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Forex rebates is a clever way allowing traders to earn extra cash from their closed trading positions, and with their preferred FX broker, regardless if the position is closed in profit or loss. Simply put, it’s a cashback program offered by a third-party provider, linked to the trading account, paying a cash rebate for each trade taken, resulting in a lower spread and improved win ratio. For example, if the rebate is 0.5 pip and the spread on the EUR/USD pair is 1.5 pips, then the net spread is only 1 pip.
By linking a new or existing trading account to a rebates program provider (IB broker), the FX broker will pay the rebates provider part of their spread or commission profit for every trade you make as compensation for referring a customer to them.
The rebates provider will then share the majority of its revenue with the trader, as a thank you for signing up via the IB broker. Traders will get part of the broker’s spread, or commission profit, paid in cashback, or credited back to their trading account. This cashback is paid regardless a trader wins or loses in a trade.
Our Forex Rebates Calculator can help traders to precisely calculate how much they can earn in cashback based on the rebate rate per traded lot and the total volume traded.
Currency pair: The rebates result can vary depending on the selected cross, as it takes into account the pair’s market price. Traders can select from one of the Major Forex pairs, Minors, from the most popular cryptocurrencies versus the USD (BTC, ETH, LTC, SLM and XRP), or Gold/Silver against the USD. Let’s choose, for example, the EUR/GBP.
Deposit currency: On this field traders simply select their trading account deposit currency, so the final calculation will show the results already converted to the trader’s account base currency. We choose the GBP as the deposit currency, for our example.
Rebate per lot: The crucial part of this calculator. Most FX brokers will pay the rebate as part of their spread, in pips. Other brokers, mainly ECN environment trading brokers, with commissions per traded lot, will prefer to offer a deduction of the commission cost.
For example, an FX broker charging 6 USD commission per traded lot, might pay in cashback 1 USD per lot traded, taken from the original commission cost. But the vast majority of the FX brokers simply pay the cashback from their spread. So, for this example, we will use the hypothetical rebate per lot value of half a pip (0.5 pip).
Lots traded: Forex rebates are paid on the volume, the lots or units traded, regardless if a position was closed in profit or loss. In this field there’s the option of calculating the rebates value based on the lots traded or the units traded. Let’s choose, on our example, a total volume of 10 lots traded.
Then we hit the “Calculate” button.
The results: The rebates calculator also uses a market price live feed with the current interbank rate (in a 5-digit format) for the crosses that don’t use the account base currency (for example AUD/CAD) to convert the rebates value into the account base currency.
So, the rebate value for the EUR/GBP cross, with a total volume of 10 traded lots and with a rebate rate of 0.5 pip, on a trading account in GBP, is currently £50. Traders should remember that rebate values are always paid, independently if the traded volume was closed in profit or with a loss.
You might also find our What are Forex Rebates article useful. It can help you to understand how do Forex rebates programs work, how the rebates are paid, what are the benefits of joining a Forex rebates program and some of the best providers to choose from.