Short answer
Buying and selling halal shares, even within the same day, is allowed in principle when you trade with your own money and actually buy the shares. Margin trading with interest, short selling, options, futures and CFDs are not permitted in the mainstream view. Trading that is really betting on price moves comes close to gambling.
Trading screened shares for profit is permitted, as it is the sale of an ownership stake. Short selling (selling what you do not own), buying on interest-bearing margin, and derivatives such as options, futures and CFDs are not permitted, because they involve selling what is not owned, riba, or paying for a right that is not a real asset.
The four schools agree on this.
Explanation
A share bought for cash is owned as soon as the trade is made, and the risk of its price is yours, so many contemporary scholars allow selling it again even before the formal settlement date. Holding it for minutes or for years does not change the ruling, as long as the company passes the Shariah screens.
What is not permitted:
- Margin. Borrowing from your broker at interest to buy more.
- Short selling. Selling borrowed shares you do not own, hoping to buy them back cheaper.
- Options. Paying a premium for the right to buy or sell later. The International Islamic Fiqh Academy ruled that options are not a valid object of sale.
- Futures. Both the price and the goods are deferred.
- CFDs and spread betting. You never own anything; you settle the price difference in cash, often with overnight interest.
- Leveraged and inverse ETFs, which are built on borrowing and derivatives.
Even with lawful shares, ask what you are really doing. Rapid trading with no interest in the business, chasing price spikes and same-day bets is very close to gambling in spirit, and most retail day traders lose money. The Quran calls gambling the work of Satan (5:90).
Shares held for trading are zakatable at full market value; see zakat on stocks. Contemporary scholars of the four schools agree on these rules.
The evidence
Quran, Surah Al-Maaida 5:90
يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوٓا۟ إِنَّمَا ٱلْخَمْرُ وَٱلْمَيْسِرُ وَٱلْأَنصَابُ وَٱلْأَزْلَٰمُ رِجْسٌۭ مِّنْ عَمَلِ ٱلشَّيْطَٰنِ فَٱجْتَنِبُوهُ لَعَلَّكُمْ تُفْلِحُونَ ﴿٩٠﴾
O you who have believed, indeed, intoxicants, gambling, [sacrificing on] stone alters [to other than Allah], and divining arrows are but defilement from the work of Satan, so avoid it that you may be successful.
Speculation that is really betting is forbidden.
Quran, Surah Al-Baqara 2:275
ٱلَّذِينَ يَأْكُلُونَ ٱلرِّبَوٰا۟ لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ ٱلَّذِى يَتَخَبَّطُهُ ٱلشَّيْطَٰنُ مِنَ ٱلْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوٓا۟ إِنَّمَا ٱلْبَيْعُ مِثْلُ ٱلرِّبَوٰا۟ ۗ وَأَحَلَّ ٱللَّهُ ٱلْبَيْعَ وَحَرَّمَ ٱلرِّبَوٰا۟ ۚ فَمَن جَآءَهُۥ مَوْعِظَةٌۭ مِّن رَّبِّهِۦ فَٱنتَهَىٰ فَلَهُۥ مَا سَلَفَ وَأَمْرُهُۥٓ إِلَى ٱللَّهِ ۖ وَمَنْ عَادَ فَأُو۟لَٰٓئِكَ أَصْحَٰبُ ٱلنَّارِ ۖ هُمْ فِيهَا خَٰلِدُونَ ﴿٢٧٥﴾
Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.
Real buying and selling is lawful, while margin interest is not.
Sunan Abi Dawud 3503
Graded sahih... لا تبع ما ليس عندك ...
"Do not sell what you do not have."
Short selling sells what the trader does not own.
Jami' at-Tirmidhi 1234
Graded hasan sahih... ولا ربح ما لم يضمن ولا بيع ما ليس عندك ...
"Nor profit on what you do not bear the risk of, nor selling what you do not have."
Profit must come from assets you own and bear the risk of.
Where the ruling is recorded
- Resolutions of the International Islamic Fiqh Academy, Resolution on financial markets. Options, and futures where neither side is delivered, are not permitted.
- Mufti Taqi Usmani, An Introduction to Islamic Finance, Chapter on shares, futures and options. Explains which stock market transactions are lawful.
- al-Hidaya, Kitab al-Buyu', on selling before possession. The rule against selling what one does not own or possess.
This answer is pending review by the scholars on our team. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.