Forex Brokers with Rebates and Cashback
If you trade forex with a broker that provides rebates or cashback, you can lower your overall trading costs and potentially improve the performance of your trading strategy. Even the smallest saving can make a big difference when day trading forex, especially if using a forex scalping strategy that is dependant on minor changes in the price of a currency pair. That being said, there are many forex brokers that offer rebates and cashback if you shop around. Here we will take a closer look at forex rebates and some of the best forex rebate brokers.
What is a forex broker rebate?
A forex broker rebate is a cashback that you earn after each trade you place. E.g. if your broker charged $7 commission per 1 lot traded per round turn and offered you a $2 rebate, you would only really pay $5 for the trade as you would receive $2 cashback on your trade. Using the example of receiving a $2 commission discount per trade, for each lot, the trader is able to save (or earn) an extra $200 per month if they were to trade 100 lots of volume for that month
Forex rebates can enable traders to earn some cashback on their trades, regardless if a position is closed in profit or loss. Simply put, it’s a forex cashback program offered by a forex broker which pays you a cash rebate for each trade you make.
Most forex brokers do not penalise traders for using rebates. The spreads and commission should remain the same as if you weren’t part of the rebate program. Otherwise, it would defeat the purpose of getting a rebate in the first place.
Forex rebate programs are becoming more popular as savvy traders begin to realise the savings that they can make which can significantly reduce trading costs when day trading. This is especially the case for high volume traders and those using high frequency trading or scalping strategies. Whilst the average retail trader can benefit from forex rebates, institutional traders can also get forex rebates.
How can I get forex rebates or cashback?
If you want to get forex rebates to save on your trading costs, you first need to find a suitable forex broker with cashback. You will then need to register on the rebate brokers website and go through the verification process. Once your account has been verified, you will receive your login details. From then on, you can get a rebate payment for every transaction, even if it was not profitable.
Some broker rebates are deducted for your trades right away whereas others pay out at the end of the month. Some forex brokers offer rebates via third-party providers. In this instance, you would need to sign-up with the forex cashback programme and link your broker account. Just make sure you check they do not apply any spread or commission mark-ups to cover the rebate they are offering.
What are the alternatives to forex broker rebates?
Using a forex broker with rebates is not the only way that you can lower your trading costs. However, it is probably going to be one of the best ways to save money in the long-term. That being said, here are a few other ways you can possibly improve your trading conditions and make savings.
The spread is the difference between the bid/ask price and is what you will pay your broker when you place a trade. If the spread were trading 1 standard lot and your broker had an EUR/USD spread of 2 pips, then you would need to pay them $20 in spread fees.
On the other hand, if your broker had an EUR/USD spread of 1 pip on the EUR/USD, you would need to pay them just $10 instead of $20, saving you 50% on each trade.
Hence, low spread forex brokers could save you a significant amount in the long run and can be the difference between good and bad results when scalping a few pips here and there.
At the end of the day, we would use a forex rebate broker to try and lower our commission fees. Well, isn’t it obvious that we can also pay less by choosing a broker that has low fees to begin with. Some brokers commission for will work out cheaper than a broker who does offer cashback anyway.
You will also find there are plenty of no commission fee forex brokers. However, these types of broker will often add a spread mark-up to compensate for the lack of commission fees. You could even end up paying more if the spread is too high, which can also make it difficult for forex scalping strategies to perform well.
The execution policy that each type of forex broker uses can determine who fast or slow your trades get sent through to the forex market. If there is too much delay (slippage), then you can end up with trades executed away from the price that you unexpected. This can put you in an unexpected deficit right away.
Forex brokers with a dealing desk can sit between you and the market, which can cause a conflict of interest and additional slippage. Even if this is just milliseconds, it can still make a difference when you consider just how volatile the forex market is. 1 pip of slippage is $10 when trading 1 standard lot. If you placed 10 trades per day and had a total 10 pips of slippage, that would be over $100 in unnecessary costs.
Of course, slippage can always occur with any broker as it depends on other factors such as the current market liquidity, volume and volatility. I find that brokers with plenty of high-quality liquidity providers tend to have less slippage as they get their prices from multiple different sources.
On the contrary, ECN brokers with no-dealing desk execution can send your orders directly through to the forex market. This means that yours positions can get executed at the best possible prices at all time, with minimal slippage. These brokers could also save you money if trading frequently and can be the difference between good and bad results when using a strategy that requires high speed execution at all times.
Although everyone can benefit from rebates and cashback, I think that there are some strategies that require them more than others. If a strategy involved taking one position per month, the savings from using a forex broker with rebates compared to a strategy that took 10 trades per day would not be as significant.
For example, if you are using a scalping strategy that targets just 1-2 pips per trade, getting 1-2 pips rebate from your broker could be the difference between winning and losing results. I have seen the same forex strategies give a completely different set of results simply due to a difference in the broker spreads, commissions fees and slippage.
Best forex broker rebates
When choosing the best forex broker rebates, the basic round lot commission needs to be taken into account before assessing the value of the rebate. In general, the lower the commission fee after the rebate has been deducted, the better. I have seen some forex brokers without a rebate offer lower commission fees than forex brokers with rebates taking into consideration.
However, it’s not just a case of choosing the forex broker with the highest rebate. It is important to remember that you are paying for all of the trading products and services that a broker is offering you. Some brokers offer more value-add services, research, and tools and can, therefore, justify charging more. It is not ideal to have the highest forex rebate but pay much more in terms of the spread than you would elsewhere.
That being said, you can see a selection of our best forex brokers with rebates in the table below. We have not just taken into account the value of the rebate, but also other important factors to consider when choosing a broker including the trading platforms, account types, deposit/withdrawal options, support and regulation.
ASIC, BaFin, CFTC, DFSA, FCA, FINMA, FMA, FSA, FSCA, JFSA, MAFF, MAS, METI, NFA
Forex broker rebates pros & cons
- Save on trading costs
- Better pricing on trades
- Improved trading strategies
- Variety of brokers to choose from
- Rewarded for your loyalty
- Rebates for new and existing traders
- Minimum trading volumes required
- Not always paid upfront
- Some brokers are cheaper without rebates
- Spread can be marked-up to compensate
- Potentially need to pay other fees
Conclusion: do I need a forex broker with rebates?
You do not need to use a forex broker with rebates, but it could save you on trading fees. This is especially important if you are trading frequently and using forex strategies that only target a few pips each time. Using a forex rebate broker in this case could be the difference between success and failure. However, there is much more to trading than that. Other important factors including spreads, slippage and discipline can all be just as important as high rebates.
I think it is worth mentioning that some forex brokers offer rebates but do not actively promote them on their website. It is worth asking them if cashback rebates are something you are set on getting. If you already have a forex account with a broker and have been consistently trading significant volumes, you might want to ask them if they can provide you with loyalty rebates.
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