Is it Halal to trade in stocks / Shares. i.e buy and sell and make profit by doing so.

Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh.  (May Allah's Peace, Mercy and Blessings be upon all of you)

 

One of our brothers/sisters has asked this question:

Asalam alaikum

Firstly i would like to appreciate your work of guiding people to the right path of Islam

My question is

Is it Halal to trade in stocks / Shares. i.e buy and sell and make profit by doing so.

 

Thank you

Allah hafiz 

 

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Answer:

 

Stock and Shares

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is no one (no idol, no person, no grave, no prophet, no imam, no dai, nobody!) worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

 

May Allah Subhanah reward you with the best of this world and the Hereafter for your kind comments of encouragement for our humble efforts in the propagation of the Truth. If our humble and modest efforts have helped even one brother or sister get closer to Allah and His Deen of Truth, then we would consider ourselves indeed fortunate to have been given this opportunity by the Lord Most Merciful to serve in His Cause. We hope, beg, and pray the Merciful Lord accepts our humble and weak efforts, forgives us our shortcomings, and saves you, us, and all the believers from the torment of the Hell Fire. Ameen.

 

Your Question: Is it Halal to trade in stocks / Shares. i.e buy and sell and make profit by doing so.

According to the view of most scholars in Islam, there is nothing wrong in the investment of shares and the stock market in its essence.

 

But the scholars have given a few guidelines to follow, to make sure that that the earnings of the company whose stocks are bought are legal according to Shariah.

 

The three main factors that make a stock haraam according to the scholars is as follows:

1.      The company should not deal in a product which is declared haraam in its essence in Islam. Eg. alchohol, prostitution, usury, pork, etc.

2.      The company should not deal in a product which is used to harm a muslim country. Eg. Arms manufacturing in a pagan country, etc.

3.      Only the pure buying, holding, and selling of stocks is termed halaal by the scholars. All types of other derivative transactions like shorting the stock, buying calls, selling calls, buying puts, selling puts, straddles, or any other variations are not legal.

 

Whatever written of Truth and benefit is only due to Allahs Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

 

 

Your brother and well wisher in Islam,

 

Burhan