Swap-free (Islamic) accounts explained

A standard forex account charges or pays swap when you hold a position past the daily rollover. A swap-free account removes that interest element. Brokers usually market these accounts to Muslim traders, because Islamic finance prohibits interest, but many brokers offer them more widely.

How a swap-free account differs

• No overnight swap is charged or credited on positions held past the rollover.
• Trading conditions such as spreads, commissions and leverage may be the same as a standard account, or different.

How the rest of this guide applies depends on the broker's specific terms.

How brokers cover the cost

Holding positions overnight still costs the broker money, so swap-free accounts usually come with something in return:

• A fixed administration fee per lot, per night, often starting after a grace period of a few days
• Wider spreads or a higher commission
• Limits on holding periods, after which positions may be charged or closed
• Exclusions for certain instruments, such as exotic pairs, indices or crypto

Some of these fees are described as not being interest, but they can cost as much as, or more than, the swap on a standard account.

Who can open one

Brokers set their own eligibility rules. Some offer swap-free accounts on request to anyone, some only in certain countries, and some require a declaration. Brokers may convert the account back to standard if they believe it is being used to exploit the absence of swaps, for example by holding carry trades for weeks.

Questions to ask before switching

1. Is there an administration fee, from which night, and how much per lot?
2. Which instruments are excluded?
3. Is there a maximum number of days a position can stay open?
4. Are spreads and commissions the same as on the standard account?
5. Can the broker change the terms or convert the account?

Is it cheaper?

Only the numbers can say. If you rarely hold trades overnight, the difference is small either way. If you hold positions for weeks, compare the swap you would pay on a standard account with the fees on the swap-free version, using the method in the real cost of a forex trade.

Whether a particular account meets religious requirements is a question for a qualified scholar, not a broker's marketing page.