Swap-free Account – All You Need to Know About

Have you heard the term swap-free in the forex world a lot but don’t know its meaning? Or do you want to create a swap-free forex account and want to know more about it? If yes then there is no need to take tension at all. 

The forex market is undoubtedly the biggest financial market and a large number of people are earning hefty amounts through forex trading. When it comes to Muslim traders they are quite hesitant to jump into forex trading because of the riba or interest. 

A lot of investors are unaware that now they have the solution in the form of swap-free accounts. So, in this article, we will talk about the swap-free account in detail. Therefore, without any delay let’s get straight into it. 

What Is A Swap-Free Account?

Before understanding the swap-free account it is imperative to comprehend the swap completely. So, swap is defined as the interest or swap that you get for holding your positions open overnight. 

If the currency rate is higher that you are buying as compared to the one that you are vending. So, you will get interest or swap. Contrary, if the value of the currency you are selling is more as compared to the one you are buying. Then you have to pay interest. 

What Is The Purpose Of Swap-Free Accounts?

According to the laws of shariah, interest or swap is prohibited for the Muslims. But in forex trading you give or receive the swap so for Muslim traders it becomes challenging to start forex trading because it is not coherent with the Islamic principles. 

Therefore, in order to assist Muslim forex traders, the brokers have introduced the swap-free account. If you go for them you can do forex trading without involving the swap. 

Do Brokers Offer Swap-Free Accounts? 

You must be thinking that how to open a swap-free account. OR how many options do you have when it comes to swap-free forex trading. Luckily you have an extensive range of options and all of them are providing services different from each other. Hence you can avail the option that is the most suitable for you. 

The top-notch forex brokers that offer swap-free accounts include XM, AvaTrade, eToro, etc. All of them have a great reputation and are trusted by a large number of traders. After analyzing their features you can pick any one of them. 

Is It Good To Go For A Swap-Free Account?

Some traders think that if they go for the swap-free account they may get less offering. Moreover, they also have a false perception that will affect their forex trading and they will not be able to get profit. 

But that’s not true at all. Most of the time you get the same trading conditions, spreads, commission, and minimum deposit. So, stop thinking like that and go for the swap-free account without having any fear.

Can Non-Muslims Go For A Swap-Free Account?

Although the swap-free or Islamic accounts are particularly designed for the convenience of the Muslims. But if you are not a big fan of swap and go for the swap-free account then you are free to go for. So, they are not restricted for the Muslim forex traders rather any trader can opt for this if they want. 

What Is The Process Of Calculating The Swap?

In this section, we are going to describe the calculation of swap. Let me explain to you with the help of an example. Suppose you are purchasing EUR and selling GBP. Let’s assume that the EUR’s interest rate is 4.25% and GBP’s is 3.5%. Therefore, in this case, the differential interest rate is 0.75%. 

If you subtract the differential interest from the commission of the broker and then multiply it with the lot price. After that, you have to divide it by 365, which is the total number of days in the year. 

The answer you get will be the rollover amount. It will either be added or deducted from your account. Bear in mind that the amount varies greatly. Sometimes it may be minor, such as 10$. On the other hand, sometimes it can be as high as 100$. Moreover, its value can be positive or negative. 

What Is The Earning Mechanism Of The Swap-Free Accounts?

Islamic accounts make revenue by foreign exchange. In this way, there is no gambling involved in your trading. Gambling is also not allowed in Isam. So, if you go for the swap-free account you can also get the chance to keep away from it. 

Final Thoughts

Well, that’s all about the swap-free account. We are hopeful that this article will assist you in understanding the swap-free account in a better way. Swap-free accounts are created easily without any difficulty and you can do trading through them. 

So, do market research and check out all the brokers and go for the one that is most suitable for you. If you have any queries feel free to ask in the comments section.

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