What's Swap in Gold Trading?

In XAUUSD, there is payment of swap fees each day: this is the interest rate of a gold that gold earns per day. This interest for gold like the Australian Dollar is 5%, this means that each day a fraction of this five % is paid to anyone holding this Australian Dollar.

This brings the Issue of paying & getting paid of an interest payment which's an Issue in the Islamic Religion. Islamic Religion doesn't allow paying & getting paid of interest, for Islamic traders there is a trading account designed in compliance with their Values: Referred to as Swap Free.

For this account a trader will not pay the overnight rollover interest on any trade & also will net get paid any interest, this also is referred to as Shariah Compliant where there is no paying of RIBA (interest) - also known as Islamic Trading Accounts.

For a gold trader to get a swap free trading account, a gold trader has to go to a Islamic trading broker & select the choice/option of the "Islamic Trading Account", This option is provided under the Trade Accounts Section of the broker specifying the steps of registering one of these trading accounts.

Once one opens a this trading account, then Gold rollover interest is removed. Once this no paying & being paid of interest is set, if one is using a software such as the MetaTrader 4 then the roll over interest record will be reset to zero.

Rollover fee is charged daily at the end of the trading day for those holding gold for which a swap is to be applied. As a trader if you do not want to pay this roll over you should close your transactions before the end of the day, that way you'll not pay the roll over interest as you're no longer holding open trade position. Because the market does not open on Saturday and Sunday, the swap fee for these two days will be deducted on Wednesdays, meaning on Wednesday one will pay the roll-over for Wednesday, Saturday & Sunday, and thenceforth on Wednesdays this roll-over fee is paid 3 Times.

The positions that pay a roll-over interest are commonly referred to and known by traders as Overnight Trades. Day Traders rarely leave their trade transations opened overnight and close all of them before the close of the day. Swing Traders on the other hand may leave their trade transations opened for a couple of days & leave these trade transactions overnight so as to capture more movement in the market trend.

Once a trader finds a swap free gold trading broker & opens and Islamic Trading Account, the Gold trader will have the same conditions as those of the other traders, except for the payment of swap fee. This means a gold trader will use the Meta Trader 4 Software like all the other traders, the gold trader can trade currencies, all stock indices, all CFDs, all metals & all the other Trading Instruments provided for by the trading Islamic broker.

However, be careful in selecting a swap free broker, some brokers will add a commission or add some pips to the spread you trade with to cover the swap(Swap Fee Online Broker). This is not supposed to happen as the Gold trader will still be charged for the interest even though it's disguised as another type of payment, good gold trading Brokers do not add any commission nor do they add any charge onto the spread.

Another thing is that some brokers will charge a roll-over interest a.k.a swap fee, if the position opened by a gold trader is held and opened for more than 5 to 7 days, this should not be the case and the online broker shouldn't charge any carry-over interest even if the open positions are held open for more than 5 or 7 days. For traders wanting to open this swapfree account with a Islamic broker it is good to check for any additional terms of trading for the Islamic Account that you're going to be opening to ensure that the online broker you choose is really a no swap online broker.

Islamic Gold Account - Swap Free Gold Accounts Without Interest - Gold Islamic Broker Trade Account

Islamic Gold Account

Swap free accounts were introduced by online brokers after demand for carry-over interest free accounts grew among the Islamic traders. The traditional account entailed paying of rollover interests in what is referred to as rollover interest. This led to introduction of Interest Free Trade Accounts that Islamic traders could open and still keep in line with their rules on no paying & getting paid interest.

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What's Swap in Gold Trading?