As a forex trader, there should be many options and account types open to you with the very best forex brokers. A key one of these account types is the Islamic account.
As a broker trading with an Islamic account, you will be doing so in compliance with Shariah Law. This means that all of your trading will be swap-free.
We have taken time to conduct the most in-depth broker reviews possible and have compiled this list of what we feel are the best swap free brokers for you to choose from.
Top 10 Best Swap Free Islamic Forex Brokers for Halal trading
Below the 10 best names in the industry if you are of Islamic faith, and you want to trade forex with an Halal compliant broker.
XM as a forex broker is one of the most easily recognizable and top brokers in the world. The broker has managed to collect a variety of awards including that of the “best broker in Australasia”. They have collected similar awards for the Europe and MENA regions.
When it comes to accounts and XM swap-free accounts in particular, you will be presented with a variety of choices. These include a total of 6 Islamic accounts that are available. Everything from the XM Zero Spread Account, to their micro trading account, and stock trading account is available as Islamic accounts.
The XM minimum deposit on these account types starts from a great value $5 and ranges up to $100 with the XM Shares account being available only with a minimum of $10,000 deposit.
When we consider spreads on these accounts, we found that they start from 0 pips and that both MT4 and MT5 trading platforms were available. Trading conditions remain the same for XM Islamic accounts in that there are no additional markups, commissions, or increased spreads.
Avatrade is another top broker that caters very well for Islamic traders. They do so through the provision of 4 swap-free account types. These account types require a minimum AvaTrade deposit of $100 to get started.
The trading accounts available include retail, standard, options, and a spread betting account. With the spread betting account though, this can be considered as a form of gambling within Islamic laws. With that knowledge then, while we recommend the brokers other Islamic account types, we would not recommend spread betting.
The AvaTrade spreads start from 0 pips and all of the trading platforms including MT4, MT5, Avatrade Go, and the AvaOptions platform are available. In terms of fees, while these are limited and there is no admin fee, spreads with these account types will be slightly higher.
AvaTrade is well-regulated by the highly respected CySEC and ASIC so you can have complete trust in their operations. A number of base currencies are also made available.
FBS is a top forex broker that has a great reputation, particularly for new traders. They provide a total of 5 swap-free accounts and so, are well-equipped in this regard. Included in these account types are both a micro trading Cent Account, and an ECN account that is only available outside Europe.
The FBS minimum deposit for traders within Europe is a great value $10. If you are outside Europe, this reduces to just $1. It is also often considered to be the best broker for Indonesian traders. This is due to the fact they can directly deposit in IDR currency and activate a fixed conversion rate of 10,000 IDR to 1 USD.
The FBS spread starts from 0 pips with top trading platforms MT4 and MT5 both available. Trading conditions also remain broadly the same for Islamic accounts with FBS. This means no additional mark-ups or higher spreads. There is however an administration fee if you keep a position open for more than 2 days.
FBS is well regulated by both CySEC and the IFSC outside Europe and both EUR and USD are available as base currencies.
eToro is the broker many consider best when it comes to social trading. They also offer options for Islamic traders in the form of their standard account which can be converted into a swap-free account.
When it comes to an eToro minimum deposit, this is typically set at $200 although if you are operating an Islamic account, your minimum deposit will be $1,000. Spreads also start from as low as 1 pip although they may be higher on most occasions.
eToro is a worldwide name and top broker for many reasons, one of which is their very accessible and easy to operate proprietary trading platform. This can be really beneficial if you are just starting out in the social trading industry.
The Islamic account trading conditions you will find, typically match all of those that apply to non-Islamic accounts when it comes to mark-ups, commissions, fees, and spreads.
OctaFX is the next top broker featured who is also renowned as having one of the best swap-free trading environments in the industry. So much so in fact that they have collected awards for being the “best forex Islamic account” from an industry website in 2015.
There are 3 swap-free accounts to choose from. These include the micro trading account through MT4 trading platform, the ECN account available through the cTrader platform, and the Pro account through the MT5 platform. Options for you no matter which trading platform you prefer.
Spreads at OctaFX start from 0 pips on all platforms and the minimum deposit stands at $100 or $500 for a Pro account. You will be glad to know that fees, spreads, and trading conditions also remain the same for Islamic accounts.
Pepperstone is yet another award-winning broker to make our listing. They have recently won the Best ECN Broker award at the global Forex awards of 2019. They also offer a strong selection for you as an Islamic trader.
There are 2 swap-free accounts available that would be suitable for Islamic traders. These are the standard and ECN Razor account types that can be opened with a Pepperstone minimum deposit of $200.
Spreads on these forex trading accounts start from 0 pips with the best in trading platforms available like MT4, MT5, and cTrader. You will also be glad to know that the trading conditions with Pepperstone all remain the same for Islamic trading as they do for forex trading. There are no additional mark-ups, spreads, or commissions. The broker does, however, apply an admin fee for positions left open for more than 10 days.
Pepperstone is well-regulated by both ASIC and the FCA in the UK with EUR, USD, GBP and more currencies available as your base currency.
7. IC Markets
IC Markets offers 2 swap-free account options if you need to engage in Islamic trading. These accounts should provide for everything you need as an Islamic forex trader. Both the standard and raw spread accounts are available as Islamic accounts.
