Forex Rebate - How Does It Work?
We all love discounts and bonuses, and always, even at the subconscious level, choose exactly the organizations we need that can, all other things being equal, offer them. Most forex brokerage centers are well aware of this, and therefore offer their traders a kind of discount system. Within the international currency market forex it was called rebate - "discount."
What is a ribate and how can it be applied in forex conditions? Everything is very simple. In order to understand in detail the essence of this phenomenon, it is necessary to have an idea of how the income of forex brokers is formed. Since it is nothing but a market, albeit rather peculiar, the main law of the market - "for everything it is necessary to pay" - acts on it without failure. Forex brokers exist at the expense of spreads - the difference between the price of sale and the purchase of currency contracts, and it is not surprising. Each trader should be prepared for this state of affairs and take into account these overhead costs when calculating future revenues on forex. But forex is also a competitive market, and competition between brokers also exists. Each of the centers is directly interested in attracting traders and increasing the volume of deals, in turn, traders themselves want their cooperation with a particular broker to be as fruitful as possible. The symbol of such mutually beneficial interaction is forex ribate. It is the return of part of the spread to the trader ribate service. If the trader simply pays the broker some commission for the work, in this case part of it can also be returned as a bonus.
As a rule, the size of the ribate is determined by the volume of the transaction in a direct dependence. If the trader only "looks" at forex from case to case, then he should not rely on a large bonus size. Another is if the amount of all the transactions he has performed is sufficiently large: in this state of affairs, the trader with full right can count on a tangible amount of increase to the amount he has earned.
The particularly attractive the ribate is that it will be obtained by the trader, even if his deal turns out to be unprofitable. It is no secret that not all forex trading operations can bring super profits: even many currency market aces often end up "at their own" at best. And even with a complete failure, the trader will be able to receive a "consolation prize" from the broker and then use the amount more successfully. In short, ribate is a tool to simplify not the easy life of a trader - and in no other way.
To be sure, ribate is an extremely tempting phenomenon, and the size of part of the spread that the brokerage center promises to return can be a decisive factor in its choice among competitors. However, these considerations alone should not be used. Common sense suggests that any broker "feeds" only at the expense of the spread, and therefore is unlikely to work for itself at a loss. Therefore, it is necessary to choose a brokerage center not only based on the conditions of the ribate, but also taking into account its reputation, place in ratings (there are many) and reviews of other successful traders.