Let us speak about The Background. Just how is it feasible that some forex broker providing rebates to their clients? Should there be any deficiency of confidence because the broker giving out discounts? There really should not any miss judges about broker offering rebates/cash to their consumer, especially from a specific ECN broker. ECN agents gain revenues mostly using their client through their price spread.
You as a forex trader should know that there is always spread between pairs, when you trade the market (either shorting or longing) the broker gets their profit, say for eurusd the spread is 2pips, so when you open up a position for the pair, it generate income for the broker, and the profit should be around 2pips, if you put 1 full lot($100, 000), then the broker should gain ~$20 from the trade it do it yourself, whether the trade moves profit or goes failures. forex cashback rebate
This should be worthwhile of considering, there are some Introducing Broker(IB) percentage scheme out there, the broker will give zero. 3 pips up until 0. 7 pips every trade closed by a client referred by the IB. Based from this commission scheme, there are a few IB giving back their commission payment to the clients called by them (the IB), and this is what we have to call Forex Rebates/Forex Procuring. Some IB give 0. 3 pips cash back, and several could give 0. 7 pips Refunds
Okay now we know the background of the Forex Rebates, how should we calculate the made rebates/cash back when we do sign up an account under some IB Links? To make things simpler out, let’s do some simple example calculations, assuming you will get a zero. 7 pips rebates/cash again:
1. Every trade value 0. 7 pips
2. Assuming were using an auto trading program so called “Expert Advisors”
3. We are trading zero. 5 Lot ($50, 000)
4. Each day the EA(Expert Advisors) could deals around 20 times a day on a sole match
5. We are trading the EURUSD set so that the value of 1 pips of 0. 5 lot EURUSD is $5
6. The rebates/cash back we gain for a period of 1 month (20 trading days) should be: 20 trades * 0. 7pips * $5 * 20 trading days = $1, 400. 00
Regardless of the clients trade was on profit or was on loss, the consumer already banked $1, four hundred out from the cash return he/she made. If we must look into profits annually, it should be a year times $1, 400 = $16, 800
There should be a broaden way of view about the fx rebates made available from some IB, so that as a forex dealer we know that we do trade the fx market pairs, and each pairs caries their own spread rate. Whenever we didn’t sign up through any IB that is offering cash back/rebates, then all of the propagate profit will go to the broker. As an added advantage, every fx trader should consider cash back/rebates to their trading activity.