Islamic / SWAP Free Forex Accounts
In forex trading, it is possible to both buy and sell the majority of all currency pairs, commodities and ETFs as CFDs around the clock. Since several major customers are Muslims, we work very closely with several forex brokers with Islamic accounts or SWAP free accounts as it is also called. In this guide, we explain the difference between regular accounts and how Muslims can trade currencies according to Sharia law thanks to special accounts, which are often managed from Dubai.
Table of Contents: Overview
Currency brokers offering Islamic accounts
eToro – Betyg: 9.78/10
eToro’s islamic account allows direct buying and selling of currencies, without any interest or delay and with direct payment.
68% of private investors lose money when they trade CFDs with eToro.
Skilling – Betyg: 9.56/10
Trade without interest at Skilling, with a swap-free account. Get started now, with the UK’s best online trading site.
63% of retail investor accounts lose money.
Plus 500 – Betyg: 9.56/10
Trade currencies on CFD completely interest free with an Islamic trading account.
72% of CFD-accounts for non-professional customers loose money.
AvaTrade – Betyg: 9.56/10
100% free trade, with no interest. AvaTrade’s Islamic accounts work for gold, oil, currencies and indices.
71% of retail investor accounts lose money when trading with Avatrade.
What is an Islamic Forex Trading Account?
Positions that are kept open during the night usually incur a special fee or swap interest. This potential fee, or profit that can also occur, creates problems for Muslim currency traders, as the Sharia Act prohibits financial transactions that entail interest on trading positions. In general, it can be said that the practice among forex brokers around the world is to charge the difference in official interest rates between two countries. If, for example, you go long in Turkish lira (TRY) against the US dollar (USD), then ordinary forex trading accounts would receive a substantial beneficial interest rate. When buying USD against TRY instead, where the US interest rate (3.75%) is significantly lower than the Turkish interest rate (20%), it will instead be a significant amount that is lost with non-Islamic currency accounts.
Serious currency brokers have of course solved this and offer both regular accounts, where you can both earn or lose interest overnight – as well as the simplified Islamic accounts. There is no extra fee or interest added overnight, at all. This makes it easier for everyone to follow and therefore many non-religious or people with other religions prefer Islamic accounts for currency trading. The only difference is that a slightly higher spread, difference in buy and sell price, is added when you make a deal. However, there are such differences that you as a currency trader do not notice or think about it at all.
Take the opportunity to open an Islamic account with one of the currency brokers below today – they are both serious players with a good reputation and who have very many of these types of accounts.
Advantages
+ Fair form of currency trading that complies with Islamic law.
+ Absolutely avoid interest overnight.
+ Easier to follow your trades that are not affected by interest costs at all!
Disadvantages
– Marginal higher spread on your transactions.
– Can not trade with some smaller currency pairs whose countries have very high interest rates, such as Turkey.
– Interest-free accounts are normally only issued to Muslims .
Islamic law
In Asian countries, i-arbitrage rules (i-rules) are applied, which came to be applied from June 9, 2018. It is a group of rules that are created to support the increased number of commercial transactions based on Islamic principles.
NOTE: It should be noted that Valutahandel.se is not a legal institution and that we always recommend talking to your Imam if you feel the need before you start shopping. Do not see our tips on Islamic accounts as an entitlement to currency trading is suitable for you. Note further that currencies with extremely high interest rates, such as the Turkish lira (24% in May, 2019), the Russian ruble (6.75% in May 2019) or the South African rand (6.75%, in May 2019) are often not possible to trade with. They would simply mean too much risk for many currency brokers and therefore they are not offered.
