How Do Forex Rewards Work?
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A Forex reward is a loyalty program offered for existing customers to keep them interested in a broker’s services so that the client continues to trade and invest money with the broker. There are plenty of different rewards, benefits, and promotions offered by brokers that are designed to lure traders into opening and maintaining an active account with a company. Such kinds of Forex rewards are ultimately beneficial for the trader, as these rewards can be anything ranging from cash rebates, bonuses, commissions, and other rewards.
Why Do Forex Brokers Offer Rewards?
In the grand scheme of FX brokerages, an honest broker earns its living from spreads, commissions, and SWAPs, which are the only ways by which a broker can make money from its clients. Since all regulated brokers are required to keep their client’s funds in segregated accounts, they can never use their customers’ money for financing the company’s operational cost or for other profitable investments. Nevertheless, the company may be able to accrue interest on the deposited amount, but nothing beyond that. Therefore, it is vital for a broker to entice its clients into making more trades to increase the revenue through multiple spreads, commissions, and SWAPs.
Forex trading is a risky business, and it is a guaranteed fact that a majority of traders lose their invested capital. Therefore, if a trader does not replenish their trading account with more money, the broker can’t earn any income. How do brokers work around this problem? Most legitimate brokers offer a loyalty program that includes Forex rewards such as cash rebates, cash paybacks, loyalty bonuses, gifts, lower spreads, and other types of FX promotions. Such FX rewards will entice traders to deposit more money into a broker and enjoy the benefits of trading rather than choosing a different broker and losing their hard-earned loyalty rewards.
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