا فَأَدَّيَا قَبْلَ افْتِرَاقِهِمَا أَوْ أَمْسَكَا مَا أَشَارَ إلَيْهِ فِي الْعَقْدِ وَأَدَّيَا مِثْلَهُمَا جَازَ
Raddul Muhtār (Vol.5, pg.257-9, Dār Al-Fiqr)
[3]
وَتَعَاوَنُوا عَلَى الْبِرِّ وَالتَّقْوَىٰ ۖ وَلَا تَعَاوَنُوا عَلَى الْإِثْمِ وَالْعُدْوَانِ ۚ وَاتَّقُوا اللَّهَ ۖ إِنَّ اللَّهَ شَدِيدُ الْعِقَابِ
Qur’an (5:2)
[4]
وَمَا لَا تَصِحُّ) إضَافَتُهُ (إلَى الْمُسْتَقْبَلِ) عَشَرَةٌ (الْبَيْعُ، وَإِجَازَتُهُ، وَفَسْخُهُ، وَالْقِسْمَةُ وَالشَّرِكَةُ وَالْهِبَةُ وَالنِّكَاحُ وَالرَّجْعَةُ وَالصُّلْحُ عَنْ مَالٍ وَالْإِبْرَاءُ عَنْ الدَّيْنِ) لِأَنَّهَا تَمْلِيكَاتٌ لِلْحَالِ فَلَا تُضَافُ لِلِاسْتِقْبَالِ كَمَا لَا تُعَلَّقُ بِالشَّرْطِ لِمَا فِيهِ مِنْ الْقِمَارِ، وَبَقِيَ الْوَكَالَةُ عَلَى قَوْلِ الثَّانِي الْمُفْتَى بِهِ…
…قُلْت: وَيَظْهَرُ مِنْ هَذَا وَمِمَّا ذَكَرْنَاهُ آنِفًا عَنْ الدُّرَرِ أَنَّ الْإِضَافَةَ تَصِحُّ فِيمَا لَا يُمْكِنُ تَمْلِيكُهُ لِلْحَالِ وَفِيمَا كَانَ مِنْ الْإِطْلَاقَاتِ وَالْإِسْقَاطَاتِ وَالِالْتِزَامَاتِ وَالْوِلَايَاتِ، وَلَا تَصِحُّ فِي كُلِّ مَا أَمْكَنَ تَمْلِيكُهُ لِلْحَالِ تَأَمَّلْ (قَوْلُهُ لِمَا فِيهِ مِنْ الْقِمَارِ) هُوَ الْمُرَاهَنَةُ كَمَا فِي الْقَامُوسِ، وَفِيهِ الْمُرَاهَنَةُ، وَالرِّهَانُ الْمُخَاطَرَةُ
وَحَاصِلُهُ أَنَّهُ تَمْلِيكٌ عَلَى سَبِيلِ الْمُخَاطَرَةِ. وَلَمَّا كَانَتْ هَذِهِ تَمْلِيكَاتٌ لِلْحَالِ لَمْ يَصِحَّ تَعْلِيقُهَا بِالْخَطَرِ لِوُجُودِ مَعْنَى الْقِمَارِ
Raddul Muhtār (Vol.5, pg.256-7, Dār Al-Fiqr)
[5]
حَدَّثَنِي مُحَمَّدُ بْنُ الْمُثَنَّى الْعَنَزِيُّ، أَخْبَرَنَا مُحَمَّدُ بْنُ جَعْفَرٍ، حَدَّثَنَا شُعْبَةُ، عَنْ عَوْنِ، بْنِ أَبِي جُحَيْفَةَ عَنِ الْمُنْذِرِ بْنِ جَرِيرٍ، عَنْ أَبِيهِ… فَقَالَ رَسُولُ اللَّهِ صلى الله عليه وسلم ” مَنْ سَنَّ فِي الإِسْلاَمِ سُنَّةً حَسَنَةً فَلَهُ أَجْرُهَا وَأَجْرُ مَنْ عَمِلَ بِهَا بَعْدَهُ مِنْ غَيْرِ أَنْ يَنْقُصَ مِنْ أُجُورِهِمْ شَىْءٌ وَمَنْ سَنَّ فِي الإِسْلاَمِ سُنَّةً سَيِّئَةً كَانَ عَلَيْهِ وِزْرُهَا وَوِزْرُ مَنْ عَمِلَ بِهَا مِنْ بَعْدِهِ مِنْ غَيْرِ أَنْ يَنْقُصَ مِنْ أَوْزَارِهِمْ شَىْءٌ ” .
