Forex Rebate in Reducing Spread Costs

 

 

What is Forex rebate, and why does a trader need a rebate service? How can it help to minimize your spread costs?

Rebate is just like the cashback option. It lets a trader compensate for a part of the trading costs.

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In general terms, it works like this, “A trader registers for free on the rebate service website, follows the affiliate link to the broker’s website, opens an account, trades, and pays the spread (markup) to the broker or market.”

The broker shares a part of the commission both spread and markup, received from the trader to the rebate service for the clients it attracted.

The rebate service shares a part of the affiliate earnings with the trader. Everybody is happy.

This article will help you to know how the forex rebate service works, how can a trader get benefitted from it, and also an advantage.

So let’s get going?

 

What is a Rebate, and How can a Trader Get Benefit from it?

 

Did you know that the trading costs can be partially reduced? I mean that you can get back some of the money you pay to the broker as the spread (markup).

Moreover, it is entirely free for a trader. And if there is such an opportunity, why not use it?

 

Rebate: The Way to Save your Money

 

Rebate is a return of a part of the spread paid to the broker. This is quite a general definition, that the article wants to explain. Spread is the difference between the buy and the selling price of an asset.

In the case of the STP or ECN order processing model, it is formed by the liquidity provider or the market state.

Using the rebate, the trader gets back only that part of the spread that is the broker’s commission (markup, which is a kind of broker’s margin on the spread).

 

 

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Rebate is paid regardless of whether the trade generates a profit or a loss. The frequency of payments is different, depending on the conditions offered by the broker/rebate service (site).

Therefore, it can be accrued daily (on the closed trading day), weekly, monthly. The calculation formula is also different, according to the trading account type.

For example, it could be a percentage of the spread of a fixed sum for each traded lot.

Some brokers offer different rebate bonuses according to the trading turnover.

Another example, you get back some amount of the money spent if your trade turnover is less than 10 lots per month. If you trade more than 10 lots in a month, you can rebate more money.

 

Rebate can be provided by:

 

• Directly by the broker. It is similar to a cashback service, and you can find the information in the section on promotional and bonus programs.
  
• Another resource, like an independent rebate service, which cooperates with many brokers.
  
• However, you can’t simultaneously participate in the forex rebate program provided by your broker and register an account through a rebate site. You will have to choose between these two options, and each of them has its advantages.
  
• Most commonly, you can rebate more of your costs by operating directly with the broker. That is because there is no additional intermediary in the affiliate chain, so you do not have to share your earnings.

 

The Advantage of Rebate Services:

The division of the trader’s cash flows. In the first case (working only with the broker), the trader’s funds (the deposit and the rebate) are controlled by the broker.

In the second case, the rebate is accumulated on the account opened on the rebate site.