Forex Brokers with Swap Free Accounts

Richard Montana | November 7, 2022

If you follow the Muslim faith and want to trade forex online, chances are that you will need a swap free forex broker so that your trading activity is compliant with Sharia law. This is because of forex brokers charging and paying interest on positions held overnight which is against Muslim beliefs. If you are a Muslim trader and plan on holding positions overnight, then this guide to swap free forex brokers can help.

What is a forex swap?

A swap in forex refers to the interest that you either earn or pay for a trade that you keep open overnight. There are two types of swaps: Swap long (used for keeping long positions open overnight) and Swap short (used for keeping short positions open overnight). The swap is also known as “rollover fee”.

The swap charge is heavily influenced by the underlying interest rate corresponding to each of the two currencies involved. The swap charge is applied should you hold the position at the daily rollover point, which is 00:00 server time.

This fee is usually a percentage of the total value of the trade, and is paid to the broker for their services. Triple swaps are charged on Wednesday, Thursday or Friday – depending on asset class and/or instrument – to account for the weekend.

How are swap fees calculated?

A swap is the interest rate differential between the two currencies of the pair you are trading. It is calculated according to whether your position is long or short. Factors that affect this amount include lot size, the current market price, and the extent of the differential between the two interest rates at that time. These differential forms are the basis of the carry trade. Swap rates are calculated in points and can be positive or negative depending on the interest rate of the two currencies.

How to calculate forex swap fees?

For forex trading, you calculate the swap rates based on the interest rate differential between the currencies being traded. Each currency pair has its own swap rate. Swap rates can be calculated using the following formula: Rollover rate = (Base currency interest rate – Quote currency interest rate) / (365 x Exchange Rate).

  • Swap = (Pip Value * Swap Rate * Number of Nights) / 10.
  • Pip value: $1.
  • Swap (long) rate: -3.3254.
  • Swap fee: (1* -3.3254 * 1) / 10 = -$0.33.

What is a swap free forex account?

A swap free forex account option is for traders who do not wish to pay or receive overnight swap or interest on their trades. This is a type of account designed primarily for traders of Islamic faith that has fixed fee instead of charging a swap. The fee is not an interest and depends on the direction of the order.

You will find that overall trading costs are more or less the same whether you trade with or without a swap, because of additional fees that brokers will charge to compensate for not charging you a swap fee.

However, if you are trading a scalping strategy around the rollover time, you can get additional benefits by not paying a swap fee that could impact the results of your strategy when you are targeting just a few pips. Just keep in mind, you may need to provide evidence to your broker that you are a practising Muslim in order to get access to a swap free forex account.

Why do I need a swap free forex broker?

Intraday traders probably will not need to worry about swap charges, as they will be closing their trade positions before the daily rollover point (00:00 server time). However, for anyone else who is planning on holding a position overnight or longer, you may need to consider a swap free broker.

Advantages of a swap free forex account

  • Allows Muslim traders to comply with Sharia law
  • You do not need to pay any rollover fees
  • Can benefit scalping strategies that target a few pips
  • Most forex brokers provide an Islamic swap free account

Disadvantages of a swap free forex account

  • Only available for Muslim traders
  • Need to pay additional fees instead
  • Not all forex brokers provide them

Who are the best swap free forex brokers?

There are hundreds of forex brokers for Muslim traders to choose from. Whilst none of them will charge a swap, they will differ in many other aspects which you need to consider before opening a swap free account. Things to look out for when choosing a swap free broker include the minimum deposit, leverage, financial instruments, spreads, fees and deposit/withdrawal options. You can see a selection of our best swap free forex brokers in the table below.

Broker
Rating
Regulated
Min. Deposit
Founded
Max. Leverage
1.
AvaTrade Review

ADGM FRSA, ASIC, BVIFSC, CBI, FFAJ, FSCA, IIROC, JFSA

$100

2006

1:400

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
2.
Pepperstone Review

ASIC, BaFin, CMA, CySEC, DFSA, FCA, SCB

$200

2010

1:400

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
3.
IC Markets Review

ASIC, CySEC, FSA, SCB

$200

2007

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
4.
XM Group Review

ASIC, CySEC, DFSA, IFSC

$5

2009

1:888

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
5.
Oanda Review

CFTC, NFA

$0

1996

1:200

Leveraged trading in foreign currency contracts or other off-exchange products on margin carries a high level of risk and may not be suitable for everyone.
6.
eToro Review

ASIC, CySEC, FCA

$200

2006

1:30

68% of retail investor accounts lose money when trading CFDs with this provider.
7.
Plus500 Review

ASIC, CySEC, FCA, FSA, FSCA, FMA, ISA, MAS

$100

2008

1:30

79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
8.
FP Markets Review

ASIC, CySEC, SVGFSA

$100

2005

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
9.
BlackBull Markets Review

FMA, FSPR

$200

2014

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
10.
RoboForex Review

IFSC

$10

2009

1:1000

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.

Conclusion: do I need a swap-free forex account?

Yes, if you are a Muslim trader you will need a swap-free account. A swap-free trading account does not generate interest, making it ideal for Islamic traders who cannot pay swap fees due to their religious beliefs. These are the only types of interest-free trading accounts and they have become quite popular among Muslim traders who are looking for a Halal trading and investing options.

About the Author

Avatar photo

Richard Montana
Richard has many years of experience in broker research, testing, analysis and reviews. He knows what to look for through years of trading himself with different brokers and listening to the feedback of others.

Review Methodology

For all of our broker reviews, we research, validate, analyse and compare what we deem to be the most important factors to consider when choosing a broker. This includes pros, cons and an overall rating based on our findings. We aim to help you find the best broker according to your own needs. You can read more about our review process.


Relevant Articles