An Islamic account or swap-free account is a special type of trading account that is offered by some forex brokers. These accounts were created to adhere to religious Islamic beliefs that prohibit the accrual of interest, meaning that Islamic traders cannot pay or receive interest rates. These accounts must respect these Islamic principles:
- Payment or receipt of interest rates is prohibited
- Exchanges must be executed immediately
- Gambling is not allowed
Although Islamic accounts have many similarities to regular trading accounts, they do differ in some ways. For example, Islamic accounts cannot be charged swap fees for holding positions overnight, but some brokers might apply administration charges if a position is left open after a specified amount of time. Each broker has its own terms and conditions for its Islamic accounts and might offer different spreads, fees, or make other changes. Always be sure to read the terms and conditions for any account before making the decision to open one. You also might want to compare a broker’s Islamic account versus their regular trading accounts to make sure that there isn’t a big difference with spreads or other conditions.
Finding a broker that offers Islamic or swap-free accounts is possible, but you should know that these accounts aren’t available with every forex broker, mainly because some brokers feel that they don’t make enough money through these accounts. If you’re trying to find out if a specific broker does offer them, start by checking out their ‘Account Types’ page and check out other areas of their website for information. If you can’t find any mention of an Islamic/swap-free account, try reaching out to ask support if this is offered before you move on to another option. Some brokers might require you to sign up for these accounts by speaking with an agent first and it’s common for proof of religion to be requested before an Islamic account can be opened.
While Islamic/swap-free accounts can be beneficial to those that often leave positions open overnight, they are only meant for traders of the Islamic faith and you will have a hard time opening one without proof that this is your religion. If you are Muslim, then the good news is that you do have options to trade without breaking any religious guidelines related to interest charges, gambling, and so on. These account types have many similarities to traditional trading accounts, although the ways that fees are paid can differ so that the accounts are compliant with Muslim beliefs.