My dear brother in Isalm,
Assalam u Alaikum Wa Rahmatullah,
Sadly, there are many misconceptions and myths about Istikhara that exist among Muslims. By the consensus of all scholars, Istikhara is a proven and established Sunnah of the Holy Prophet Sallallahu Alaihe Wa Sallam. Below, I will relate to you the description and supplication of Istikhara as it is proven from the authentic Hadith of Jabir (R.A) recorded in Sahih Al-Bukhari.
Jabir (R.A) narrated that the Holy Prophet Sallallahu Alaihe Wa Sallam used to teach us Istikhara in all of our matters as he would teach us a Surah from the Holy Qur'an. He used to say: When one of you intends to do something (important) then he/she should perform two Rak'ah of voluntary prayer (Nafl), thereafter he/she should say the following supplication:
اللهم إنى أستخيرك بعلمك وأستقدرك بقدرتك وأسئلك من فضلك العظيم فإنك تقدر ولا أقدر وتعلم ولا أعلم وأنت علام الغيوب. اللهم إن كنت تعلم أن هذا الأمر (هنا تسمى حاجتك) خير لى فى دينى ومعاشى وعاقبة أمرى ـ أو قال عاجل أمرى وآجله ـ فاقدره لى و يسره لى ثم بارك لى فيه . اللهم وإن كنت تعلم أن هذا الأمر (هنا تسمى حاجتك) شر لى فى دينى ومعاشى وعاقبة أمرى ـأو قال عاجل أمرى وآجله ـ فاصرفه عنى واصرفنى عنه واقدر لى الخير حيث كان ثم أرضنى به. رواه البخارى
O' Allah, I consult you through your knowledge and I seek ability from you from you Ability and I seek from your great Grace as You have power over everything and I do not, and You know every thing and I do not and You are the possessor of knowledge of unseen. O' Allah if You know that this matter (here, you should name the issue for which you seek Istikhara) is good for me in matters of my religion, and living and Hereafter- Or one should say: in this world and Hereafter- then make it possible for me and make it easy for me then place blessings in it for me. O' Allah, and if You know that this matter is bad for me in matters of my religion and living and Hereafter- Or one should say: In this world and Hereafter- then move it away from me and move me away from it and make goodness available for me wherever it maybe and then make me happy with it.
Above is the supplication and method of Istikhara from authentic Hadith of the Holy Prophet Sallallahu Alaihe Wa Sallam. Thus all other things that people may associate with Istikhara are not based on the practice of the Sunnah.
You may perform Istikhara at any time. It does not have to be done at night time only. It is not necessary that you will see a green light or gray light as a result of Istikhara. Once you have done Istikhara then Allah will guide you to that decision which will be good for you.
Istikhara should be done by the person facing the decision or matter. It should not be done by another person.
And Allah knows best.
Mufti Ikram ul Haq
Fatwa Center of America