IC Markets spreads start from as low as 0 pips and trading is available on all major platforms such as MT4, MT5, and cTrader. Aside from the fees that exist from IC Markets if you hold your position open for longer than one day, the other aspects of trading conditions are the same throughout for Islamic accounts.
The broker is transparently regulated by two of the foremost authorities in the industry through both CySEC and ASIC regulatory bodies. The broker also makes several base currencies available such as EUR, USD, GBP, SGD, and more.
FXTM is yet another of the nest brokers for Islamic traders. They are a multi-award winning broker having been voted the best broker for Nigerian traders in both 2017 and 2018. They provide a total of 6 accounts which includes 3 types of ECN account, a mini trading opportunity through the cent account, and a shares account available for Islamic trading.
The broker minimum deposit starts from just $10 with spreads from 0 pips and access to the well-known MT4 trading platform throughout.
You will be pleased to know that as an Islamic trader, the trading conditions remain the same as that of a regular forex trader. This means no mark-ups, no increases in the spread, and no higher commissions. There is just one admin fee that FXTM can apply which varies depending on the asset traded and is typically applied after 2 or 7 days of holding a position.
9. Vantage FX
Vantage FX offers 2 swap free-accounts through either their standard or raw ECN account types to those wishing to open an Islamic account. Deposits on these account types start from $200 for a standard account and a $500 minimum deposit for Islamic trading through a Vantage FX ECN account.
Spreads on these accounts are competitive for forex traders and start from 0 pips with trading available through MT4, MT5, and Webtrader.
There is an admin fee attached to every position that you open, but apart from this, there is no difference in trading conditions when it comes to spreads, mark-ups, and commissions on the Islamic accounts compared with that of another forex trader.
When it comes to Islamic trading, HYCM also offers a variety of choice. This includes 4 account types to select from including the fixed spread, raw spread, standard, and VIP accounts that are all available as Islamic trading accounts.
HYCM minimum deposits on these Islamic account types start from $100 with a maximum of $200 minimum deposit active on the raw spreads account, and $10,000 to open a VIP account.
HYCM spreads on these accounts start from 0.2 pips with both MT5 and MT5 available for trading on. Aside from a flat $5 admin fee which is charged after 14 days, the trading conditions remain the same when considering mark-up, commissions, and spreads.
What is a swap-free account?
As a forex trader or other type of trader, you may indeed be wondering what swap-free trading actually is. This type of trading is used by those following Shariah law as the law forbids Riba, on the basis of usury, and due to this, the paying of interest is forbidden.
In forex trading, the swap, also known as the overnight fee is the interest the trader either pays or gains based on their asset when it is held during leveraged trading. This type of interest either paid inward or outward on a regular forex trading account would not be halal under Shariah law and therefore, brokers often facilitate the opening of swap-free accounts.
Islamic Law on Different Assets
The law of Islamic trading is complex in terms of how they can be applied in each market for forex trading and because of this, we will take a look at each type of traded asset and how the law impacts each.
Forex: Why are Swap Fees Haram?
In forex trading, the “swap fee” is typically charged to you as a trader and acts as a form of tax you should pay, although occasionally depending on the asset, it can be earned by you. Either way, this kind of fee, which depends on the forex currency pair you may be holding, is not permitted in Islamic law.
For this reason, these kinds of fees are not charged in Islamic accounts, thus, they are swap-free.
Stocks: Are Dividends earned from Shares Halal?
Stock dividends under Islamic trading and Shariah law are considered halal. Why is this? Well, these gains are made directly from the growth of a company you have invested in and are somewhat quantifiable in nature, at least in theory. This separates them from interest which can be viewed as punitive in nature.
The complexity deepens though when we consider investing in companies such as alcohol brands, tobacco brands, and others. This kind of investing would be haram and so, you should be careful as a trader following Islamic law, what you choose to invest in.
ETFs and Stock Indices: Are they an Halal Investment?
ETFs and Stocks are halal due to the fact that they both relate to investing in pools of companies. Therefore, any monies gained from this kind of investment can be viewed as coming from the growth of the company.
As mentioned above, there may be some haram companies included in these pools. To negate this, as a trader, you should simply calculate how much of the profit is as a result of these companies and donate that percentage of gain to a charity.
Bonds: Are they actually Haram?
The simple answer here is yes. Typically, bonds are considered haram as they are technically loans to be repaid over a period of time which is inclusive of interest. There are however, Islamic trading compliant bonds. These Islamic bonds are certified as being compliant with Islamic laws.
Are Demo Accounts Halal?
Since forex broker demo accounts are only dealing in virtual funds and not your real money, then they can all be considered as Halal and compliant with any Islamic trading laws.
Islamic Account costs
Trading with an Islamic account is typically free of charge. This is good news for any trader. With that said, some broker minimum deposits may be higher than usual in order to open an account, although not always.
Opening an Islamic account is usually as easy as contacting the customer support team of any top forex broker. With some brokers, but not many, the trading costs could be higher to make up for the absence of swap fees. You should consult your individual broker on this. They may impose a fee that is not interest and is, therefore, compliant with Islamic trading law. This admin fee is typically applied after a number of days holding an asset.
Another thing which could occur, although less frequently, is the raising of spreads or commissions for Islamic trading accounts. There may also be some exotic currency pairs or less common trading markets that are unavailable when trading through an Islamic account.