What is the concept swap in forex?
When trading forex, you buy or sell a foreign currency pair and get a profit or a loss. In trading in general there are two types of traders, the intraday traders who trade and close the trades within a short period, or the long-term traders who hold the position for days or even weeks.
The importance of swaps and their fees is very apparent to long-term traders because a swap fee is applied by the broker if the trader keeps the position open until the next day. As for intraday traders, their trades will be closed normally during a specific period of the day.
A swap appears in the form of a legal contract between two parties aimed at exchanging two currencies at a later time, but the exchange rate must be determined in advance. The action of Swap is very visible in online forex trading, as it is the rollover interest that you may win or lose (pay) to the broker in exchange for holding your position overnight. That is, if you open and close the position on the same day, the rollover interest will not be applied.
What is a swap-free halal trading account?
The interest-free trading account is used in forex, and the account holder is not allowed to receive or pay any kind of interest. By doing this, trades that are held overnight are not tied to overnight taxes or interest. If you are new to forex and want to trade interest-free Islamic accounts, we are here to help.
The term swap is used to modify the interest that occurred while holding a CFD (Contract for Difference) or Forex (FX) overnight. Let’s try to understand this with an example – if you hold a stock position overnight or buy a currency exchange deal, you will need to pay a holding fee. It is based on the released nightly rate for the whole month.
In an Islamic swap-free account, the broker does not deduct any money from the trader in return for holding an overnight position on any stock or currency. For this reason, your trading results will depend solely on the exchange rates in a specific time frame. Monetary or interest rate adjustments are made in the country in which the product is traded.
Many non-Islamic brokers also add their management fee along with the interest fee. This is included in Riba (Riba is unjustified profit or interest in borrowing or lending as a condition imposed by the lender on the borrower, and Riba is Haram by Sharia in Islam), and trading in this way is not permitted at all in Islam.
At Halal Trading Brokers, we are committed to providing you with the best trading conditions that will not allow you to trade Haram. We will guide you to the best halal brokers that offer interest-free Islamic trading accounts.
If you are considering trading with an interest-free halal account, we are here to help. We have done extensive research on Islamic rules to help you trade.
Is the interest-free account Halal or Haram?
In the interest-free account, the traders do not need to pay a commission for using these trading accounts. In this case, the broker will not charge a fee or deduct funds from your Islamic account for overnight swaps on the currency pair or stocks. According to the rules of Islamic law, trading on this type of account, free of interest and swap fees, is permitted in Islam.
Trading accounts that are free of interest or swap fees are created specifically for Muslims who are not allowed to trade by paying commissions to brokers. As it is known, the collection of payments in exchange for interest is an act that is Haram under Islamic Sharia laws.
With interest-free trading, you can trade in a range of weekly contracts that expire every Friday. The interest-free account is Halal according to Islamic law because you do not trade on a commission basis or pay any overnight fees. You will only trade a financial asset at a fixed price.
You will get to know us the best halal brokers in the world who will help you open an Islamic account so that you can trade without interest.
Islamic Forex Account
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