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Collateral vs Leverage: An Islamic Perspective 🕌💹

Many Muslim traders often compare Collateral Loans with Leverage Trading. At first glance, they look similar – but in reality, there are key differences from an Islamic finance point of view.

✅ Similarities:

Both involve using someone else’s capital.

Margin/Collateral works as security.

Risk exists in both cases if repayment/position fails.

❌ Differences:

Interest (Riba): Conventional loans & normal leverage accounts involve interest → Haram. Islamic (Swap-Free) accounts remove this.

Ownership: Collateral gives you real asset ownership (house/land). Leverage only gives you a digital contract (CFD).

Clarity of contract: Collateral is clear & transparent. Leverage contracts are often speculative and complex.

🕌 Islamic Ruling:

Haram if it involves Riba, excessive speculation, or no ownership.

Permissible if done via Swap-Free Islamic Accounts, halal instruments, and with a sincere intention for halal rizq.

💡 As Muslims, our goal is not just profit – but Halal and blessed earnings. Because only halal wealth brings real barakah.

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