How to open Deriv's Swap Free trading account?

Introduction to Swap-Free Trading

Forex trading has grown immensely popular across the globe. It is a preferred form of investment for many due to the potential for high returns. However, there is a particular aspect of Forex trading that does not sit well with some traders – the concept of interest rates and swaps.

Forex swaps, also known as overnight or rollover interest rates, are the fees that you either earn or owe for holding a position overnight. Depending on the interest rates of the two currencies involved in a transaction, a trader might earn or pay a certain amount of interest.

This concept of swaps contradicts the principles of Islamic finance, which prohibits the charging or earning of interest. Therefore, the solution for those wanting to participate in the forex market without contravening these beliefs is to use a swap-free account.

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Understanding Swap-Free Accounts

A swap-free account, as the name suggests, is an account type that does not involve any swap or rollover charges for holding positions overnight. This type of account is often referred to as an Islamic account, as it was designed to adhere to the principles of Islamic finance.

Islamic finance strictly forbids Riba, or usury, which refers to the practice of lending money at high interest rates. From an Islamic perspective, earning or paying interest is considered exploitative. Therefore, a swap-free account allows Muslim traders to participate in the forex market while staying in compliance with their religious beliefs.

The operation of a swap-free account is largely similar to a regular trading account. The primary difference lies in the absence of swap charges. When a trader opens a position with a swap-free account, they won’t be charged any interest, irrespective of how long they hold the position. Instead, the broker charges a fixed commission for each trade, which is generally higher than the charges on a regular trading account.

This commission is used by the broker to cover the costs of hedging the overnight positions. In financial terms, hedging refers to the strategy of taking on an opposite position in the market to mitigate potential losses. As brokers can neither charge nor receive interest in swap-free accounts, they must hedge all overnight positions.

Now, let’s explore deeper into the specific steps to open a Deriv MT5 Swap-Free account, and then we’ll discuss the ins and outs of forex trading and synthetic indices trading with Deriv.

Open Deriv’s Swap-Free Account

Opening a Deriv MT5 Swap-Free Account

Step 1:: Log in to your Deriv account. If you do not have an account, visit the Deriv website to create one. The process is simple, requiring just a valid email address and some basic personal information.
Step 2:: Once you’re logged in, navigate to the Trader’s Hub. In this area, you will find various options related to different trading methods and account types. Scroll down to the CFDs section. There, you’ll find the option for Swap-Free under Deriv MT5. Click on ‘Get’ to proceed.
Step 3:: The next step is to select the jurisdiction for your Deriv MT5 Swap-Free account. Ensure you choose the correct jurisdiction as it may affect some regulatory aspects of your trading activities.
Step 4:: After choosing the jurisdiction, you will be prompted to enter your Deriv MT5 password. This is to verify your identity and prevent unauthorized access to your account. Once you’ve entered your password, click on ‘Add account’.
Step 5:: Now that your Swap-Free account is set up, it’s time to fund it. Select ‘Transfer now’ to deposit funds into your account. You can choose from various deposit methods, including credit/debit cards, bank transfers, e-wallets, and cryptocurrencies.

After following these steps, your Deriv MT5 Swap-Free account is ready. You can now trade without worrying about incurring swap charges.

It’s important to remember that all trading involves risks. Always make sure you understand the market, the specific trades you’re entering, and the potential risks before you start trading. It’s often helpful to practice with a demo account before moving on to real trading.

In-Depth Guide on Forex and Synthetic Indices Trading with Deriv

Deriv is a popular online trading platform that offers a variety of financial instruments to trade, including Forex and synthetic indices. The platform provides a seamless trading experience, whether you’re a beginner or an experienced trader. Let’s explore how to open a real Deriv account and start trading Forex and synthetic indices.

Creating a Real Deriv Account

Opening a Deriv Demo Account: Before you start real trading, it’s recommended to familiarize yourself with the platform through a demo account. This will give you access to all Deriv account functions, including binary options, forex trading, and synthetic indices. To open a demo account, visit the Deriv website, click on ‘Create Demo Account’, and follow the prompts.
Creating a Real Deriv Account: Once you’re comfortable with the platform, it’s time to switch to real trading. Log in to your demo account and click on the dropdown arrow beside your demo balance. Click on the ‘Real’ tab to proceed. You’ll be asked to provide additional details such as your real name, address, and phone number.
Opening a Deriv Real Account on MT5: If you want to trade synthetic indices, you need to open a Deriv real account on MT5. After logging in to your Deriv real account, click on the ‘Real’ tab and then on the ‘Add’ button next to the synthetic account option. Set a password for this account, and you’re good to go.

After creating your account, you’ll need to transfer funds from your main account to your MT5 synthetic indices account. Once you’ve done this, you’re ready to start trading.

