Islamic Swap Free Account - What is Swap in Forex Trading?

In Forex, there is the payment of every day swaps: this is the interest rate of a currency which the currency earns per day. This interest for a currency 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 and getting paid an interest payment which's an Issue in the Islamic Religion. Islamic Religion does not allow paying and getting paid of interest, for Islamic traders there is a trading account designed in compliance with their Values: Referred to as Swap Free.

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

For a forex trader to get a swap free account, a forex trader has to navigate to a Islamic broker and select the option/choice of the "Islamic Trading Account", This option is provided under the Accounts Section of the currency broker specifying steps of opening and registering one of these trading accounts.

Once a trader opens a this trading account, then Forex rollover fee interest is removed. Once this non paying & being paid of interests is set, if one is using a platform software like the MT4 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 currency for which a swap is to be applied. As a trader if you do not want to pay this rollover you should close your trade positions before the end of the day, that way you'll not pay the roll over fee interest as you are no longer holding the currencies. Because the currency market doesn't open on Saturday and Sunday, the roll-over for these 2 day will be charged on Wednesdays, meaning on Wednesday a trader will pay the roll over fee for Wednesday, Saturday & Sunday, and thence on Wednesdays this roll-over fee interest is paid 3 Times.

These positions that pay a roll-over fee are commonly known by traders as Overnight Positions. Day Traders rarely leave their trade positions opened overnight and close all of them before the close of the day. Swing Traders on other hand may leave their trades opened for a few days and leave these trade transactions overnight so that to capture more movement in price trend.

Once a trader finds a swap free Forex broker & opens and Islamic Trading Account, the FX trader will have the same trading conditions as those of other traders, except for the payment of roll-over fee. This means a fx trader will use the Meta Trader 4 Software like all the other traders, the trader can trade all currencies, all stock indices, all CFDs, all metals and all the other Financial Instruments provided for by the Islamic broker.

However, be careful in choosing a swap free online 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 is not supposed to happen as a currency trader will still be paying and charged for the interest even though it is disguised as a different type of payment, good forex Brokers do not add any commission nor do they add any charge on to the spreads.

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

Islamic Investment Account - Swap Free Account - Islamic Account - Swap Free Accounts Without Interest

Islamic Trading Account

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

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Islamic Swap Free Account - What is Swap in Forex Trading?