How to avoid swap fees forex

I know of only three ways to save swap charges.

a. Don't hold the positions overnight.

b. Choose a broker with the lowest swap charges. Different brokers charge this differently, some are outrageous. See the screenshot from Exness's website.

-0.62 swap fees on EUR/USD. A swap fee of -0.62 on EUR/USD long means that for every lot held overnight, a fee of 0.62 pips will be charged. Or -6.2 USD for 1 Standard lot.

In comparison, at another broker XTB, it is -0.006636% for Long EUR/USD. which is -6.636 USD per lot.

But notice how one broker is not paying positive swap on the Short side, but other is. So, you have to check every broker & see which exact broker is charging the lowest for your desired instrument. For some other instruments, the swap charges can be really high.

c. Open a Swap free account or an Islamic Account.

Another way to avoid paying swap fees on overnight trades is to trade with a broker that offers swap-free instruments to all traders not just those of Islamic faith. Brokers like HFM, Just Markets, XM etc. offer swap-free trading on certain instruments so you can check them out.

For Short on EUR/USD. The exact swap would be different for every instrument.

Ideally, for holding USD i.e. EUR/USD short, the broker should pay positive swap, based on the interest rates differential. But most brokers don't. Even XTB has a really high markup on swaps, it is just an example.

But I heard some brokers who offer swap-free trading turn around and inflate spreads to make up for the loss of income how true is this please?

I don't know about this to make any claims, so I'll not speculate on this. Maybe someone who has worked for broker's revenue department can better add value here.

But if you are trading with a variable spread broker, it can always change the spreads at any point of time to make more money or just hedge their risk.

I've seen even the bigger name brokers widen the spreads just before some events, when at other brokers it is unchanged. Of course you could say it is to manage their risk, but from point of view of a trader, it is what it is.

Given that most brokers make highest money from spreads & market making (not swap charged), I don't think swaps is that much of a percentage for them.

They can easily make up 5% they make from swap fees by marking up the spreads, and most traders would not care if the spreads go from 1 pip to 1.1 pips, which is a 10% jump. It is even higher when 0.6 goes to 0.7, which the actual number is the same 0.1, the broker's margin changes.

I know a few forex brokers who offer swap-free trading to both Muslims & Non-Muslims: Exness (Major FX, Gold, Oil, Crypto Indices), HFM (Major FX, Gold), Just Markets (Major FX, Gold, Stocks, Indices & Crypto), XM Broker ( Major FX, Gold).

Also note that if some brokers notice you are abusing the swap-free window, they reserve the right to downgrade you from extended swap-free to standard swap-free where you get swap-free on lesser instruments.

In fact, if some brokers notice you are abusing the swap-free by intentionally trading overnight only, they can even start charging you a flat commission for overnight trades.

Many brokers offer swap-free trading so you just have to check for the one whose trading conditions suit your circumstance.

Also remember that swap is not always a debit, sometimes you can be credited, so when you opt for swap-free trading, you lose the chance of being credited too.

I don't think you need to change your broker because they don't offer swap-free trading, because it can be arranged.

You can try writing to your broker customer support and telling them you want your account setup for swap-free trading. I think they can customize your account for that purpose.

The New York session ends around 5 pm American Time so to avoid paying swaps, you must close your trades before this time (convert it to your local time).

For example South Africa is 7 hours ahead of New York so a trader in South Africa should close his trade before 12 midnight to avoid being charged swap fees.

When it is a Wednesday, you should also close your trades before 5 pm American time as forex brokers charge triple swaps on Wednesday night because forex trades have a T+2 day settlement window.

If your broker charges high swap fees, checking out alternative routing options can make a difference.

What do you mean by alternative 'routing options'. I don't quite understand what you mean.

If you are a retail CFD trader, I don't think there is a way to route trades through any alternate ways. Unless your broker does not charge any swap fees on the trades, as far as I know, you cannot avoid it.

Some CFD brokers have swap free trading accounts.

Some traders use https://blackeaglefg.com/routing/ to find better conditions and avoid unnecessary costs. Always compare different options to see what works best for your trading style and strategy.

Swap free accounts are the solution and if you do prop firms, look for a prop firm that doesnt charge swaps, there are some like FTMO

Swap fees really suck, especially the ones charged over the weekend. They charge you swap for entering a trade, and another swap for exiting a trade. These days I only transact with brokers that offer swap free accounts.

Switch to a proper swap-free (Islamic) account, most solid brokers like HFM offer them with zero extra fees or restrictions.

It’s the cleanest fix if you hold overnight.