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Advantages and Disadvantages of a Swap-Free Account

Like any other financial instrument, a swap-free account has its pros and cons. It’s essential to understand them to make an informed decision.

Advantages:

Compliance with Islamic finance principles: A swap-free account allows Muslim traders to participate in Forex trading without violating their religious beliefs. This is especially crucial for traders living in regions where Islamic finance is prevalent.
Eliminates swap charge uncertainties: In a regular trading account, swap charges can build up over time and affect the trader’s profits. A swap-free account removes this uncertainty, enabling traders to hold positions for as long as they want without incurring swap charges.

Disadvantages:

Higher trading costs: While a swap-free account eliminates swap charges, it often involves higher commissions per trade. These can eat into your profits, especially if you’re a high-volume trader.
Limited availability: Due to regulatory constraints, swap-free accounts may not be available to traders in all countries.

To conclude, a swap-free account offers significant benefits, particularly for traders who wish to adhere to Islamic finance principles or those who want to avoid overnight swap fees. By carefully evaluating the advantages and disadvantages, you can determine whether a swap-free account aligns with your trading strategy and goals.

Trading in the financial markets involves significant risk and may not be suitable for everyone. Ensure you fully understand the risks involved and seek independent advice if necessary.

Open Deriv’s Swap-Free Account

Other Account Types in Deriv

Aside from the swap-free accounts, Deriv offers a range of other trading accounts tailored to different trading needs and styles. These include demo accounts, real accounts, and MT5 accounts.

Demo Account:: This account is perfect for beginners who are still learning the ropes of trading. With virtual funds, you can practice your trading strategies without risking real money. You can open as many demo accounts as you want and switch between them seamlessly.
Real Account:: This is your gateway to real trading. You can trade a wide variety of financial instruments, including binary options, forex pairs, and commodities. The minimum deposit for a real account is $5, making it accessible for traders with small budgets.
MT5 Account:: This account is suitable for traders who want to trade synthetic indices. These are unique, simulated markets that mimic the behavior of real-world markets. You can trade synthetic indices 24/7, making them an ideal choice for traders who want to trade outside regular market hours.

When choosing an account type, consider your trading strategies, risk tolerance, and financial goals. It’s essential to understand the features, benefits, and limitations of each account type before making a decision. As always, don’t hesitate to reach out to the Deriv support team if you have any questions or need assistance.

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FAQs to summarize the article

What is a Swap-Free account?: A swap-free account is a type of forex trading account that does not incur any swap or rollover charges on overnight positions. In other words, traders who hold positions overnight do not pay or receive any interest on their trades. This type of account is often called an Islamic account, as it complies with the principles of Islamic finance which prohibit the charging or paying of interest.
What is the advantage of using a Swap-Free account?: The primary advantage of a swap-free account is that it allows traders, especially those following Islamic finance principles, to participate in forex trading without violating their religious beliefs. Moreover, they provide a predictable cost structure by eliminating the uncertainty associated with swap charges, which can accumulate over time and eat into profits.
Are there any downsides to using a Swap-Free account?: The main disadvantage of swap-free accounts is their typically higher trading costs. The broker charges a fixed commission on each trade to cover the costs of hedging the positions, which can affect traders’ profits. Also, some countries may have stringent regulations regarding forex trading and may not allow brokers to offer swap-free accounts.
How do I open a Deriv MT5 Swap-Free account?: Log into your Deriv account, scroll down to CFDs in the Trader’s Hub, navigate to Swap-Free under Deriv MT5 and select ‘Get’. Select your jurisdiction, enter your Deriv MT5 password, and add the Swap-Free account. Finally, deposit funds into your account to start trading.
What is the Deriv MT5 platform?: Deriv MT5, or DMT5, is Deriv’s version of the popular MetaTrader 5 platform. It gives traders access to multiple asset classes on a single platform and is available 24/7.
How do I open a Deriv real account?: Start by opening a Deriv demo account. After verifying your email, you can create a Deriv real account by clicking on the ‘Real’ tab in your demo account. Choose your default account currency, supply the necessary details, and verify your account with your proof of residence and ID or passport.
How do I fund my Deriv Synthetic Indices DMT5 account?: Funds will first reflect in your Deriv real account, from which you then have to move them to the DMT5 synthetic indices trading account. This transfer is done via the Deriv cashier.
Can I start trading on Deriv without verifying my account?: Yes, you can start trading right away before verifying your account by using local payment agents to deposit and withdraw from your account. However, if you want to move funds into and out of your Deriv account via the Deriv peer-to-peer platform (Dp2p) or if you want to become a Deriv payment agent, you will need to fully verify your account.