Islamic forex account (swap-free): how it works

This lesson explains how swap-free accounts work in practice. It is not a religious ruling. Whether a particular product or way of trading is permissible is a question for qualified scholars you trust.

What is swap?

When you hold a leveraged forex or CFD position past the daily rollover (usually around midnight server time), the broker charges or pays an overnight financing amount called swap or rollover. It reflects the interest-rate difference between the two currencies, plus the broker's markup. On Wednesday night many brokers charge three days' swap to cover the weekend.

What a swap-free account changes

On a swap-free (often called “Islamic”) account, no interest-based swap is charged or paid on overnight positions. Brokers usually recover their costs in other ways, which can include:

• A fixed administration or holding fee per lot per night, often after a number of free days.
• Wider spreads or a commission on the account.
• Limits on how long positions can stay open, or on which instruments are swap-free.

What to check before you apply

• Eligibility: some brokers require a request and proof, or offer it only in certain regions.
• The full fee table for the instruments you trade, especially gold, indices and exotic pairs.
• Whether the conditions can change, and what happens to positions held beyond any limit.
• That the account is with the same regulated entity as a standard account.

The broker comparison shows which brokers say they offer swap-free accounts; always read the broker's current terms.