A Great Way to Lower Trading Costs with Forex Rebates
Forex trading is all about making a profit. But as it almost always involves using the services of a Forex broker there are inevitable costs. All of which have to be factored into the equation and can make a sizeable dent in any profits. There is, however, a way to reduce overall costs as well as earn extra cash by using Forex rebates. Forex rebates are a scheme that involves getting cash back but can also include other Forex referral services. They serve as an incentive that entitles traders to receive a refund on any spreads and commissions paid to Forex brokers.
How do Forex rebates work?
Also known as pip rebates, they are a way in which a trader can cut the cost of trading without making any changes to the way they trade. And best of all, Forex rebates are free. “But how is that possible?”, we hear you asking. Forex rebates are provided by a rebate provider and this is how they work:
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- First, you open an account with a rebate provider who acts as the middleman between you and a Forex broker
- The Forex broker has already agreed to pay the rebate provider a finders fee, which is actually a percentage of the transaction fees a trader pays to the broker
- Some of these rebate providers will then pay a portion of the finders fee they receive from the broker back to the trader to say thanks for choosing to register with a broker through them
As you can see, this is a win, win situation for everyone involved. The broker gets new customers, the rebate provider gets their finders fee, and you, the trader, get your rebates. It really is as amazing as it sounds, and best of all, it costs nothing to join a rebates program, and there are no requirements. Unlike a deposit bonus or rewards that often come with some very sizeable trading requirements. The rebate provider doesn’t mind if you choose to trade in micro lots and only make $50 deposits.
How to receive Forex rebates
The process is really quite easy. With just a few simple steps you’ll be well on the way to cutting the cost of trading.
Choose a Forex rebate provider
There may be a large number of rebate providers but not all of them offer the same level of service. You need to consider the rate of rebate the provider is offering, the tools made available, the Forex brokers the provider has chosen to work with, quality of customer support and any other extra benefits.
Register for a free account
Once you’ve chosen a pip rebates provider it’s a simple process to register and open a free account. It shouldn’t take longer than a couple of minutes and the only decision you need to make is how you want your rebates to be paid. There are usually a number of options including PayPal, Skrill, wire transfer, or check.
Open a Forex trading account
The rebates provider you choose to open a free account with will have a number of Forex brokers you can choose from. The important thing to remember is not to go direct to the Forex broker but to sign up via the rebate providers website.
Wait for approval, fund you account and start trading
You will have to wait for your trading account to be approved and then deposit some funds. But once that is all done you’ll be able to start trading and accumulate rebates.
Is there a referral program option?
A number of rebate providers also offer a referral program, so check out if the one you’ve chosen does, as this is another way to earn a little extra cash.
The advantages of using a Forex rebates system
- When you’re still learning to trade an FX rebates program is a great way to earn. In the beginning, there will be inevitable losing trades, but with rebates you can ease the pain of losing.
- You’re going to be trading anyway, so why not take advantage and earn rewards?
- Rebates will make your trading more profitable. Even if you’re suffering a run of losses the rebates will make up for it by giving you back some of the money you’ve lost. And if you’re winning trades the rebates will be extra profit.
- When you sign up with a particular broker through a rebates provider you’ll be rewarded. Some brokers even offer additional bonuses which can add hundreds and possibly even thousands of dollars to your trading account.
- Rebate programs are free to join.
- The more you can trade the better you rebates.
- You are still able to sign up for a rebates scheme if you’re already registered with a broker. Just speak to customer support and it can be arranged
As is often the case, there are some disadvantages, so it’s only fair we point these out as well. Otherwise, you’ll be unable to make an informed decision about whether Forex rebates are right for you.
The downside of Forex rebates
Forex rebates are designed to benefit traders because they give back a certain amount of money for every trade made. However, as with many things in life, there are a few disadvantages.
- Forex rebates have a tendency to make traders a little overconfident. Why worry about making successful trades when you can earn money anyway, whether your trade is a good one or not?
- Joining a pips rebate program can also make traders reckless.
- There is no incentive to become a better trader, as you’ll be earning some money whether the trades are successful or not.
- If the market is bullish you’ll be tempted to trade even though you probably shouldn’t.
- Good money management tends to go out of the window. Rather than being wise and carefully allocating your trading bankroll you may be tempted to base your trading decisions on instinct rather than a sensible trading system.
So there you have it. How Forex rebates work, how to join a program, and the good and the bad side of the system. Now it’s all down to you to decide whether you want to participate or leave it for other traders.