What is swap (rollover) in trading?

What is swap (rollover) in trading?

Swap (rollover) what is it?

What is swap (rollover) in trading


Islamic trading accounts are known as swap-free (swap-free) accounts in all its forms, regardless of the duration of the contract on overnight trades, that is, those that are kept open for the next day without interest or additional fees.


Swap in trading, or swap trades, is a kind of interest that is charged on trades that are held overnight in various trading markets.


Swap "Swap" is the amount of money you receive or pay for keeping your position open at night. It is estimated based on the interest rates of the central banks of the countries whose currencies are traded. The swap may be positive or negative.


Islamic accounts have the same trading terms and conditions applicable to all types of trading accounts. The only difference is the absence of swap (rollover) interest in the Islamic account. Pairs and other instruments will not be charged any fees in the Islamic account.


Depending on the swap rate and the type of transaction taken, the swap value can be either negative or positive. In other words, you will either have to pay a fee or you will be paid a fee for holding your position overnight.

In the trading market, for example, every time you open a position, you are actually making two trades, buying one currency in a pair and selling the other. In order to sell a currency, you actually borrow this amount to sell it, which leads to the need to pay interest on the borrowed amount. However, the currency you buy will earn you interest.


If the base interest rate of the purchased currency is higher than the currency you are selling, it is possible to earn interest to hold the position overnight. However, due to other considerations, such as increasing the broker, it is likely that regardless of the open position (buy or sell), interest will be charged from you.


What is the difference between an Islamic trading account and traditional accounts


There are a number of differences between an Islamic trading account and regular trading accounts. The Islamic Sharia, which prohibits the accumulation of interest, means that traders who have Islamic trading accounts do not receive or pay any usurious interest. In addition, transactions on an Islamic trading account must be made without delay, so that currencies must be transferred from one account to another immediately, while also paying transaction costs at the same time.

Although halal investment in Forex Trading is not a recent financial innovation, there are still a few trading brokers that offer their clients the opportunity to trade halal, we at Amana trading are proud and proud to offer this opportunity to our clients and provide them with an Islamic trading account according to Sharia requirements.




When is the swap fee calculated in trading

The moment when the swap is charged to your trading account will depend on your broker. For most brokers, the swap fee is charged around midnight, most often between 23:00 - 00:00 server time (Server).

Something that is not always known, is that sometimes a swap fee is charged for keeping the deal over the weekend, even when it is not held over the weekend. To compensate for the fact that the markets are closed during the weekend, weekend swap fees are charged on Fridays or Wednesdays, depending on the selected market.

In other words, if you hold your position overnight on the day the weekend swap is applied, three times the normal swap will be debited on your position.

To confirm exactly when your broker is placing swap fees on your trading account, it is best to either look at the contract specifications for the instrument you are trading, or ask your broker directly.


How can you see swap in MetaTrader

You can check the swap rates in the MetaTrader trading platform, in the meta Trader 5 (MT5) trading platform, you can see the swap of an open position under the "Swap" column in the "Trade" tab, as shown below.




They can also be found before opening a deal by right-clicking on the instrument with which you plan to trade in the "Market Watch"window. Just click on "Specification" from the next drop-down menu and you will be shown a dialog box with information related to the tool, including swap values.




Swap-free trading accounts


Are there any interest-free trading accounts (swap) Yes there is. Islamic accounts at Amana Trading do not contain swap interest.


In Islamic finance, lenders are not allowed to charge interest. Islamic trading accounts may have other trading fees, such as the weekly fee charged at the beginning of the transaction, or they may have no additional fees at all.