Lower Your Trading Costs Through Forex Rebates

The Basic Principles & Inner Workings Of Forex Rebates

Let us consider the scenario where you are opening an account with an FX broker on your own without going through any affiliate or a referral. In such a case, there is no middleman between you and your broker, and you deal directly with your broker by paying the full markup spread, commissions, and SWAPs. For instance, if you are trading the GBP/USD pair through a standard STP broker, you will be quoted a minimum spread of at least 2 to 3 pips during normal market conditions; however, the spreads can increase by as much as 5 to 10 pips during highly volatile or low-volume sessions. If you are using an ECN broker, you can enjoy a reduced spread of around 1 to 2 pips, but you will have to pay a commission per trade that is directly related to your trade size. And if you are a long-term trader that holds on to overnight trades, you will also have to pay the SWAP fee, which can either be positive or negative.
The trading costs mentioned above are how a genuine and reliable broker makes money from their clients. Therefore, the more a trader trades, the more profit, a broker generates. In this scenario, the entire profit accrued from a trader’s account goes directly into the broker’s pocket. But when it comes to affiliates or referral traders, there is a slight twist to the way how the broker generates its revenue.
A Forex broker is ultimately a business that requires more traders to be a part of its service portfolio to generate more revenue. Therefore, along with its marketing efforts, almost every Forex broker will have an affiliate channel that allows third party advertisers, marketers, individuals, and even Introducing brokers to refer traders back to the broker. In return, the broker offers the affiliate a commission for every verified client and continues to award incentives or revenue to an affiliate by sharing a percentage of pips, commissions, and other fees according to the customer’s trading activities. Therefore, the broker shares its revenue with a referral, which is a win-win situation for all of the parties concerned.