What are Forex Rebates and how you can you use them to increase your overall trading experience?

Before commiting any money to a broker, make sure you have educated yourself and know what you are doing. As with any investment, you must be aware of the risks involved. If you have any questions, contact a financial advisor to go over any investing questions you may have.

How does it work? It is really easy for the trader to start earning trading rebates. Companies make relationships with Forex brokers so they can offer there customers a return for investing through them. These individual companies bring new clients to the brokers, who in return give a rebate or a commision to the individual company. These cash refunds are then passed on to the trader. It is that simple.

The amount of money returned to the trader depends on the volume you plan to trade. Some offer trading rebates as much as $7 per round turn trade on a standard lot. (Information about lot sizes will follow later.) The best part about these cash rebates is the low risk factor. How can you minimize your risk with an investment? Remember, the trade you place actually may or may not work out - but the rebate is guranteed. These refunds can add up and help off set your trading costs and can even make you a more profitable trader. Let's look at some examples.

WIthout getting into too much detail about what FOREX is, let's focus on the Forex Rebate. First, let's discuss a pip. A pip is the increment of a currency, which is the smallest value of the currency pair. Let's say the EUR/USD changes from 1.4220 to 1.4221, for a change of 1 pip. This increment is the difference between a positive and negative return on your investment. How does this affect you and your trading?

When you make trades with your broker, you pay a spread when you enter the trade. Assuming you trade the EUR/USD, the spread may be 1-3 pips or possibly more. For this example, we will work with a 2 pip spread on a standard size account. If you take a trade to buy the pair, you pay a spread of $20. This is automatically adjusted in your profit and loss statement. Assuming the trade goes in your favor, you will need the currency pair to move two pips to be at break even. Let's not forget the $20. Whether your trade is profitable or not, you still have to pay the $20. Don't you wish you could minimize your trading costs? Of course you do. This is where the power of working with an IB comes in.

Working with an IB offers you a potential rebate of $1-$7 depending on the amount you trade. These numbers are always negotiable with the IB. Say you broke even on the trade. It cost you nothing, but if you were receiving rebates, this would be a potential $7 added back into your account. If you are going to trade, why not capitilize on this extra money? There is nothing you have to do, except sign up through an IB. In the business of trading, you need to take advantage of any free money you can get.

1. Before you start trading with real money, open a demo or practice account. This allows you to learn how to trade and work on your strategy without any financial risk. Understand the risk factors of trading and work with your financial advisor if you have any questions.
2. Research the different brokers in the market. Some of the most reputable ones are FXCM, FXDD, GAIN Capital, and MB Trading.
3. Find a NFA Registered Introducing Broker to open your account with.
4. Build a relationship with the IB and come to terms for your rebate. Remember they make money from you, so if you leave they lose out. You have the leverage. Of course, there is only so much companies offer. Don't be greedy.
5. Start trading with real money and start receiving your FOREX rebates. These rebates can make the diference between a winning and a losing trade.

FOREX is short for Foreign Exchange. Some of you may have come to this page looking for exchange rates because you are about to go over seas. If you are an American heading to Europe, you are in for an expensive treat. The Euro is at all time high against the dollar making US citizens a bit on edge about their currency. The USA used to have the most powerful currency, but now it has fallen by the wayside to Europe, Canada and several other regions. What can we expect next? Only time will tell.

Of course rebates are great, but it helps to be a good trader as well. If you can make money trading and collect rebates as a bonus, then you are well on your way to becoming a profitable trader. Below is a chart of a news event that took place a while back, but it is important to be on the right side of the action and protect your bad trades with stop losses. Don't let the losing trades keep rolling against you and try to make the winners run. In the case below, you would have had a painless trade, assuming you were on the right side. Learn as much as you can before pulling the trigger.