Swap Free Trading Account

Introduction

Being the world’s largest financial market, the Forex trading market is one of the most lucrative endeavours. With a daily volume of more than 6 Trillion dollars, the foreign exchange market holds great potential for financial stability. Everyone, including Muslims, can make money through forex trading to improve their financial condition and lead a comfortable life. However, certain restrictions make forex trading Haram for Muslims, which we will discuss further in the article.

What Makes Forex Trading Haram?

When you sign up with a broker, you may need to pay certain fees like commissions, rollover fees, swaps, and other forms of interest. Swaps are rollover fees that a broker demands from its clients for opening a position overnight. According to Islamic finance or Shariah Law, Muslims are strictly prohibited from taking or giving any interest. This means that a transaction or agreement, including riba/interest, is forbidden for Muslims. As swaps are a form of interest, trading in such a condition will be considered Haram. (Haram is an Arabic term that means prohibited).

So does that mean Forex trading is Haram? No, Forex trading is not completely haram. Islam allows all forms of trading as long as they are fair, free of interest, and devoid of gambling. If a trader follows Islamic finance, forex trading can be a Halal source of revenue. By trading in a swap-free Islamic account, you can trade forex in a halal way.

What Are Swap-free Accounts? Should You Use A Swap Free Trading Account?

Swap-free accounts are designed so that no interest is involved in any trading activity. These accounts are called “Islamic” or “No-Riba” Forex accounts. The brokers take great care to avoid usury; hence, there is no need to pay any swaps or interest on these forex accounts. If you are a Muslim trader and strictly adhere to Sharia law, you must trade in a swap-free account. There will be swaps or other interests in a regular account, irrespective of your religious sentiments. If you don’t trade in a swap-free account, the revenue you earn will be haram. This is why brokers started offering Swap-free Islamic trading accounts to Muslim traders who carefully observe Shariah law and follow them.

Therefore, if you want to trade forex without worrying about the money being haram, it is ideal to open a swap-free trading account with your broker, which does not involve rollover fees or interests. However, if you’re a Scalper, there’s no need to open an Islamic trading account, as there are no overnight positions.

Conclusion

As discussed in the article, Forex trading is a great way to make money, even for Muslim traders. As long as they abide by Islamic financial laws, everyone in Islam can engage in activities that help them better their financial condition. With the advent of Swap-free accounts, Muslims can easily trade forex and make halal money. However, before opening an Islamic account with a broker, you must carefully evaluate the terms and conditions. Always go with a broker that is licensed & regulated for the additional safety of your funds. Also, see if the broker abides by Shariah law, is cost-effective, provides quality trading tools and platforms, and has a solid reputation in the industry.