What is better: Swap-free accounts or standard Swap?

When trading on the exchange, you often have to leave a transaction open until the next day, for which, in most cases, the broker charges a commission – Swap.

The accrual amount depends on the discount rate for the currencies involved in the transaction and additional conditions of your broker.

It should be noted that a similar commission is also charged when trading other assets if you use contracts for difference when opening trades.

There are many opinions on whether this commission is worth paying attention to and how much it affects the outcome of a transaction. Here is an example of calculations for cryptocurrencies - https://time-forex.com/kriptovaluty/swop-kriptovaluty

But most importantly, for those who don't want to pay swap, brokers offer swap-free accounts, or as they are also called, "Islamic accounts":

The main advantage of these accounts is that you are not charged a fee for holding positions overnight, but only a one-time fee when you open a trade.

But this begs the question: how profitable is this? Is it worth using these types of accounts? It all depends on a number of factors that influence the choice.

When you shouldn't use Swap-free accounts:

For short-term transactions , it is clear that there is no point in using an Islamic account if you trade intraday, or if the duration of your transactions rarely exceeds a few days.

With a positive swap – it’s no secret that a swap can be both negative and positive, so if the asset you’ve chosen has a positive swap , then why lose out on additional profit?

If the commission is greater than the swap - for some assets, the commission charged on Swap-free accounts may exceed the swap amount, so there is no point in using this type of account.

For example, for the AUDNZD currency pair, the swap is -0.03 pips per day, while the additional commission when opening a trade is $3 per lot.

That is, the swap for the AUDNZD pair is equal to 0.18 cents, it is easy to calculate that 300/18 = 16 days, that is, the saved swap will cover the one-time commission only if the transaction is maintained for more than 16 days.

When trading cryptocurrencies , most brokers simply do not provide such a service for assets such as cryptocurrencies, stocks, indices, bonds, and commodities.

When do Swap-free accounts make sense?

If you are a Muslim , then the use of such accounts is determined by religious considerations.

Long-term trades – when your trades last on average more than one month or longer.

When opening swap-free accounts, be extremely careful when choosing brokers, as some brokerages charge a daily fee for using swap-free accounts, rather than a one-time commission. This means you'll be charged $5 for every 24 hours the account is open.