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The difference between futures contracts and savings
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The difference between futures contracts and savings is very significant, as they represent two entirely different concepts in the world of finance and economics. In short, futures contracts are a complex investment tool that involves high risks, while savings is a basic financial practice aimed at building financial security.
Futures Contracts
Futures contracts are legal agreements between two parties (buyer and seller) to buy or sell a specific asset (such as commodities, currencies, stock indices) at a specified future date and at a price agreed upon now.
Key characteristics of futures contracts:
* Commitment of both parties: Both the buyer and the seller are obligated to fulfill the contract on the specified date, regardless of the current market price of the asset.
* Trading on exchanges: Futures contracts are traded on organized exchanges (such as the Chicago Mercantile Exchange CME Group), providing standardization and transparency.
* Daily settlement (Margin): Futures contracts are settled daily based on market price fluctuations, meaning that parties may be required to pay additional "margin" to cover potential losses, or they receive profits if the market moves in their favor.
* Hedging and speculation: Futures contracts are used for hedging (protecting profits or reducing risks from future price fluctuations) or for speculation (attempting to achieve profits from price movement forecasts).
Futures Contracts
Futures contracts are legal agreements between two parties (buyer and seller) to buy or sell a specific asset (such as commodities, currencies, stock indices) at a specified future date and at a price agreed upon now.
Key characteristics of futures contracts:
* Commitment of both parties: Both the buyer and the seller are obligated to fulfill the contract on the specified date, regardless of the current market price of the asset.
* Trading on exchanges: Futures contracts are traded on organized exchanges (such as the Chicago Mercantile Exchange CME Group), providing standardization and transparency.
* Daily settlement (Margin): Futures contracts are settled daily based on market price fluctuations, meaning that parties may be required to pay additional "margin" to cover potential losses, or they receive profits if the market moves in their favor.
* Hedging and speculation: Futures contracts are used for hedging (protecting profits or reducing risks from future price fluctuations) or for speculation (attempting to achieve profits from price movement forecasts).
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* Transparency and Fairness: The transaction should be transparent and fair, free from any practices of fraud or deception.
* Hedging and Risk Management: It may be permissible if used for legitimate hedging purposes and to mitigate risks, not for pure speculation.
* Absence of Riba or Prohibited Transactions: Contracts should not include any interest or other prohibited elements.
* Actual Ownership: In the case of sale, the seller must be the owner of the traded asset.
Legal Alternative:
The Salam contract is considered one of the legal alternatives similar to futures contracts, where the price is paid in advance and the goods are received at a later date, provided that the seller receives the full price in the council, and the goods are described accurately to prevent ambiguity.
Conclusion:
The default ruling on futures contracts prevalent in global markets is prohibition, due to their inclusion of legal pitfalls such as uncertainty, riba, and selling what one does not own. Therefore, it is advised to refer to trusted scholars and avoid any type of trading that raises doubts or contradicts legal values.
* Hedging and Risk Management: It may be permissible if used for legitimate hedging purposes and to mitigate risks, not for pure speculation.
* Absence of Riba or Prohibited Transactions: Contracts should not include any interest or other prohibited elements.
* Actual Ownership: In the case of sale, the seller must be the owner of the traded asset.
Legal Alternative:
The Salam contract is considered one of the legal alternatives similar to futures contracts, where the price is paid in advance and the goods are received at a later date, provided that the seller receives the full price in the council, and the goods are described accurately to prevent ambiguity.
Conclusion:
The default ruling on futures contracts prevalent in global markets is prohibition, due to their inclusion of legal pitfalls such as uncertainty, riba, and selling what one does not own. Therefore, it is advised to refer to trusted scholars and avoid any type of trading that raises doubts or contradicts legal values.
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In general, the majority of contemporary scholars and jurists tend to prohibit futures contracts (or 'futures') in Islamic law due to their inclusion of a number of legal prohibitions. The most notable of these prohibitions include: * Gharar and gambling: Futures contracts often involve high risks and lack of clarity in the terms, where the profit for one party is based on the loss of the other party, which resembles the gambling that is prohibited by law. * Riba: Often, futures contracts use leverage, which is considered a prohibited usurious loan, especially if it includes overnight fees (interest on the loan). * Selling what one does not own: In some forms of futures contracts, something is sold before it is actually owned, which contradicts the legal prohibition against selling what one does not possess. * Lack of legal possession: Sometimes, especially in the sale of currencies, gold, and silver, actual possession does not occur in the session, which is a fundamental condition for the validity of the sale in these cases. Decisions of jurisprudential assemblies: * The International Islamic Fiqh Academy, the Council of Senior Scholars in Saudi Arabia, and the Egyptian Fatwa House have issued decisions prohibiting the trading of futures contracts due to their inclusion of gharar, gambling, and riba. Cases where futures contracts may be permissible (under strict conditions): Some jurists believe that futures contracts may be permissible if certain conditions are met to ensure they are free from legal prohibitions.
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The Simplest Explanation of Futures Contracts
Futures Contracts: A Simplified Explanation
Futures contracts are simply agreements to buy or sell a specific asset (commodity, currency, stocks, etc.) at a specified price on a future date.
Imagine it as agreeing today to buy a specific commodity, like a barrel of oil, not at today's price, but at a price you both agree on now, to be delivered and paid for later (for example, in 3 months).
Futures contracts are simply agreements to buy or sell a specific asset (commodity, currency, stocks, etc.) at a specified price on a future date.
Imagine it as agreeing today to buy a specific commodity, like a barrel of oil, not at today's price, but at a price you both agree on now, to be delivered and paid for later (for example, in 3 months).
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Profiting on Binance
How do you profit on Binance? A comprehensive guide for beginners and traders.
Binance is one of the largest and most famous cryptocurrency trading platforms in the world, offering a wide range of opportunities for profit. Whether you are a beginner looking for your first steps in the crypto world, or an experienced trader seeking to enhance your strategies, Binance provides you with the necessary tools. But the most important question remains: how do you profit on Binance?
Binance is one of the largest and most famous cryptocurrency trading platforms in the world, offering a wide range of opportunities for profit. Whether you are a beginner looking for your first steps in the crypto world, or an experienced trader seeking to enhance your strategies, Binance provides you with the necessary tools. But the most important question remains: how do you profit on Binance?
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