What's Swap in XAUUSD?

In XAUUSD, there's the payment of swap every day: this is the interest rate of a xauusd that the instrument earns per day. This interest for a xauusd instrument like the Australian Dollar is 5 %, this means that every day a fraction of this five % is paid to anyone holding this Australian Dollar.

This brings the Issue of paying & getting paid of an interest payment which is an Issue in Islamic Religion. Islamic Religion doesn't allow paying and getting paid of interest, for Islamic xauusd traders there is a account designed in accordance with their Values: Known as Swap Free.

For this account a trader will not pay the overnight rollover interest on any gold and will also net get paid any interest, this also is known as Shariah Compliant where there is no paying of RIBA (interest) - also known as Islamic Trade Accounts.

For a gold trader to get a swap free account, a xauusd trader has to navigate to a xauusd Islamic gold broker and select option of "Islamic Trade Account", This option is provided under the Accounts Section of the broker specifying the guidelines of opening one of these trading accounts.

Once one opens a this trading account, then Trading rollover interest is removed. Once this no paying & being paid of interest is set, if a trader is using a platform like MetaTrader 4 then the roll-over fee record will be set to zero.

The rollover fee is charged daily at the end of the trading day for those holding a particular xauusd instrument for which a swap is to be applied. As a trader if you do not want to pay this roll-over you should close-out your trade before the end of the trading day, that way you'll not pay the roll-over fee as you're no longer holding open trade position. Because the market does not open on Saturday & Sunday, the roll-over interest for these 2 days will be paid on Wednesdays, meaning on Wednesday a trader will pay the roll-over fee for Wednesday, Saturday & Sunday, & therefore on Wednesdays this roll-over interest is paid 3 Times.

These positions that pay a swap interest are commonly referred to and known by traders as Overnight Positions. Day Traders rarely leave their trade transations opened overnight and close all of them before the close of the trading day. Swing Traders on the other hand may open and leave their trades opened for a few days & leave these trade positions overnight so as to capture more market movement in the price trend.

Once a trader finds a swap free broker & opens & Islamic Trade Account, the trader will have the same trading conditions as those of other traders, except for the paying of rollover interest. This means a gold trader will use the MetaTrader 4 Platform like all the other traders, the trader can trade all currencies, all stock indices, all CFDs, all metals & all the other Financial Instruments provided by the Islamic broker.

However, be careful in choosing a swap free broker, some brokers will add a commission or add a-few pips to the spread you trade with to cover the swap(Swap Fee Online Broker). This isn't supposed to happen as a gold trader will still be paying and charged for the interest even though it is disguised as another charge, good Brokers do not add any commission nor do they add any charge onto the spreads.

Another thing is that some brokers will charge roll-over fee (also known as swap fee) if the trade position held by a xauusd trader is held and opened for more than 5 days or more than 7 days, this should not be the case and the broker shouldn't charge any carry-over interest even if the open trades are held for more than 5 or 7 days. For traders wanting to open this swapfree account with a xauusd Islamic gold broker it's good to check for any additional terms & conditions of trading for the Islamic Account that you are going to be opening to make sure that the broker you choose is really a no swap broker.

Islamic XAUUSD Account

Swap free accounts were introduced by brokers after demand for carry-over interest free accounts grew among Islamic xauusd traders. The traditional account entailed paying of rollover interests in what is known as roll-over interest. This led to the introduction of Interest Free Accounts that Islamic traders could open & still keep in line with their rules on no paying & getting paid interest.

Get More Tutorials and Topics:

• Indicators That Are Used for Taking Profit
• What Time Do DJ30 Index Close?
• How Do You Add Standard Deviation Trading Indicator on Gold Chart for Gold Analysis?
• Bears Power Technical Indicator MT4
• NKY225 Index Trade Systems