A forex rebate is money that is paid to a forex trader for every forex trade they place, whether it’s a win or a loss. A forex rebate effectively reduces the cost of the transaction and puts some money back in a trader’s account every month that would otherwise be lost to the cost of the transaction.
If a trader is signed up through a trustworthy forex rebate provider they earn some of their transaction costs back in the following ways:
- Monthly cash back – Payments are credited and sent automatically by the 12 of the month following the month rebates are earned in.
- Spread or commission reduction – The trader actually receives reduced commissions and/or spreads.
- Paid direct to brokerage account – Cashback is credited directly to the trader’s brokerage account, typically between 1-7 days after the trade is closed.
A forex broker primarily generates revenue by adding a cost to every transaction. This typically comes in 2 forms:
- A commission charged by the broker on every transaction, or;
- An addition to the ‘spread’ – the difference between the buy and sell prices of a given financial instrument. For example, a trader who buys the EURUSD at 1.0005 and can only sell it back to the broker at 1.0004 pips has effectively paid 1 pip to enter the trade.
Of course not all of this is profit to the broker, as the broker has their own costs including offsetting risk if they are counterparty to the trade. They also have marketing costs, including paying introducing brokers (or ‘IB’ – the industry standard term for a marketing or referring agency). If the IB offers forex rebates, the IB then pays much of this commission back to their clients.
Check our forex broker list for supported brokers offering forex rebates and signup today.
How Forex Rebates Work
When you open a brokerage account through a forex rebate provider, the brokerage pays the rebate provider part of their spread or commission profit for every trade you make as compensation for referring a customer to them. The rebate provider then shares the majority of their revenue with you, paying you a cash rebate for each trade you make as thank you for signing up. Your spreads and trading conditions remain the same as if you had opened an account directly with the broker. The only difference is: as a rebate client you earn extra cash per trade, making trading through a forex rebate provider more profitable than opening direct with the broker.
Watch the video below for a brief explanation about how forex rebates work.
Use the Forex Rebate Calculator to estimate earnings:
Are Forex Rebates a scam; or is there some ‘catch’ such as increased spreads to compensate for the rebate?
Rebates paid by legitimate rebate providers are not a scam, however scams do exist. The most common scam is a rebate provider that marks up the spread or commission in order to pay a higher rebate than competitors. Many brokers do allow a referring party, or rebate provider, to markup costs to traders they refer. Obviously this defeats the purpose of the service provided by the rebate provider and thus jeopardizes the viability of the rebate provider’s reputation and business, so a reliable provider wouldn’t consider this. Besides this, certain rebate providers may not pay on time, or not at all. This is why it’s important to choose a reliable provider.
In once case since cashbackforex.com first began offering rebates in 2007 a broker was caught marking up pricing on their own to gain a higher profit for themselves. This is very easy to catch since clients will almost immediately report the pricing difference, and it’s also rare in our experience that a broker would blatantly act so unethically. The agreement with that broker was terminated indefinitely.
When working with a trustworthy rebate provider, there is no ‘catch’. It is more beneficial to a trader’s financial position to work with a rebate provider than solely with the forex broker.
How are forex rebates paid?
The rebate payment methods vary among forex rebate providers. Because we deal with so many traders in so many different countries and serve 23 languages we have to cover a wide array of options. Here’s what we offer:
|Monthly cash back||Payments are credited and sent automatically by the 12 of the month following the month rebates are earned in.|
|Spread or commission reduction||The trader actually receives reduced commissions and/or spreads. This is an exciting option offered by some of our top brokers including IC Markets and Global Prime.|
|Paid direct to brokerage account||Cashback is credited directly to the trader’s brokerage account, typically between 1-7 days after the trade is closed. This is another exciting options offered by some of our top brokers including HF Markets, Instaforex, Pepperstone, and XM.|
In the case of the ‘Monthly cash back’ rebate option, monthly payments can be paid via bank wire, Paypal, Skrill, Sticpay, Entropay, China Unionpay, and Neteller. Some payment methods such as bank wire carries fees and often traders set a custom minimum payment amount in order to accumulate rebates and withdraw their rebates less often than monthly.
Are there any other benefits to working with a forex rebate provider?
It depends on the rebate provider. Due to our unique relationship with many brokers, we have often mediated between brokers and clients in order to help successfully resolve client issues, including clients who are having withdrawal issues. Brokers are often very fast to respond to us, since we typically have many clients with them. Our knowledgeable support team is available 24 hours per day in 8 native languages & 23 total languages for any questions. We also offer trading tools, calculators, reviews and a robust forex education section.
Who are the top forex rebate providers?
The first forex rebate providers were Chinese and catered to Chinese clients. In 2006 the company ‘FX Rebates’ arrived on the scene out of the USA, offering forex rebates to a global clientele. In 2007 cashbackforex.com became the second global rebate provider and surged in popularity. ‘FX Rebates’ shortly thereafter either went out of business or stopped offering forex rebates. From 2007 onwards cashbackforex.com and it’s affiliates have been the dominant and largest rebate provider and one of the largest introducing brokers globally.
Many competitors have come online since 2007, some good and some bad. We have continued to improve our services along the way to stay ahead of the pack.
Do Forex Rebate Providers have access to my account?
A rebate provider does not have the ability to perform any trading functions such as placing a trading, moving a stop loss etc. Typically a rebate provider will have access to limited details such as your name, account number, and depending on the broker, trade history.