There are some brokers offering Islamic forex accounts. It means the accounts must not be charged with an interest rate or swap but do all of them have real Islamic accounts, are all the accounts really swap-free, and what brokers offer the best Islamic forex accounts?

Some forex brokers claim that they have Islamic accounts but they charge a fixed commission or fee instead of swap, which is variable.

Other brokers don’t charge an overnight fee in the first place, however, they have a time limit for free swap.

Although it may not seem a swap-free or Islamic account, this type attracts some traders and can be profitable for position traders who keep their positions open longer than 10, 20 days, or even one month because the fixed amount may become less than the sum of swaps.

For example, you have to pay $7 as swap each day that you keep your position open. It becomes $70 after 10 days.

On the other hand, if you choose an Islamic account, you have to pay something like 40 or 50 dollars so the swap free version is to the benefit of you in general.

That’s a version of Islamic forex account that some brokers offer, however, if you are a Muslim and don’t want to pay interest, whether it’s called swap or commission or any other types, you need to find the Islamic forex accounts that don’t charge any overnight fee.

---

For this purpose, I examined more than 100 brokers in order to find the best Islamic Forex accounts with real swap free.

I also went through the websites of the selected brokers and asked them one by one about some differences or any other limitation or extra fees that their Islamic accounts may have, compare to their other types of accounts.

I’ll explain about them on this post and you can see a concise form of them in the table at the bottom of this post but before that let’s take a look at some information about Islamic accounts of forex brokers.

What Is An Islamic Forex Account?

An Islamic forex account is a type of account that is free from swap or overnight interest rates.

According to sharia law, Muslims are banned from paying or receiving any interests or as it’s called in sharia, riba which is considered haram in Islamic law.

It’s a controversial issue because some Muslims consider excessive interest rates as riba while others see any interests, even nominal ones, as riba.

Leaving aside different interpretations, Islamic accounts offered by forex brokers are normally without any interest rates, however, some of them have some kinds of overnight fees. We’ll talk about that in detail in the next section.

What Are the Differences Between Swap and Swap Free Accounts?

In a nutshell, Swap is an interest rate that you either pay or receive if you keep a position more than one day.

As you can see, sometimes you pay swap (negative swap) and sometimes you receive it (positive swap).

For example, if you buy one lot of EURUSD and keep your position open until the next day, you receive 4,5, etc dollars (regarding the swap structure of your broker) as swap which means the swap is in your favor and you benefit from that.

On the other hand, if you sell one lot EURUSD and keep it open for more than one day, you have to pay an amount of money as a negative swap.

Swap is usually different from day to day and it’s variable. For more information about the types of swap and how it’s calculated, you can check out a post that I wrote about that here.

On the contrary, in swap-free accounts there is no fee, neither paid nor received, as swap; however, some brokers play with that and charge a fee with a different name such as commission or overnight fee, and etc.

Types of Swap Free or Islamic Forex Accounts

In my study, I came across three main types of swap free accounts:

Accounts with an Overnight Fee

Although this type of account isn’t charged with a fee as swap it has a fixed overnight fee. Sometimes it’s called commission and in some cases a fixed fee or any other names.

In some cases, the fee is not even fixed and is the same as swap. They just change the name from swap or interest rare to overnight fee.

I asked one of the brokers that has such a fee and they told me there’s no difference. Since interest rate is forbidden in Islamic law or more specifically in sharia law, they just change the name to commission!

In this case, if the swap is negative, they charge the commission and if it’s positive they pay you the commission — just getting around the law I assume.

Although it may seem odd and against sharia law, it’s still justifiable according to the method used in Islamic banking.

In Islamic banking, a profit or loss is allocated to the borrowed money involved in a business activity. In simple words, you can borrow money to do business and the lender is exposed to the profit and loss, however, it’s not like that in reality and you have to pay interest in most cases.

Aside from the name, method, or structure, a fee is involved in the positions kept open for more than one day.

Anyway, I didn’t put forex brokers with such Islamic accounts in my list and cross them all out.

Accounts with Time Limit on Free Swap

There is another version of Islamic forex accounts that is really swap free but this free swap is bound by a time period.

In this type, the swap is free for a few days and after that, a fee is charged.

For example, if you open a position and hold it for 5 days, you don’t pay any fees but you have to pay that if your position is still open on the sixth day.

The limitation is different from broker to broker; it can be 2 days, 5 days, 10 days, and etc.

In some brokers it’s different from pair to pair, for example, the swap is free on EURUSD for 2 days and it’s free on GBPJPY for 7 days.

