Swap-free account in gold trading

A swap-free account, often called an Islamic account because it was designed for traders whose faith prohibits paying or receiving interest, does not apply overnight swap to open positions. Instead, many platforms charge a fixed daily administration fee after a grace period of a few days, widen the spread on swap-free symbols, or limit which instruments are available swap-free.

How it applies to gold trading

Gold is one of the instruments most affected by swap because both long and short rates are often negative and positions are frequently held for days. On a swap-free account a trader holding 0.50 lots through a two-week move pays no nightly swap, but may pay the administration fee from day four onwards. Whether that is cheaper depends on the fee, the holding period and the normal swap rate, so the comparison has to be done in dollars for the actual trade plan.

Swap-free accounts are also attractive to traders who want to hold gold through the triple-swap night or across weekends without the three-day charge.

Platforms may also reserve the right to convert a swap-free account back to a standard one if it is used mainly to hold positions through swap, so the terms are worth reading in full.

A common mistake

Assuming “swap-free” means “cost-free” for long holds. The administration fee or wider spread can exceed the swap it replaces, particularly for positions held for weeks.

See also: Swap and rollover, Triple swap, Position trading.

Frequently asked questions