In the name of Allah, the most Beneficent, the most Merciful.
There are two possible situations to your question. If by Forex markets you mean the foreign exchange market, which allows banks and other institutions to buy and sell currencies, then the Islamic viewpoint is as follows:
It is stated in Hidayah that Bai-sarf is that transaction where both the buyer and seller are making a transaction using either gold or silver. In such transactions excess on either side is not permissible and it is also essential to complete the transaction before separating. (Vol 3. P104)
Scholars’ state that paper currencies are not considered to represent gold and silver but rather a legal tender and is considered as fulus.
In view of the above, currency trading will be permissible as the genus (jins) of both currencies is different. It is stated in Hidayah that when exchanging items of varied nature, it is permitted to have excess on one side. (Vol 3, P105)
However for the transaction to be valid, it would be necessary that the transaction is either completed on a spot basis or at least one party takes possession of the currency at the time of the transaction. Separating with debt on both sides (deferred to a future date) is not permitted.
The second possible scenario is that if you mean a “forex scam” where it is used to defraud traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market, then this will be considered impermissible and will fall under the ambit of deception.
Cheating, trickery and deceit is strictly forbidden in Islam.
The Prophet of Allah Sallallahu Alahi Wasalam has said; “Whoever bears arms against us is not one of us and whoever cheats us is not one of us.” (Sahih Muslim p.70 v.1)
Once the Prophet of Allah Sallallahu Alahi Wasalam passed by a pile of food in the market. He put his hand inside it and felt dampness although the surface was dry. He Sallallahu Alahi Wasalam said;
“O owner of the food, what is this?” The Man side; “It was damaged by rain, O Prophet of Allah.” He said; “Why didn’t you put the rain damaged food on top so that people could see it! Whoever cheats us is not one of us.” (Sahih Muslim p.70 v.1)
If the Islamic alternative is free from any interest (riba) then it will be permissible to use.
Only Allah Knows Best
Mohammed Tosir Miah
Darul Ifta Birmingham