1.) I am wondering what the rules for investing in stock are based on Sayyid Al Sistani’s rulings. From my little knowledge, I understand that a business can be involved in interest, alcohol, and drug business if it is a minuscule part, is that true? Can you please quantify it for me? I ask because most companies have an investing team that buys all sorts of stock, from defense companies that produce weapons which kill muslims, to alcohol and recreational drugs like weed.
2.) Stock investing sometimes involves following patterns rather than relying on news. This means investing based on the movement of a ticker, which forms certain shapes or trends that can help predict what happens next. Often, a stock goes up due to news that the average person doesn’t have access to. An investment firm with insider information may buy large amounts before the news is public. Other times, the stock rises for no apparent reason.
There’s a bot that tracks many stocks, typically cheap or penny stocks, and alerts its members about patterns, increases, and other significant movements. I’ve seen it work in real-time multiple times, with stocks increasing by 200-1000% in a single day. It can also decrease by 200-1000%, but you can be safe and set to automatically sell.
What should I do in this situation? Can I blindly invest in the stocks the bot recommends, or is there specific information I need to understand before investing?
3) Options trading, Is it halal? If you’re unfamiliar with it, this article explains the basics. https://www.investopedia.com/options-basics-tutorial-4583012
Options trading involves a contract linked to a stock. You have the right to exercise the contract (buy the stock at the strike price), or you can choose not to exercise it, in which case all you lose is the premium (essentially the contract fee, usually $100–500 for most options).
Alternatively, you can sell the contract itself. Its value increases if the stock performs well, so if you don’t have the funds to exercise the option, you can sell the contract for a profit (ex. making $400 extra).
Is this way of trading halal?
4) lastly how about “pattern trading.” As I mentioned earlier, many people invest based on patterns, but the real reason a stock goes up can be due to:
A.) Enough traders noticing the same pattern and buying the stock simultaneously, creating a self fulfilling cycle of demand and driving the price up artificially. This is the result of collective behavior in the market.
B.) A wealthy individual or institution acting on insider information and buying heavily before the news becomes public.
Some consider this kind of trading speculative, as it relies on past price movements and collective behavior rather than a company’s actual performance. Others see it as a science, given that it involves statistical analysis and probability.
QUESTION: Is investing/trading based on stock patterns halal, given that the company meets the halal criteria?