- What is a Forex Rebate?
- How Can You Get A Forex Cash Back Rebate?
- How Does a Forex Rebate Work?
- Is a Forex Rebate Like a Forex Bonus?
- The Benefits of Forex Cash Back Rebates
- What are the Risks with a Forex Rebate?
Creating a successful trading program is like opening a business. You have to earn money on trades which exceeds the cost of trading the markets. Trading costs include commissions and slippage as well as, internet, software and hardware costs. While it is very important to have a sound trading strategy that has robust risk controls, it’s just as important to keep your costs low. When you execute transactions, the more you trade the more commissions you will experience. Fortunately, there is a way to reduce commissions by getting a forex cash rebate. A rebate is completely different than forex bonuses and allows you to reduce your commissions by receiving cash back on all of your trades. If you are an active trader that takes up large costs in commissions than a forex rebate alliance is right for you.
What is a Forex Rebate?
A forex rebate is like a credit card reward bonus where a broker gives you real capital every time you make a transaction. Each time you make a trade you receive a portion of the commission your broker charges, allowing you to reduce your commission cost.
Some traders choose a specific instrument, usually a volatile and liquid one such as EUR/USD, GBP/USD, USD/JPY, Gold, etc. and make a high number of transaction, whether intraday or swing. Thus, for those traders, forex rebate can be beneficial as it changes their strategy and obviously their income.
How Can You Get A Forex Cash Back Rebate?
Getting a cash rebate starts with a search for a cash back facilitator. Companies like Forexcashbackcloud.com have agreements with retail brokers where they help them market their services on their website. A cashback company allows you to choose from several different brokers that trade forex. They have a sharing agreement with each one of the brokers that are listed on their site allowing them to receive a portion of the commission that you pay if you deposit funds and trade on the broker’s platform.
Once you sign up and begin to trade, a forex cashback company begins to receive income. The difference between many of the review sites that advertise retail forex brokers and a forex cashback companies is that the latter actually pays you part of their income from commissions. In essence, you are taking part in a revenue-sharing plan where you get paid for the commissions you generate. Even better, if you send referrals to the cashback website, you will also participate in the revenue-sharing for their commissions. If you send lots of people to the site, you can even trade for free.
How Does a Forex Rebate Work?
Here is how it works. You sign up for a forex cashback website like forexcashbackcloud, and pick out a broker that you would like to use. Once the forex cashback site receives confirmation that you signed up and deposited funds into your forex account, the will alert you that you are ready to receive payments for every transaction that you make on the brokers’ platform. The process allows you to receive a discount on the commissions you trade, by receiving a revenue share on the commission you produce.
Is a Forex Rebate Like a Forex Bonus?
A forex discount or cash back is different from a forex welcome bonus. A bonus is a gift from a broker to their new clients as compensation for allowing them to serve you as a broker. When you choose a forex broker with a welcome bonus you have made the decision that you will pay them a specific fee for the right to speculate in the forex market. Remember that the way forex broker makes their living is by market making using a bid/offer spread or charging a commission. Either way, the more your trade, the more money your broker makes. So, not only is your broker showing their appreciation by giving you a bonus, they are also trying to get you used to trade a larger volume.
There are several types of forex bonuses including the forex broker welcome bonus, the reload bonus and the recharge bonus. A welcome bonus goes into a forex welcome bonus account that is coming with your deposit money. Each forex broker has a different bonus award, with most requiring a deposit before they provide you with a bonus.
What is important to understand about a forex bonus is that your broker is giving you the money to offset trading commissions or spread that incur while trading with their operation. Commissions and spreads are how brokers generate revenue. For this reason, a broker will not allow you to withdraw your bonus until you have reached specific volume criteria. The number of trades you place and the commission that is charged will generally eat up the forex welcome bonus you receive.
The Benefits of Forex Cash Back Rebates
The benefits of a cash back rebate are obvious, as you will significantly reduce your commission costs which might allow you to venture into strategies you ignored. For example, if you trade a scalping strategy, the goal is to make hundreds of trades generating small increments. If you cut your commission costs, your strategy will become more profitable. Another benefit is that by using a cashback site you can get the spreads that are generally geared to investors that have larger accounts.
What are the Risks with a Forex Rebate?
There are several risks associated with forex rebates. Note that you receive the combination of low commissions and robust service. If you become enamored with a rebate you might fail to notice the amount of the commission or spread a broker is charging you. In addition, if the execution is poor, you could lose money on your trades despite the low commissions you are experiencing.
Remember, a forex cash back rebate site is geared to market brokers. Although most perform their own due diligence, you need to check out the broker and test their site yourself. Just because a broker is on a forex cash rebate site does not mean they are a fit for you. Prior to depositing capital, read some reviews and test drive the site using a demo if there is one available.