Is The Stock Market Halal or Haram?

Is The Stock Market Halal or Haram_

Have you ever wanted to immerse yourself in stocks trading but are afraid if the stock market is halal and haram? Worry not.

Most scholars agreed that participating in the stock market is not haram if you follow the basic principles of Islamic Finance.

Fundamentals of Islamic Finance

Islamic Finance is based on some essential principles. The most important features are its freedom from Riba, Gharar, Maysir, and avoidance of trading impermissible goods and services. Furthermore, Islamic Finance, at its core, promotes the principle of justice and equity.  

What is Riba?

Riba is usury or interest in English. Riba is an arrangement that exploits the poor by trapping them in continuously growing debt. This is while the rich increase their wealth without creating any value.

What is Gharar?

Gharar means uncertainty, and it is related to situations involving risk, uncertainty, or doubt. The word comes from the Arabic word “gharra,” which means to deceive. Gharar is prohibited because its existence denies parties equal bargaining power.

What is Maysir?

Maysir or gambling is one of three fundamental prohibitions in Islamic Finance. Prohibition of maysir is used for arguments against conventional financial practices such as speculation, conventional insurance, and derivatives.

Fundamental Rules of Islamic Finance

Islamic Finance prohibits riba, gharar, and maysir. Moreover, Islamic Fiance requires businesses to stay away from unlawful goods and services that are mentioned in the Quran and Hadith. According to Islamic principles, some prohibited goods and services include non-halal foods. This includes pork and animals not slaughtered. Also, intoxicating drinks, pornography, tobacco-related products, and weapons are among prohibited activities. Companies should not associate these prohibited goods and services. Including buying or selling, production and distribution, packaging, transportation, warehousing, and marketing.

In essence, following these fundamental rules of Islamic finance will help you stay on the right path. So, is the stock market halal or haram? Well, it depends on what you do with the Stock Market.

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