Short term trading in stocks and bitcoin

đź’° Everyday Islamic Finance Savings & Investing
#1

Salam Alykom all;

I know a friend that know how to analyze bitcoin and detect patterns in them. For example he usually buy bitcoin when it is below ~$xx then sell when it exceeds ~$xx+2000. That happens usually in matter of days or very few weeks and of course he makes good earnings out of that if he invested with good amount.

3 more pieces of information I wanna add that might be relevant

  1. He is doing that on Robinhood
  2. He decide that if buy at say ~$61000 as he usually do and then the price goes down with no sign to go up in near future, then he has no problem keeping his money as Bitcoin as he anyways believes that in long-term it will rise.
  3. He also do that with stocks so again buy stocks that he believe will rise in few days/weeks and sell when they rise

He recently watched some videos for some scholars claiming that this is Gharar or like gambling as he understood from the videos! So my friend would like to know his position and if what he is doing is really haram or halal. AND please if the answer was Haram, what he should do with the earnings that he got so far.

Jazakom Allho Khairan
Thanks

#2

As-salamu Alaykum Wa Rahmaa Tu’lahi Wa Brakatu,

This is a very touchy topic.

Some scholars are on the opinions that all trading is haram because it’s similar to gambling.

Others say it’s not.

On the view of trading in the way you described; if it’s just guess work then it is somewhat similar to gambling as there is an element of chance.

However, if the friend is using technical analysis and research, then it is similar to the traditional trading we do.

Ultimately, buying and selling stocks, shares, assets when they’re higher is what we all aim to do to generate a profit.

I don’t think, and it’s my opinion, that there isn’t enough information to identify if it is gambling or not.

It just sounds like what any other investor does.

Jazakhalla khairan,
Maheen

#3

Jazak Allho Khairan for the honest reply
I wanna add more information
my friend is just looking at the pattern of going up and down and he can guess when to buy and when to sell. he has been following bitcoin ups and downs for months now and he could develop the skill to make a good guess of the price trend. Also in case of loss he just keep the money there and sell when it goes high and even on that he has an asset (not like gambling he just lose everything because there is no asset there).
just one clarification, I did not understand you last sentence “I don’t think, and it’s my opinion, that there isn’t enough information to identify if it is gambling or not.” did you mean that you do not see enough information to make it gambling? (I did not understand and get confused by the sentence because you used two negations: “I don’t think” and “there isn’t”)
I know that this is your opinion but I just wanna explore and understand it better
Thanks