Local Broker With Swap Free Feature, What's Interesting?
Is it possible to trade without swap (Swap Free) at a local Indonesian broker? What advantages can traders get from this feature?
When hunting for a broker, most traders will explore more about the trading conditions offered, ranging from spreads, leverage, deposit amounts, and so on. For some traders, especially Muslim traders, there is one feature that is considered crucial, namely Swap Free. But along with the development of time, Swap Free is also in demand by all traders. Why is that? What's so interesting about this feature?
What is the Swap Free Feature?
By definition, Swap is the difference in the reference interest rate of the currencies traded in the forex market. Swaps will be charged to traders if their trading positions stay overnight or past midnight according to the broker's server time. So, if interpreted in its entirety the meaning of 'Swap Free' is an interest-free feature provided by the broker.
Basically, each country has a different reference interest rate, and the interest rate will change from time to time. In other words, this creates a difference in interest rates for each currency; some have high or low interest rates.
Please also note that the calculation of interest rates may change depending on the type of position opened, whether Buy or Sell. That is why, swaps in forex trading do not always act as interest, but can also be a burden on trading costs if the difference is negative.
Forex Trading Swap Fee Calculation Illustration
For example, the interest rate for the Australian dollar (AUD) is 2%, while for the United States dollar (USD) it is 0.25%. When trading on the AUD/USD pair, traders may have to pay or get swap results from the difference in interest rates between the two currencies.
When a trader opens a Buy AUD/USD position, it means that the trader is buying AUD and selling USD at the same time. When a trading position is open until after midnight according to the forex broker's server time, the trader must pay the interest rate for the USD currency and earn the interest on the AUD. So that the Swap value obtained by the trader when making a Buy AUD/USD position is 1.5% from the calculation results of 2% (AUD Interest) - 0.5% (USD Interest).
On the other hand, in a Sell position, the trader must pay the AUD interest rate, and at the same time earn interest from the USD. So the swap per lot obtained is -1.5% of the calculation result of 0.5% (USD Interest) - 2% (AUD Interest). Because the value is negative, the swap in this case becomes the trading costs borne by the trader.
Advantages of Trading at Local Brokers With Swap Free Features
If swaps can provide the added benefit of positive interest, then many traders prefer trading without swaps? Broadly speaking, of course there are several benefits that traders get when trading at a broker with Swap Free, including :
1. Interest Free
The main point of this feature is to free traders from usury. The Swap Free feature is a solution for Muslim traders because it can free overnight trading positions (stays) from rollover interest (Swap). In Indonesia, most traders are Muslims who consider swap fees to be usury.
In Islam, usury is forbidden. It is on this legal basis that most Muslim traders prefer trading conditions with swap fees free. So, it is natural that local brokers who see this potential provide Swap Free to facilitate the needs of Indonesian traders.
2. Minimize Trading Fees
As is well known, in the world of forex trading there is no guarantee that traders will always get money. There are times, traders will experience losses or losses. When a trader experiences a loss, this feature is very useful to minimize losses. The reason is, traders only bear trading losses, without the need to be exposed to negative swap interest.
Strategies that specifically target positive swaps do exist, but such methods are usually employed by more experienced traders because the choice of pairs is limited and requires patience. For traders who still want to try various strategies or already have a reliable pair in a certain method, this kind of limitation will certainly be inconvenient and tend to be detrimental.
3. Trade with Authorized and Trusted Brokers
Swap Free services can be obtained at many brokers, but if you choose a broker carelessly and do not ensure the licensing, then you can be registered with a broker whose legality is not guaranteed. However, if you open an account with a local and trusted broker, then in addition to the Swap Free benefits above, of course there is a security guarantee from CoFTRA regulations that further complement your trading comfort.
List of Best Local Brokers Providing Swap Free Features
Although there are already many local brokers operating, some of them still do not have the Swap-free feature. For traders who want interest-free trading conditions, here are some recommendations of the best local brokers that provide Swap Free trading features.
1. GKInvest
PT Megah Tama Berjangka or more popularly known as GKInvest is the first broker in Indonesia to provide Swap Free features for its clients. The presence of this feature certainly guarantees to clients that transactions at the GKInvest broker are in accordance with Islamic sharia, which is free of usury.
By eliminating the swap fee, this will greatly help GKInvest clients who have a long-term strategy or trade with a duration exceeding one day. Usually on a regular trading account, when a trading position is still open and exceeds one day's time it will be subject to swap or daily interest.
In addition, GKInvest is a local broker that has obtained a permit from the Indonesian regulatory agency, namely CoFTRA. In addition, this broker also offers a variety of trading instruments including: forex, CFDs, commodities, and indices that can be operated on desktop, web and mobile based MT5 platforms. Traders can also use leverage up to 1:100 with a minimum deposit of $200.
2. Octa
The next local broker that provides Swap Free services is Octa Investama Berjangka or better known as Octa. In order to realize the mission to always provide the best service, Octa broker has also provided a Swap Free feature to gather the needs of local traders. With this feature, Indonesian traders can trade comfortably and free of usury.
In addition, Octa broker also offers competitive trading conditions, super low spreads and requote-free trade execution. There is also a fixed rate or fixed exchange rate with a rate of 10,000 rupiah = 1 USD, and there is a rebate bonus of up to 5 USD per lot. Octa clients also have the opportunity to receive attractive compensation from partnership results, lucky draws and interactive contests.
3. HFX International Futures
Swap costs are often a barrier for traders to maximize their capital. But it is an advantage if a trader chooses HFX, because this broker provides a Swap Free feature for 7 days on all available instruments. Not only in forex pairs, traders can also trade interest-free on a number of indices, gold, silver, and crude oil.
By obtaining a permit from CoFTRA, the activities of International Futures HFX brokers in Indonesia are 100 percent legal. In addition, the HFX broker also provides other interesting features, including; affordable minimum deposit, partnership program with competitive rewards, tight spreads without manipulation, and so on.
4. FOREXimf
Officially operating since 2005, FOREXimf has now grown to become one of the largest and most trusted local brokers in Indonesia. Having a license from CoFTRA is a testament to the seriousness of the FOREXimf broker to provide the best and official trading services for Indonesian traders.
In addition, the FOREXimf broker also provides a series of interesting features such as educational programs that regularly hold weekly live webinars, as well as complete forex learning materials ranging from beginner to professional classes. There is also a Swap Free feature for Muslim traders who want interest-free trading.
Choose Swap or Swap Free Feature, Which is Best?
In the end, the choice of using a Swap or Swap Free site is up to each other. Of course there are many variables to consider. Basically, both features have their own advantages and disadvantages.
The Swap feature will be very beneficial for users of the Carry Trade strategy who are deliberately looking to profit from positive Swap interest. But it's a different story for Swing Trading users. The Swap Free facility will certainly be more profitable because the trading positions of Swing Traders are sometimes opened for more than one day.
For non-Muslim traders, of course, there is no problem if you use a broker with Swap or Swap Free facilities. But for Muslim traders who want halal, of course a broker that provides Swap Free facilities will be much more appropriate.
In addition to Swap Free, another feature that traders need to pay attention to in choosing a broker is the high and low spreads. Today, there are many local brokers competing to offer the best spreads to attract traders' attention. Find out what are the advantages of trading with a local broker with low spreads before deciding to register with a broker.
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