XM Forex Penguin
XM Forex Penguin

Forex Rebate / Forex Cashback

When you are checking into forex promotional programs, you may discover it is possible to get rebates when trading on some sites. Indeed, you might have encountered forex rebate sites—third-party websites that say they can get you rebates while trading. What are forex rebates, and are they worthwhile?

In this guide, we will go over the basics of forex rebates. We will discuss how these programs work, different types of programs, and what their benefits are.

If you are looking for a forex rebate on any particular forex broker, you can contact us for the options on the rebate.

What is Forex Rebate?

Forex rebates are the same thing as cash-back. Sometimes, you will hear a forex rebate program referred to as a cash-back program.

When you participate in a rebate program, you earn cashback as you trade. It is similar to other cash-back programs you might have participated in elsewhere (i.e. casino cash-back programs or the rebate programs some sportsbooks and racebooks offer).

There are three parties involved in a forex rebate program:

  • You (the trader).
  • The forex broker.
  • A third-party rebate provider.

It is actually the third-party rebate provider that gives you the cash-back you earn while placing trades on the broker site.

We will explain how this works in detail in the next section.

How Does Forex Rebate Work?

Here is how a forex rebate program works:

  1. You discover a forex broker via a third-party rebate provider.
  2. You go through that rebate provider to open an account with that broker. You then make a deposit and start trading with the broker.
  3. As you place trades, you start earning cashback.
  4. The rebate provider pays you your cash-back according to a predetermined schedule (more on that shortly).

The amount of cash-back you receive through the rebates program depends on the provider in question, the broker, and also on how much you are trading and how often.

The more lots you trade and the more trades you place, the more cash-back you will receive.

For many traders, the rebates will come out to a few dollars back per day. Over the course of a month, that can really add up depending on your trading habits.

How Are Rebates Paid Out?

Generally, most rebate programs payout to traders in one of several ways. Either:

1-Your commission rate is reduced over what it would have been otherwise, so the rebates are built into your trading experience. Usually, commission rebates will range somewhere between $1-4 per lot.

Or …

2-Your spread is reduced over what it would have been otherwise. This is a “spread rebate” rather than a “commission rebate.” Typically, spread rebates range between 0.1 pips and 1.3 pips.

Or …

3-You pay the regular commission rate and spread, and the rebate provider pays your rebates out later. This usually will take place when the month ends, but sometimes it might happen weekly, or even more frequently than that. You will get all of the rebates you have earned at that time as a lump sum payment.

Tiered Forex Rebates vs. Flat Forex Rebates

Along with differences in the ways in which rebates are calculated and paid out, they may be either flat or tiered.

A flat rebate program will give you the same rebate amount no matter how many trades you are making.

But with a tiered program, the more you trade, the higher your rebate amount per trade can be.

So, if you make a lot of trades, it may make sense to look for a tiered forex rebate program. If you just make a few trades every week or month, however, a program that pays out rebates at a flat rate might be just fine.

Why Do Rebate Providers Pay Cash-Back to Traders?

Obviously, receiving cashback on your forex trades is advantageous to you. But you might be wondering why forex rebate providers are willing to give you this money back as you trade.

Sites that offer forex rebates affiliate with forex brokers. Both parties benefit.

  • The broker benefits by getting the word out. More traders are able to discover brokers and their services through rebate programs. That means that sign-ups increase. For this reason, the broker is willing to pay the rebate provider a portion of the commission or spread as you trade.
  • The rebate provider is receiving payment from the broker, as described above. Since they are profiting as you trade, it makes sense for them to return a portion of those profits to you as a rebate. Doing so incentivizes continued trading.

In effect, forex rebates are a win-win-win. All three parties gain something:

  • Brokers gain loyal traders.
  • Forex rebate providers make money as traders trade.
  • Traders receive cash-back whether they win or lose.

Benefits of Forex Cashback

You might think the benefits of forex rebates are obvious: money back is always good, after all. But there may be some advantages you have not thought about.

