Islamic Swap Free Account

In trading online Gold contracts there is the payment of swaps every day. Swap is a rollover fee charged by the broker so as to keep an open position overnight. Traders who keep their trade open until the next day have to pay this rollover fee or what is known as swap fee. This payment is a form of interest that is paid by a trader or paid to a trader for opening the Gold position.

Because XAUUSD is traded against USD, and USD has an interest rate of 0.75% it means that a trader trading XAU against USD will have to pay will be paid interest according to the trade they have opened.

Buy Trade - Buying Gold means a trader will buy Gold and sell USD, Selling USD means one will have to pay interest of 0.75%. But this 0.75 interest is per year, therefore every day the trader will have to pay a small fraction of this 0.75% interest.

Sell Trade - Selling XAUUSD means a trader will sell Gold and buy USD, buying USD means one will have to be paid pay interest of 0.75%. But this 0.75 interest is per year, therefore every day the trader will get paid a small fraction of this 0.75% interest.

Whereas, this amount of interest being paid by the trader or getting paid by the trader is not much, there is the issue paying & getting paid interest which is an issue in Islamic Religion.

This issue of paying and getting paid interest which is an Issue in Islamic Religion brings us to the Swap Free Islamic Accounts. Islamic Religion does not allow paying and getting paid interest, for Islamic Gold metal traders there is an account designed in accordance with their Values: Known as Swap Free Account.

For this swap free account a trader will not pay the overnight rollover interest on XAUUSD & will also net get paid any interest, this is also known Shariah Compliant where there is no paying of RIBA (interest) - also referred to as Islamic Accounts.

For a trader to get a swap free account, a trader has to go to a broker and choose option of 'Islamic Account", this option is provided under the Trading Accounts Section of the online Gold trading broker specifying the instructions of opening one of these swap free accounts.

Once a trader opens this Islamic XAUUSD Trading Account, then the Gold rollover interest is removed. Once this no paying of interests set, if a trader is using the XAUUSD trading platform - the MT4 then the rollover fee record will be set to zero.

Islamic Forex Account

The rollover fee is charged daily at the end of the trading day for those holding an open Gold trade for which a swap fee is to be applied. As a trader if you do not want to pay this rollover swap fee you should close your transactions before the end of the day, that way you will not pay the rollover fee as you're no longer holding the open gold trade positions. Because the online financial market does not open on Saturday and Sunday, the rollover fee for these 2 day will be charged on Wednesdays, meaning on Wednesday a trader will pay the roll-over for Wednesday, Saturday & Sunday, and therefore on Wednesdays this rollover fee is paid 3 Times.

These open trade positions that pay a rollover interest fee are commonly referred to by traders as Overnight Positions. Day Traders rarely leave their trades opened overnight & close them all before the end of the day. Swing Traders on the other hand might leave their trades opened for a few days & leave these trades overnight so as to capture more movement in the price trend.

Once a trader finds a swap free online XAUUSD trading broker & opens and Islamic Gold Trading Account, the trader will have the same trading conditions as those of other traders, except for the paying of rollover fees. This means a trader will use the MT4 Platform Software like all the other traders, the trader can trade Gold as well as all currencies, all stock indices, all CFDs, all metals & all other Financial Instruments provided by the broker alongside XAUUSD.

However, be careful in selecting a swap free broker, some brokers will add a commission or add some pips to the spread you trade with to cover the swap(This are Swap Fee Brokers). This is not supposed to happen as the trader will still be paying for the interest even though is disguised as another charge, good online brokers don't add any commission nor do they add any charge on to the spreads.

Another thing is that some brokers will charge a rollover fee if the open position held by a trader is held for more than 5 days or more than 7 days, this should not be the case and the broker should not charge any carry over interest even if the open positions are held for more than five or seven days. For traders wanting to open this swap free Account it is good to check for any additional terms of trading for the Islamic Account that you're going to be opening to make sure that the broker you select is really a - no swap broker.

Swap free accounts were introduced by brokers after demand for carry over interest free accounts grew among the Islamic Gold traders and currency traders who trade online. The traditional trading account entailed paying of rollover interests in what is referred to as rollover interest. This led to the introduction of Interest Free Accounts that Islamic traders could open and still keep in line with their rules on no paying & getting paid interest while trading Financial Instruments such as XAUUSD & other currencies.