Is day trading permissible?

Question

Is Day Trading Halal?

As salam alikum, i know this question has been asked befor. i will be more specific. I using this app Robinhood. In this app, as soon as you buy a stock you get an email stating your order has been placed and then within seconds you get another email stating your order has been executed.

Ex: If i buy 100 stocks of ABC for $1, i get an email stating, "You have submitted a limit order to buy 100 shares of ABC. You can check on the status of this order on Robinhood. we will notify you when this order has been executed"

Then i get the email "Your limit order to buy 100 shares of ABC was executed at an average price of $1.00 on Jan 1st 2021 at 10 AM. Your trade confirmation will be available in your order history on Robinhood is one trading day."

Once the order is executed i am responsible for the profit/loss. Based on the fact that i get a confirmation email and i am responsible for the profit or loss i believe i am the owner of the shares purchased, now i should be good to sell those shares irrespective of same day or the nextright ?

Considing the technology getting more advanced, the stock orders being executed on the same day, is it allowed to buy and sell shares on the same day?

Abu ‘Umar Muhammad bin Zayn Patel · Accepted Answer

In the Name of Allah, the Most Gracious, the Most Merciful. As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh. We commend you on your Deeni consciousness in earning halāl. May Allah Ta’āla grant you barakah in your wealth. In principle, day trading is not permissible since you do not yet have possession of the shares. It is not permissible to sell anything before you have taken possession of the item.[1] You have stated that you are the owner based on the following: 1. An email stating the order has been executed and 2. You are responsible for profits and loss. This is incorrect for the following reasons: 1. Although orders are executed on the same day, they are only finalised two days after the day you bought the shares. This is when the buyer receives true ownership of the shares. Stocks have a two-day delay which is mandated by law in the USA. It is known as the ‘settlement date’ or ‘t+2’. Despite technological advancements, it still takes time for the trade to take place. [2] 2. Secondly, you are not entitled to dividends after the execution of the stocks. Rather you are only entitled to the dividends after the settlement date. [3] For example: If you buy 100 shares of ABC on Monday. The order will be executed on Monday. It will then take two-days after the day of purchase to be settled(finalised), which takes place on Wednesday. The seller will receive his payment, and the buyer’s name will be recorded as a shareholder in the company. If there are any dividends which are paid out on Tuesday, you will not be entitled to the dividends. This indicates that you are not the true owner of the shares until Wednesday, when the order has been finalised. Therefore, we advise you to abstain from selling stocks on the day you bought them. Rather, wait for two days after the purchase day, before selling your stocks. And Allah Ta’āla Knows Best Abu ‘Umar Muhammad bin Zayn Patel Student Darul Iftaa South Africa Checked and Approved by, Mufti Ebrahim Desai. (2021-03-24) [1] لأصل للشيباني ط قطر (2/ 436) وإذا باع الرجل بيعاً قد كان اشتراه قبل أن يقبضه أو اشترك فيه أو ولاه فإن هذا مردود لا يجوز. قال محمد: حدثنا بذلك أبو حنيفة رفعه إلى النبي - صلى الله عليه وسلم - أنه نهى عن بيع ما لم يقبض .

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