It’s a good option for the swing traders (Muslim ones of course) that their positions last for a few days.

It can also be beneficial for position traders that keep their positions open for a longer period such as 10 days because in some cases you have to pay for example $9 every day as swap in a swap account while you only pay $50 after 10 days in an Islamic account.

Although most forex brokers provide Islamic accounts to their Muslim clients, some of them offer swap free accounts to all clients so non-Muslim traders can take advantage of this opportunity if they are position or swing traders.

Account with No Time Limit on Free Swap

This type is probably the best Islamic forex account because there’s no swap involved whatsoever.

You can keep your positions open for an unlimited time period and no swap is either paid or received.

The only problem that some Islamic accounts of this kind may have is some extra fees such as higher spreads. This is not a specific issue for this type of swap free accounts and may include other types of Islamic accounts as well.

Spreads don’t play a significant role in long term trading; however, not all traders who have swap free accounts are swing or position traders.

If your positions are open for 2 days on average, spreads are usually more important than swap.

In this case, you have to make sure you don’t pay higher spreads or commission for Islamic accounts.

I personally asked the forex brokers about this subject when I was gathering the list you see here, and all of them except Axitrader told me there’s no difference in terms of spreads and the condition is the same.

In Axitrader spreads are a little bit wider.

Probable Limitation on Swap Free Accounts

As we’ve seen so far, some swap free or Islamic accounts have time limit and a fee is allocated to them after a few days.

Another limitation that you may see in some brokers’ Islamic accounts is a limit on the type of accounts.

In general, forex brokers have different types of accounts including fixed spreads, floating spreads, and ecn or zero spreads.

Normally you choose one type of a broker’s account and then change the status to swap free or Islamic version.

In some brokers, you can pick any types of their accounts and turn it to an Islamic forex account but there are other brokers that offer swap free accounts for a specific type, for example, standard floating spread accounts and exclude other accounts like ECN ones — I’ve mentioned that in the table.

Some brokers’ Islamic accounts have also different conditions. They try to make up for free swap with charging a bit wider spreads.

As I said early on, all the brokers that I picked, except Axitrader, claim that they don’t charge any extra fees and the conditions are the same as their other types of accounts.

The next difference that forex Islamic accounts may have compared to non-Islamic ones is the number of instruments or trading products.

Since swap is high in some instruments such as Cryptocurrencies or exotic forex pairs, some forex brokers don’t offer them in their Islamic accounts, even though they have those instruments in their portfolios and you can trade them if you have non-Islamic accounts.

Can Non – Muslims Use Swap-Free Forex Accounts?

Yes, non-Muslims can use swap-free accounts in some forex brokers. Although swap-free accounts are for Muslim traders, there are a few forex brokers offering this type of account to non-muslim traders as well.

Some brokers don’t have any extra conditions for providing swap-free accounts to non-Muslim traders but some of them do.

For example, you don’t need to be a Muslim to use their swap-free accounts but you need to live in a Muslim country in order to be eligible for this kind of account.

Other brokers have a minimum deposit condition for non-Muslims so if you deposit less than that, you can’t use swap-free accounts.

You can see all the relevant information about that on the non-Muslim section of the table at the bottom of this article.

How to Choose the Best Islamic Forex Account

As we’ve seen so far, there are some specific factors that can distinguish a good Islamic forex account from a bad one.

Let’s summarize them one more time.

Free swap is the fundamental distinction between an Islamic account and a non-Islamic one so you should make sure there is no fee is paid or received whether it’s called commission or overnight fee or anything else.

If you are a day trader or scalper and your trades don’t roll to the next day, you don’t need a swap free or Islamic account — it’s already Islamic 🙂

Some brokers offer Islamic accounts with day limit so you’d better make sure that period is longer than the time period that your positions normally stay open.

If you are a position trader that keeps positions open for a very long time, go with the accounts that have no limit.

There is no limitation on regular forex pairs (major and minor), metals, and indices in Islamic forex accounts but if you have a particular selection of trading pairs that includes crypto or exotic pairs, pick from the ones that have no limitation on the trading instruments.

And last but not least, always choose from regulated brokers.

Best Swap Free Islamic Forex Accounts

Here’s a list of Forex brokers with the best conditions for Islamic accounts:

• HYCM
• IFCMarkets
• FP Markets
• Hotforex
• IC Markets
• JustForex
• NordFX
• FFS
• Forex.com
• AXI Trader

In the following table, you can find all the explained features.