If you have some experience trading in the Forex market, you must know that Forex brokers charge a commission for trading certain groups of instruments. The price of any instrument includes two prices, Ask price and Bid price. A difference between Ask price and Bid price is called a spread. If a trader opens and closes many positions, spreads can take a big bite out of their overall profit. Luckily, a trader can get a spread rebate. Read on to find on how to do it.
What is a rebate service?
Thanks to rebate services, a trader is paid back a part of the spread, regardless of the outcome of a trade.
Forex rebates fall into two types:
- Direct rebate is when a broker pays back a part of the spread directly to a trader. To get a direct rebate, a trader usually needs to reach a threshold trading volume. This is how a broker encourages its clients to open more trades.
- Rebate via specialized services. Under their affiliate program, such a service gets a part of spread on each trade and then refunds a certain percentage of that amount to a trader.
How can I use a rebate service?
To connect to a rebate service, you need to register with your broker’s partner company and open an account. That’s it! Now, every time you close a position, you’ll get a spread rebate to your account.
How much refund will I get back?
A broker rewards a Forex rebate service for attracting new clients by giving it 10-50% of a spread in each trade. Depending on their selected plan, a trader can get from 20 to 70% of that amount. Sounds confusing? Here is an example. You buy/sell 1 lot of a currency pair. Suppose, 1 pip costs $10. Spread is 2 pips.
Your rebate service refunds 50%. Thus, if you closed a trade with a $20 loss, you get $10 to your account.
Your payback percentage depends on your trading volume. The more trades you make, the more refund you’ll get. Note that you get a rebate on both profitable and losing trades.
Spread rebates are a great way to slightly reduce your losses and fatten up your trading account with no additional efforts.