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 that 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 percentage% is paid to anyone holding this Australian Dollar.

This brings the Issue of paying and getting paid of 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 Trading Accounts.

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

Once a trader opens a this trading account, then Forex rollover interest is removed. Once this non paying & being paid of interests is set, if a trader is using a platform such as the MT4 then the rollover 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 don't want to pay this rollover you should close your trades before the end of the day, that way you'll not pay the rollover fee as you are no longer holding the currencies. Because the currency market doesn't open on Saturday & Sunday, the rollover for these 2 day will be charged on Wednesdays, meaning on Wednesday a trader will pay the rollover fee for Wednesday, Saturday & Sunday, and therefore on Wednesdays this rollover fee is paid Three Times.

These positions that pay a rollover interest are commonly known by traders as Overnight Positions. Day Traders rarely leave their trades opened overnight and close them all before the end of the day. Swing Traders on other hand may leave their trade transactions 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 trader will have the same conditions as those of other traders, except for the paying of rollover fees. 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 & all 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 some pips to the spread you trade with to cover the swap(Swap Fee Online Broker). This is not supposed to happen as a fx trader will still be paying for the interest even though is disguised as another charge, 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 rollover fee - swap fee, if the trade position opened by a forex trader is held for more than 5 or more than 7 days, this should not be the case & the broker should not charge any carry-over interest even if open trade positions are held for more than five or seven days. For traders wanting to open this swap free account with a Islamic broker it is good to check for any additional terms of trading for the Islamic Account that you're going to be opening to make sure that the broker you select is really a no swap online broker.

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

Islamic Trading Account

Swap free accounts were introduced by trading 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 rollover interest. This led to introduction of Interest Free Trading 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?