Short selling Halal or Haram in Islam? Many Muslims want to know about short selling. In this article, I have taken a beautiful question about short selling.
Short-selling Halal or Haram in Islam?
A beautiful question from a youth is ‘I am a day trader of stocks and I earn money from stocks by doing short selling. Is it permissible in Islam or not?
Ans: Short selling in the stock market is not permissible in Islam because selling before buying is not Halal in Islamic Shariya.
What is short selling?
Short selling is the selling of a stock that the seller doesn’t own at the time of selling them. Traders make a quick sale and earn profit in a short time. When the Stock Price goes down, the trader sells the stock without buying the shares, then waits for more drop, then buys the share and books profit.
How short selling Works?
The price of ABC Stock is $50. Trader thinks the price of ABC Stock may go down, at that time traders sell the stock at the correct price with the help of a broker. when the share price goes down then the trader buys the stock. Generally, the traditional investing is to buy low and sell high but the short selling is attempting to sell high and buy low.
Short-selling Halal or Haram in Islam?
Most Islamic scholars agree with this topic that short selling is not permissible in Islam. Short selling is totally haram in Islam. Short selling is hidden Gambling. Stock buying and selling is permissible in Islam but there is some condition you should follow. What are the conditions? if you want to know then Click Here. The condition is not available in short selling.
Why Short selling is Haram?
Short selling is Haram because selling before buying is not permissible in Islamic sariyah.
Our beloved Prophet Mohammed peace be upon him said that “Do not sell that which you do not possess” So You are not allowed to sell anything which you do not have ownership of. For this reason Short selling is Haram.
What is the Alternative to short selling?
If you are an investor or a long-time trader then you should know what is alternative to short selling. Halal alternative is a short-time investment. If you think that the price of stock will go high then you can buy shares. after getting ownership you can sell and book profit. Remember that you should buy first when you get ownership then you can sell.
Avoid Haram Industries during Investment
Some Examples of industries below that you should avoid.
- Banks that engage in “riba”, or unjustified lending
- Alcohol
- nightclubs
- Insurance companies
- Pornography
- Music instrument
- statue
Conclusion: Short-selling Halal or Haram in Islam?
After a Long discussion, we have known that The Short selling is Prohibited in Islam. Almighty Allah Knows best.
If you want to know clearly about Halal Investment then Click here..
FAQ
Can we short-sell in Islam?
Short selling is not permissible in Islam. Short selling is totally haram in Islam.
Is short-selling illegal?
Yes, short selling is illegal because selling before buying is not permissible in Islamic sariyah.
Which type of trading is halal in Islam?
Stock buying and selling is permissible in Islam but there is some condition you should follow. What are the conditions? if you want to know then Click Here.
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