Rebate (Cashback) is an attractive method for reducing trading fees in Forex, stock, cryptocurrency, prop firms, and binary options brokers, offered by Introducing Brokers (IBs). Traders can use cashback to recover a portion of their commissions or spread (more than 50%) from IBs.
What is a Rebate?
Traders are required to pay a fee, usually a spread (the difference between the bid and ask prices) or a commission, for executing trades on a broker.
If a trader opens an account through an Introducing broker (IB) or transfers their existing account to the IB's client list (Moving Existing Account), a portion of this fee is paid to the IB (IB commission).
The introducing broker then shares a specific portion of the commission received with the traders in the form of arebate or cashback.
Many IBs collaborate with Forex, stock, binary brokers, or cryptocurrency exchanges and prop firms to pay cashback.
Rebate in Forex Brokers
The IB returns a portion of the trader's paid spread (the difference between the bid and ask prices), commission, and swap as a discount on paid fees in a broker.
Factors affecting trader’s cashback amount:
- The type of traded instruments (currency pairs, cryptocurrencies, metals, commodities, etc.)
- Trading volume
- Consistency of trades over different time periods (daily, weekly, monthly)
- The IB’s commission
Rebate in Binary Option Brokers
The IB commission is calculated based on the traders’ turnover in binary options brokers. The introducing brokers pay back the majority of the traders' commission in cashback or rebate.
Rebate in Prop Firms
The most significant expense in prop firms is the cost of challenges. IBs offer various discounts on the prices of one-step, two-step, and other plans, significantly reducing the cost of purchasing prop firm challenges.
Rebate in Cryptocurrency Exchanges
While it isn’t common, IBs that work with cryptocurrency exchanges also provide cashback programs. An Introducing Broker (IB) returns a portion of the trader's paid fees on spot, futures, or margin trades (maker or taker fees) as a rebate.
Traders can cash out these funds through cryptocurrencies or other methods provided by the IB.
Rebates in Stock Brokers
To trade US, UK or European company shares, traders must pay a set commission to the stock broker. If you sign up or move your account to an IBs client list, you can earn cashback on the commissions you pay to the broker. These rebates allow you to limit your trading costs and increase profits.
When and How Traders Receive Rebate Payments
The introducing broker distributes cashback manually or automatically at hourly, daily, weekly, or monthly intervals.
In the automatic payments, the IB prepares a list of their traders and regularly pays rebates for the fees they pay to the brokerage.
Each IB uses various methods to pay these fee discounts. Rebate payment methods:
- Cryptocurrencies: USDT, Bitcoin, Ethereum, Tron
- E-wallets: PayPal, WebMoney, Perfect Money, Skrill, Neteller, FasaPay
- Credit cards: Visa, MasterCard
- Bank wire transfer
- Internal transfer within the broker
Do All Introducing Brokers Pay the Same Amount of Rebate?
No, the commission received and the cashback paid by each IB vary by its level in the broker’s partnership program. For example, the Alpari broker pays its IBs 20% to 65% of the spread commission, depending on their level.
The amount of cashback an IB offers increases as the number of traders, trading volume, and trade frequency grow.
The commission structure set by the broker for the IB plays a key role in determining the rebate amount for traders. Depending on the trading pair, the IB’s commission is typically either a percentage or a fixed amount.
For example, the IB commission for trading Forex pairs, indices, metals, and commodities at Alpari broker is a fixed amount ranging from $0.30 to $18, whereas the commission for cryptocurrency is calculated as a percentage, ranging from 10% to 35%.
Benefits of TradingFinder IB
Partnering with TradingFinder IB offers several benefits beyond consistent cashback payments. TradingFinder IB advantages:
- Highest commission levels in reputable brokers
- Trading signals
- Trading bots
- Exclusive indicators
- Educational material for Forex, stocks, cryptocurrencies, etc.
TradingFinder IB also offers attractive rewards to traders who refer new clients to the broker.
How to Calculate Forex Rebate
To better understand how cashbacks work, let’s explain it with an example. Suppose you have a trading account with a reputable broker and plan to open a 1 standard lot (100,000 units) on the EUR/USD pair.
The spread for this pair at your broker is 3 pips, and your IB has agreed to return 40% of the spread from each trade as a rebate.
Each pip in a standard lot is equal to $10, so for this trade, you would pay $30 in spread costs.
According to your agreement with the IB, 40% of this amount ($12) will be returned to you as cashback.
There is also an easier way to calculate your rebate amount. You can use a Forex rebate calculator to determine the cashback on your trades quickly.
How to Receive Cashback from an IB
To receive cashback on your trades from an IB, you need to follow 3 steps. The process of receiving rebates from an IB:
- Open an account with the broker through the IB’s referral link (if you already have an account, provide the account details to the IB)
- Execute trades
- Receive cashback from the IB
Note: The Introducing Broker (IB) will pay cashback to traders after receiving the commission from the broker, following the trader’s request. If the broker does not collaborate with the IB, cashback cannot be paid to traders.
Does Using IB Services Increase Trading Costs?
If you use the services of an IB and a non-reputable broker, your trading costs may increase alongside receiving cashback.
However, TradingFinder only partners with reputable brokers, ensuring that your commission, spread, and swap will remain unchanged after you start receiving rebates.
TF Expert Suggestion
Rebates are among the best methods for reducing trading costs (by more than 50%) in Forex brokers, binary option brokers, prop firms, cryptocurrency exchanges, and stock brokers.
Traders who select a reliable IB like TradingFinder and open an account via their dedicated link can receive cashback on an hourly, daily, weekly, and monthly basis.
