With the help of their selected forex broker and forex rebates, traders can increase their trading income whether or not a position ends in a profit. To put it simply, it is a cashback program provided by a third-party supplier that is connected to your forex trading account and gives you a cash reward for each trade you make.
How do schemes for forex rebates operate?
- Step 1: Connect a new or current forex trading account to a supplier of a forex rebates program.
- Step 2: Your forex broker will pay your forex rebates provider a portion of their spread, or commission profit, for each trade you place.
- Step 3: Whether you win or lose a trade, the forex rebates provider will provide you a cash rebate for that deal.
The essence of forex rebate programs is very similar to that of a credit card rewards program. Consider a Visa credit card as an illustration. The vendor charges Visa a fee of between 1.5% and 3% when you, the customer, make a purchase using your Visa credit card. This fee covers the cost of completing the transaction.
Most consumers who participate in credit card rewards programs earn an average of 1% cashback on every purchase they make. This cashback is given to you by your credit card company out of the fees the retailer charges.
Is it a free gift? Yes and no, I suppose. Although that’s money you wouldn’t have received if you hadn’t joined the rewards program, it was given to you from the fees paid to the vendor, who will naturally include those fees in the price of their goods.
The supplier often has contracts with multiple different forex brokers, and they each pay them a commission for every trade that one of their traders refers to the broker. From the commission they receive from the forex broker, the supplier then gives the customer a cash rebate.
How are currency rebates handed out?
Various providers may use different payment methods. For instance, AvaTrade works with thousands of traders from a variety of nations and provides support in many different languages, offering a wide range of possibilities.
- Monthly Cashback: Following the month in which rebates are earned, payments are automatically paid and sent by the end of the following month.
- Reduction in spreads or commissions: The trader is given lower commissions and/or spreads. Some of the best brokers, including IC Markets and BlackBull Markets, provide this choice.
- Paid immediately to brokerage account – After the trade is closed, usually 1 to 7 days later, cashback is credited directly to the trader’s brokerage account. Some of the best brokers, including Pepperstone and XM, provide this as yet another fantastic choice.
For the Monthly Cashback option, payments can be made each month via a bank wire transfer or electronic wallets (e-wallets). There are charges associated with some payment options, such as bank wire transfers.
In order to accrue rebates and withdraw their extra money less frequently than monthly, traders frequently select a custom minimum payment quantity, which results in lower expenses.
What advantages come with joining a program for forex rebates?
Saving on trading costs is the main benefit to getting forex cashbacks. There is no “catch” when working with a reliable and honest forex broker.
In order to properly handle client difficulties, forex rebate programs can frequently intervene between brokers and clients thanks to their special relationship with forex brokers. This can also be applied to customers who are experiencing withdrawal symptoms.
Since they normally have numerous clients with them, forex brokers frequently answer to rebate program requests quite quickly. The experienced support staff should be accessible to you around-the-clock in your native language.
Lower transactional expenses. As a portion of the transaction cost is reimbursed to you on each trade, a rebates cashback program can lower the actual costs of your transactions. As a result, the spread will be smaller and the win ratio can be higher. In actuality, your net spread is actually 2 pips if your rebate is 1 pip and your forex broker spread on a certain instrument is 3 pips.
Is working with a provider of forex rebates safe?
Yes, 100%. Providers are unable to undertake any trading operations on your forex trading account and do not have any direct access to it.
The Rebate provider is entirely barred from performing any actions on your trading platform (MT4, MT5, etc.), including placing a market order, moving a stop loss, closing a trade, etc.
A rebate provider often has access to a small number of information, such as your name, trading account number, and, depending on the forex broker, your trading history.
Are reputable forex rebate programs available?
Yes, these kinds of forex rebates programs, which are funded by reliable sources, are not frauds, but they do exist. The most typical con is when a provider is dishonest and marks up the spread or commission. To offer a higher discount than its rivals, they do this. However, your trading expenses will be considerably larger!
Numerous forex brokers do permit a referring party or rebates provider to mark-up prices for the traders they recommend. This undermines the goal of the program and puts the reputation and viability of the provider’s business at danger.
So, a trustworthy provider wouldn’t even think about using this strategy. In addition, some suppliers might not reimburse you promptly or, in the worst case, at all. This is why picking a trustworthy service is crucial.
It is rare (but still possible) that a broker is discovered to be independently marking up the prices in order to increase their personal profit. Since customers promptly point out the price discrepancy, it can be quite simple to detect.
What is the best forex rebates program?
Prior to determining the value of the rebate, it is important to consider the basic round lot commission when selecting the best forex broker rebates. After the rebate has been subtracted, the commission cost should generally be as low as possible. Some forex brokers, in my experience, provide lower commission fees than other forex brokers who take rebates into account.
However, picking the forex broker with the largest rebate is not the only consideration. It’s critical to keep in mind that you are paying for all of the trading-related goods and services that a broker provides. Some brokers can justify charging more because they provide more value-added services, resources, and tools. Having the biggest forex rebate yet paying considerably more in spread than you would elsewhere is not ideal.
Having said that, one of my top forex brokers providing rebates is IC Markets. I have not only considered the rebate amount when picking this broker, but also other crucial aspects like the forex trading conditions, trading platforms, account kinds, deposit/withdrawal options, support, and regulation.
Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading! Read more about me.