Rebates Calculation in Forex Trading

What are Forex Rebates?

Forex rebates also known as Forex cashback, refer to a reward system where Forex brokers pay traders a portion of the commission for every trade they make. It states that traders receive a percentage or a portion of their trading cost back, regardless of whether they win or lose. It is the simplest way to increase your forex profit or reduce your trading costs.

Forex rebates are usually paid out by a forex rebate service, which acts as an intermediary between the trader and the broker. The rebate service negotiates with the broker to offer rebates to their clients and then passes on transfers of the commission they receive from the broker to the trader.

What is the Forex Rebate Calculator?

Forex Rebates Calculator helps traders to precisely calculate how much they can earn in cashback based on the rebate rate per traded lot and the total volume traded. It illustrates the amount of profit or savings you can based on the trading activity. 

How to use the Forex Rebate Calculator?

  • Instrument: Rebate rates may vary depending on the selected asset, and partner broker. In this category, traders can select from major forex pairs, stock indices, minors, from the most popular cryptocurrencies. For example, the EUR/GBP pair.
  • Deposit Currency – It can be AUD, CAD, CHF, EUR, GBP, JPY, NZD, or USD
  • Rebate type – The rebate can be computed either on pips or money values. Let’s have an example a cashback can be $2 per traded lot or 2 pips per trade.
  • Currency pair – It means the traded currency pair of the choice.
  • Lots – Lots depends on which timeframe are you looking to calculate. If you wish to calculate the monthly rebates then provide the total monthly volume in lots, in the case of a weekly rebate provide the total weekly volume in lots, and so on.

How Do Forex Rebates Work?

To get more clarity, on how forex rebates work. Let’s assume you open a trading account with a broker and execute or make a trade for 1 lot of EUR/USD. The broker charges a spread or commission of 2 pips, which amounts to $20 in trading costs.

If you have a Forex rebate account, you may be permitted for a rebate of 0.5 pips, or $5 per lot. This means that for every lot you trade, you will receive a rebate of $5, regardless of whether your trade is profitable or not.

As time passes, these rebates can add up to significant savings, especially for active traders who make multiple trades per day or week. By using a forex rebate service, you can minimize your trading costs and enhance your profitability. 

How are forex rebates paid?

The mode of Payment may vary amongst different providers. Such as:

  • Monthly cashback.
  • Commission basis.
  • Paid to direct brokerage account

Pros of Forex Rebates:

  1. Forex rebates can be helpful to entry-level traders because as they learn to trade, they can continue to make money from their trades regardless of whether they are profitable or not.
  2. The main advantage of forex rebates is low trading costs and receiving a portion of the commission back can reduce the overall cost of the trades, which can add up to significant savings over time.
  3. It can customizable rebate programs that can be tailored to the specific trading needs. 
  4. Forex rebates reduce trading costs and also increase profits. 

Cons of Forex Rebates:

  1. Forex Rebates does not provide always profit and low trading costs. Trade experts advise beginner traders or entry-level traders to avoid rebate brokers because spreads are higher than the industry average.
  2. The biggest drawback of rebate sites is the high number of malicious users on the internet who target unsuspecting traders with fake forex rebate offers, websites, and so on. 

Frequently Asked Questions

Forex rebate” or “Forex cashback” is a way to receive money back for your Forex trading activities from the fees you pay while trading with numerous brokers.

Lot Rebates means Commission payment/Rebate calculated based on each 'Lot' traded by a Client. Partners are paid in USD amount for each specific symbol traded.

A rebate is a cashback or refund given to the customers against the purchase, which acts as an incentive to complete the transaction.