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Why Future Trading is Considered Prohibited in Islam?

Future trading is considered haram (prohibited) in Islam because it involves several Shariah violations. The primary reasons are as follows:

1. Gharar (Uncertainty in the Contract)

In future trading, buying and selling occur for a commodity that does not yet exist, and the price is determined for a future date. Since both the buyer and seller are uncertain about the actual price in the future, this involves gharar (uncertainty and deception), which is prohibited in Islam.

2. Gambling and Speculation (Qimar & Satta Bazi)

In future trading, most participants bet on price fluctuations without engaging in actual buying or selling of goods. This practice resembles gambling, as profits and losses are primarily based on speculation and luck rather than real trade activity. Islam strictly prohibits any form of qimar (gambling).

3. Selling Without Ownership

According to Islamic principles, a person must own a commodity before selling it, and possession is necessary. However, in future trading, people often sell items they do not physically own at the time of the contract. The Prophet Muhammad (ﷺ) forbade such transactions:

“Lā tabiʿ mā laysa ʿindaka” (Tirmidhi: 1232)
(Do not sell what you do not possess.)

4. Involvement of Interest (Riba)

Future trading often involves interest (riba), especially when trading with leverage or on a deferred payment basis. Since riba is strictly prohibited in Islam, this becomes another major reason why future trading is considered impermissible.

In conclusion, due to these fundamental Shariah violations, Islamic scholars generally regard future trading as impermissible in Islam.