Swap Vs Swap free.

A forex swap is the simplest type of currency swap. It is an agreement between two parties to exchange a given amount of one currency for an equal amount of another currency based on the current spot rate.

In the forex swap transaction, you sell a currency at a pre-determined price today and have to buy that currency at this price in the future irrespective of its prevailing price at that point of time.

Swap free means that the dealer does not lose any money in the swap deal due to the interest rate movements but only due to currency movements.

Swap transactions can only turn to be favorable if you have fully studied the market and can accurately predict the changes in the value of a currency in the future.

Some brokers offer additional perks for swap-free accounts: Hibah. “Hibah” is a term describing gifts or donations awarded voluntarily, therefore the broker enables its Muslim clients to donate a share of their profit for charity.

On Forex market, clients are charged with Rollover (Swap) charges for transiting the position over midnight. The amount of Swap depends on the difference between bank rates of the base currency and secondary currency in a currency pair. Swaps can have either positive or negative value.

Swap-free accounts ensure working on Forex without swaps (or commissions, in other words) which are either charged or credited by a broker for holding overnight positions.

Swap-free accounts will perfectly suit the needs of long-term traders who choose the most volatile currency pairs with a negative swap.

From what i understand, A forex rollover/swap is the interest added or deducted for holding a position open overnight. The rollover/swap rates are calculated as the overnight interest rate differential between the two currencies on which the position is held depending on the position type (Buy (Long) / Sell (Short).

Rollover/Swaps are charged on the clients forex account only on the positions kept open to the next forex trading day.

Swap arises due to the overnight interest rates for each currency being different. Since currencies are always traded in pairs, you always need to borrow one currency in order to buy another, so it follows that you have to pay interest on the loan, but you also receive interest on the currency you are holding.

If the difference between what you pay and what you receive is positive, then you are eligible for a net swap credit. If the difference is negative, that is if you pay more interest than you receive, then your account will be debited the appropriate swap amount.

From what i get from study, thee simplest definition is the difference between interest earned and paid is a swap.

Swap free account is also known as islamic account . It means that we can't get overnight charges.

The swap is the fee charged/received daily for positions kept opened from one day to another (overnight rates). It corresponds to the difference of interest rates adopted by central banks of each currency of the pair in which the client has an opened position.