  • All of your trades are less expensive to place. The most obvious benefit of rebates for forex trading is that it costs less money to place each of your trades. Either you save money on the commission, through reduced spreads, or through cash-back later.
  • Trades that might not have been worth it otherwise are affordable enough to justify. Sometimes, there might be trades that you would not normally be able to afford to take because of the regular commission or spread which you can afford if you have a forex rebate. This opens up opportunities that would otherwise be closed to you.
  • Those who trade on a short time-frame may especially benefit. Perhaps, for example, you are a forex scalper. If so, you know how hard it can be to make up for all of the commissions that you pay. Your life will be a lot easier once you are receiving cash-back on the numerous trades you place every day.
  • Your overall bottom line can improve. When the costs of trading decrease, your relative profits increase because you have less to compensate for before you can start making money. That means that you should see a boost in your bottom line. As a result, you may even be able to grow your account more rapidly, making faster progress to your trading goals.
  • Trading can be less stressful when you know you are getting cash-back. Earning money is a lot more enjoyable than spending it. The decrease in your trading costs may be accompanied by a drop in your stress levels.

Forex Rebate FAQ

Now that you know how forex trading rebates work and what some of their benefits are, let’s go over answers to some frequently asked questions.

✅ Is it better to choose an FX rebate program with a reduced commission, lower spreads, or monthly rebate payouts?

There is no “best” recommendation overall for what format is ideal for a rebate program. It depends on your preferences as well as the costs of trading with a specific broker.

We suggest that you check out a few different forex rebate programs and brokers. Check the transaction costs the brokers charge, and then do the math to figure out how much you would be saving through different brokers and rebate programs.

Based on your calculations, you should be able to figure out which broker and program will offer you the best value.

✅ Are spreads higher if I claim forex commission rebates (or vice versa)?

You might be concerned that you are “paying” in some way for the rebates you receive. If you are claiming cash-back, is the broker charging you more in some other way?

The answer to that question is no. Technically, rebates are not “free” cash—you are getting the money back because you are paying into a mutually beneficial system that works well for you, the broker, and the rebate program.

There is no reason to punish you for participating in that system.

You can verify for yourself that this is the case simply by checking the spreads and commissions yourself where you are trading. You will see that you are receiving the rebate, but not paying a higher rate than other traders for services.

✅ How much can I save on trading costs through rebates each month?

How much money you can save each month through forex rebates depends entirely on the specifics of the program and your trading patterns.

But it is not unusual for some traders to save as much as $50 to $150 a month on rebates.

If you trade many lots or if you trade frequently, your savings will be high because your overall costs are high.

If you only place a few trades every month, your savings will be a lot lower. But then again, so will your overall costs of trading.

✅ Who should use forex rebates?

Anybody who trades forex can benefit from participating in a forex rebate program. That is true regardless of your trading method, how much money you are trading with, and how frequently you trade.

But if any of the following apply to you, you may especially benefit from forex rebates:

  • You trade a lot of lots.
  • You place numerous trades.
  • You are a scalper or other short-term trader.
  • Your account size isn’t large enough for you to qualify for the most competitive spreads and lowest commissions your broker offers.

✅ Are there any disadvantages of forex rebates?

No, there is nothing disadvantageous about participating in any legitimate FX rebate program from any trustworthy broker.

That being said, we do offer you the following cautions:

  • Do not join a site and deposit money in an account without researching that broker, however enticing the associated rebate offer may be. Even though many trusted, legitimate FX brokers, offer rebates, some scam sites may do so as well. So, you need to be careful to make sure you are not being reeled in by a scam.
  • Remember, the largest rebate may not be the most affordable option—not if the commissions or spreads on the site in question are also large. You need to check all commissions and spreads before jumping on an offer. You could find in some cases you would save more money with a different broker, even though the rebates are smaller.
  • Even though trading is less expensive when you are getting cash-back, that does not mean that you can considerably loosen up your requirements for trade setups. To make the most of rebates, you need to protect your bottom line by only choosing the highest quality setups you can using your trading method. So, resist the urge to overtrade. Stick with the plan you already have developed.

✅ How can I get started with a forex rebate program?

First, you sign up on a forex rebate website (there is no cost to do this). Then, you look through the brokers that partner with that site. Choose one or more that interest you, and then open accounts on their sites. This too is free, but you will need to make a deposit before you can trade.

Once you have done that, you will begin earning rebates as you trade. You will receive them as either discount on commissions or spreads or as regular payments from the rebate provider on a predetermined schedule.

✅ What if I already have an account to trade FX?

If you already have a forex account on a site that partners with a rebate provider, contact the rebate provider to ask about your options. It might be possible to still set you up to participate in the rebate program.

Now you know what forex rebates are and how they work. Ready to get cashback while you are trading? Better still, claim XM No Deposit Bonus to kick start your trading.