Sahih Muslim 1017a (Bk.12, ch.20 , sunnah.com)
[6]
https://www.investopedia.com/terms/f/futures.asp
https://aaoifi.com/ss-10-salam-and-parallel-salam/?lang=en
بَابُ السَّلَمِ (هُوَ) لُغَةً كَالسَّلَفِ وَزْنًا وَمَعْنًى وَشَرْعًا (بَيْعُ آجِلٍ) وَهُوَ الْمُسْلَمُ فِيهِ (بِعَاجِلٍ) وَهُوَ رَأْسُ الْمَالِ (وَرُكْنُهُ رُكْنُ الْبَيْعِ) حَتَّى يَنْعَقِدَ بِلَفْظِ بَيْعٍ فِي الْأَصَحِّ (وَيُسَمَّى صَاحِبُ الدَّرَاهِمِ رَبُّ السَّلَمِ وَالْمُسْلِمُ) بِكَسْرِ اللَّامِ (وَ) يُسَمَّى (الْآخَرُ الْمُسْلَمُ إلَيْهِ وَالْحِنْطَةُ مَثَلًا الْمُسْلَمُ فِيهِ) وَالثَّمَنُ رَأْسُ الْمَالِ
وَحُكْمُهُ ثُبُوتُ الْمِلْكِ لِلْمُسْلَمِ إلَيْهِ وَلِرَبِّ السَّلَمِ فِي الثَّمَنِ وَالْمُسْلَمِ فِيهِ) فِيهِ لَفٌّ وَنَشْرٌ مُرَتَّبٌ
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قَوْلُهُ وَيَصِحُّ فِيمَا أَمْكَنَ ضَبْطُ صِفَتِهِ) لِأَنَّهُ دَيْنٌ وَهُوَ لَا يُعْرَفُ إلَّا بِالْوَصْفِ فَإِذَا لَمْ يُمْكِنْ ضَبْطُهُ بِهِ يَكُونُ مَجْهُولًا جَهَالَةً تُفْضِي إلَى الْمُنَازَعَةِ، فَلَا يَجُوزُ كَسَائِرِ الدُّيُونِ نَهْرٌ…
Raddul Muhtār (Vol.5, pg.209, Dār Al-Fiqr)
[7]
https://amanahadvisors.com/is-the-bito-etf-shariah-compliant/
Ibid. Raddul Muhtār (Vol.5, pg.256-7, Dār Al-Fiqr)
وَمِنْهَا) أَنْ يَكُونَ مَقْبُوضًا فِي مَجْلِسِ السَّلَمِ لِأَنَّ الْمُسْلَمَ فِيهِ دَيْنٌ، وَالِافْتِرَاقُ لَا عَنْ قَبْضِ رَأْسِ الْمَالِ يَكُونُ افْتِرَاقًا عَنْ دَيْنٍ بِدَيْنٍ وَإِنَّهُ مَنْهِيٌّ عَنْهُ لِمَا رُوِيَ أَنْ رَسُولَ اللَّهِ ﷺ «نَهَى عَنْ بَيْعِ الْكَالِئِ بِالْكَالِئِ» أَيْ النَّسِيئَةِ بِالنَّسِيئَةِ، وَلِأَنَّ مَأْخَذَ هَذَا الْعَقْدِ دَلِيلٌ عَلَى هَذَا الشَّرْط…
Badā’i’ Al-Ṣanā’i’ (Vol.5, pg.202, Dār Al-Kutub Al-’Ilmiyyah)
وَإِذَا عَرَفْت الْمَبِيعَ وَالثَّمَنَ فَنَقُولُ مِنْ حُكْمِ الْمَبِيعِ إذَا كَانَ مَنْقُولًا أَنْ لَا يَجُوزَ بَيْعُهُ قَبْلَ الْقَبْضِ وَكُلُّ جَوَابٍ عَرَفْته فِي الْمُشْتَرِي فَهُوَ الْجَوَابُ فِي الْأُجْرَةِ إذَا كَانَتْ الْأُجْرَةُ عَيْنًا وَقَدْ شُرِطَ تَعْجِيلُهَا لَا يَجُوزُ بَيْعُهَا قَبْلَ الْقَبْضِ وَكَذَا بَدَلُ الصُّلْحِ عَنْ الدَّيْنِ إذَا كَانَ عَيْنًا لَا يَجُوزُ بَيْعُهُ قَبْلَ الْقَبْضِ… وَمَا لَا يَجُوزُ بَيْعُهُ قَبْلَ الْقَبْضِ لَا يَجُوزُ إجَازَتُهُ
Al-Fatāwa al-Hindiyyah (Vol.3, pg.13, Dār Al-Fiqr)