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The Disadvantages and Advantages of Forex Rebate Programs

If you want to be a successful trader, you should not sign up for a forex rebate program. Why should this be? After all, aren’t these programs designed to benefit traders by giving back a certain amount of money for every trade they make?

Yes, but there are also many downsides for a trader when he gets rebates on his trades.

Guest post by FXCC – an ECN forex broker

  1. A forex rebate can make you complacent. After all, why bother exerting yourself to make successful trades when you are earning some money anyway on all your trades?
  2. Joining a rebate program can make you reckless. Since you’re getting rebates on your trades, win or lose, why not be more rash? After all, those big risks might actually pay off with a big win.
  3. You have no incentive to become a better trader. No matter how bad a trader you are, you’ll still earn some money from your trades through rebates. And who knows, no matter how indifferently you trade, you might still make some winning trades.
  4. You won’t exercise good money management. Instead of wisely allocating your trading bankroll among your trades, you might simply decide how much to invest arbitrarily based on ‘instinct’ rather than a sensible trading system.
  5. You’ll still trade even when you shouldn’t. When the market is bullish, it might be better for you not to trade. But you’ll trade anyway since you’re getting rebates.

But, to be serious, what are some of the advantages you can enjoy from a forex rebate system?

  1. You are rewarded just for making trades. Why not enjoy a reward for something that you normally do anyway?
  2. Rebates will help make your trading more profitable. If you’re having a bad run of losing trades, rebates can help make up for it by giving you back some of the money you’ve lost. On the other hand, if you’re making winning trades, rebates will give you additional profits.
  3. A rebate program will reward you simply for signing up with a particular broker. As an incentive, many brokerages offer welcome bonuses to those who will sign up with them through the rebate program. This can put hundreds or even thousands of dollars into your trading account at once that you can use to make trades.
  4. You can still join a rebate program even if you already have an account with an online broker. Many programs will work with your existing broker to arrange a rebate for you.
  5. A rebate program is a good way to earn while you’re still learning to trade. When you’re still practicing trading, losing trades are inevitable. But a rebate can help take away some of the sting of these losses.
  6. Joining a rebate program is free. Since the purpose of the program is to promote the brokerages, there’s no reason for them to charge membership fees or other recurring fees.
  7. The more you trade, the higher the amount of rebates you will earn. Most forex rebate programs encourage you to make more trades by paying you a rebate per completed trade or round turn lot.

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