Swap-free account
Also called Islamic account, Swap free account, No-swap account, Sharia-compliant account, Interest-free account
A swap-free account is a trading account where the broker neither charges nor pays overnight swap interest on positions held past the daily rollover. It is often called an Islamic account, and the broker usually replaces swap with another fee.
Swap-free does not mean free to hold. The broker still has a cost to carry your position overnight, so it usually recovers it another way. If you only check that the swap line shows zero, you can end up paying more than on a standard account.
What a swap-free account removes, and what replaces it
Swap is the overnight interest a broker charges or credits when you keep a position open past its daily cut-off, called the rollover. It comes from the interest-rate gap between the two currencies in the pair.
A swap-free account switches that interest off in both directions. You are not charged negative swap, and you do not receive positive swap either.
Brokers usually replace the lost swap in one of these ways:
- An admin or holding fee: a fixed amount per lot per night, often starting only after a number of free nights.
- A wider spread or higher commission on every trade.
- A limit on holding time or on which symbols are swap-free.
What a 10-night trade costs on each account type
The figures here are an illustrative example, not any broker's real rates. You buy 1 standard lot (100,000 units) of EUR/USD and hold it for 10 nights.
On the standard account, the swap for this position is −$7 per lot per night. On the swap-free account there is no swap, but the broker charges a $10 admin fee per lot per night after 5 free nights. Its spread is also 0.5 pip wider, and 1 pip on a standard lot is worth $10.
Over 10 nights the swap-free account is $15 cheaper. Change the holding time and the answer changes, as the chart below shows.
Break-even nights = (free nights × admin fee − extra spread cost) ÷ (admin fee − swap per night). In the example: (5 × $10 − $5) ÷ ($10 − $7) = $45 ÷ $3 = 15 nights, where both accounts cost $105. Past that point the admin fee, which is larger than the swap it replaced, makes the swap-free account the more expensive one.
Two more cases matter:
- You close the same day. No swap applies on either account, so the swap-free account only adds the wider spread: $5 extra per trade in this example.
- Your direction earns positive swap. On a standard account you would be credited each night. On a swap-free account you give that income up.
Where the swap-free status shows on your account
You choose swap-free when you open the account, or you request it later in the broker's client area. It is a property of the account, not a setting on a single order.
To confirm it is active, open the symbol details on your trading platform and check the overnight swap rates for buys and sells. Both should read zero. Then hold a small position past rollover and check the swap figure on the open position. It should stay at zero.
The replacement fee often sits somewhere else. Look in your account history for a commission, a fee line or a separate balance deduction dated at rollover.
Checks before you trade on a swap-free account
- Run the formula. Standard cost = nights × swap per lot per night × lots. Swap-free cost = (nights after the free period, or 0 if you close inside it) × admin fee per lot × lots + extra spread in pips × pip value × lots. Compare the two for your usual holding time.
- Apply the decision rule. Use the 15-night break-even above. If you close before rollover, standard is cheaper (you only pay the wider spread on swap-free). If you hold more than 0 and fewer than 15 nights, swap-free is cheaper. If you hold more than 15 nights, standard is cheaper. If your direction earns positive swap, standard wins at any holding time. Lot size cancels out, so the break-even is the same at 0.1 lot as at 1 lot. The rule only works when the admin fee is higher than the swap it replaces.
- Check the symbol list. Swap-free may cover major pairs only, with gold, indices or exotic pairs excluded or charged differently.
- Ask about the mid-week charge. On one weekday the rollover charges three nights at once to cover Saturday and Sunday, so holding one night on that day can cost you three nights of fee. Ask whether the admin fee works the same way. If it does, a short hold over that day uses up three free nights at once and can push you past the free period sooner than you expect.
- Read the abuse clause. Brokers can remove swap-free status, or bill back fees, if they judge you are using it only to dodge swap on long holds.
FAQ
Do I have to be Muslim to open a swap-free account?
It depends on the broker. Some ask for a declaration or proof of faith, and some grant it automatically to clients in certain countries. Some brokers now offer swap-free accounts to any client, as a regular account option.
Can I open a swap-free trading account in the UAE?
Many brokers that accept UAE residents offer one. Terms depend on which regulated entity of the broker holds your account, so read that entity's fee schedule rather than the global marketing page.
Can I switch my existing account to swap-free?
Usually you can ask for it through the client area or support. Some brokers convert the account you already have. Others open a new swap-free account next to it. Ask whether the change covers positions that are already open, or only trades you open after it is approved.
Why does the broker charge a fee if swap is not allowed?
The broker still has a cost when it carries your position overnight. The admin fee is a fixed amount per lot. It does not move with either currency's interest rate, so the broker presents it as a service charge, not as interest. If your reason for going swap-free is religious, check that the fee meets your own standard, and ask a scholar you trust if you are unsure.