Dreams have great significance in Islam as they find a mention in both the Holy Quran as well as the ahadith. Therefore, underestimating their value and preferring to ignore them is not the correct approach to deal with one’s dreams. Some people opine that dreams are inconsequential and useless. Such people do not tend to focus on their dreams. They rather prefer to ignore whatever they see in a dream. However, is this approach acceptable? Let us find out for ourselves.
Here is an authentic hadith which serves as a solid proof about the authenticity of dreams:

‘Towards the end of time, i.e. the period before the Doomsday, hardly any dream will be untrue. Prophet Mohammad (pbuh) said, ‘That will be because Prophethood and its effects will be so far away in time, so the believers will be given some compensation in the form of dreams which will give them some good news or will help them to be patient and steadfast in their faith’. (Al Bukhari- & Muslim).

This hadith makes it clear that not only are dreams important in Islam but they are also a source of glad tidings or good news from Allah (swt) who is The All Merciful. This hadith also shows us how much love and blessings Allah (swt) showers upon us because He has granted us dreams as a gift. He has compensated us with dreams because we were not fortunate enough to have Prophet Mohammad (pbuh) in our midst. How Considerate is our Creator to think about what we lack and He has offered a means of compensating us through dreams which may either give us good news or strengthen our faith in Allah (swt). Would it not be inconsiderate on our part if instead of paying attention to our dreams and learning how to interpret them we simply ignore them? 

Moreover, there is no point in classifying dreams into such categories like nightmares, prophetic dreams, wet dreams, lucid dreams etc. We have enough evidence from the ahadith about the actual categories of dreams. Hence, there is no point in complicating the topic of dream categories.
It is mentioned in a hadith that Allah’s Apostle (saw) said, ‘Dreams are of three types: a dream from Allah, a dream which causes distress and which comes from Shaitan and a dream which comes from what a person thinks about when he is awake and he sees it when he is asleep ‘. (Al-Bukhari & Muslim)
In another hadith Abu Qutaadah said, ‘The Messenger of Allah (pbuh) said: Good dreams come from Allah and the bad dreams come from Shaitan. Whoever sees something that he dislikes, let him thrice towards his left side and seek refuge with Allah from Shaitan’ for it will not harm him’. (Narrated by Al-Bukhari & Muslim). The spitting, which is referred to in this ahadith, means dry spitting sans any saliva.
Aby Sa’eed al-Khudri (ra) said that Allah’s Apostle (saw) said, ‘If anyone of you sees a dream that he likes, this is from Allah, so let him praise Allah for it and talk about it to others. If he sees other than that, a dream which he dislikes, this is from Shaitan, so let him seek refuge with Allah from its evil and not mention it to anyone, for it will not harm him’. (Sahih Bukhari & Muslim)

These two ahadith describe the types of dreams and the ways to deal with them. We also find that there are certain rules which we need to follow when we see a good or a scary dream. The following hadith further elaborates about these rules:
Abu Huraira (ra) reported that Prophet Mohammad (pbuh)said, ‘If anyone of you sees a dream which he does not like then he should stand up and pray and he should not relate it to anybody’. (Al-Bukhari).

In a hadith by Muslim another rule has been mentioned to avoid the ill-effects of the scary dreams. The hadith instructs us to change the side on which we were lying at the time we saw the scary scream.

So up to now we have discussed about the different types of dreams in the light of Islam and also about the right way to respond to those dreams so that we are not harmed by them. When it comes to the horrifying dreams (which are shown to us by our biggest enemy, i.e. Shaitan in order to scare us) we are not supposed to be discreet about such dreams. Instead of disclosing about such dreams we should seek refuge with Allah (swt) from the evil of such scary dreams. Talking about such rubbish Satanic dreams before others can create a negative impact on our minds and we may start believing in those fake dreams. I shall mention a hadith here to elaborate this point.

According to a authentic hadith, Jabir reported that Prophet Mohammad (pbuh) said, ‘There came to him a desert Arab who said, ‘I saw in a dream that I had been beheaded and I had been following it (the severed head). Prophet Mohammad (pbuh) reprimanded him by saying, ‘Do not inform about the vain sporting of the devil with you during the night’.