Forex Rebates May Determine Your Outcome as a Winning Trader
What if there was a way that you could take any Forex system or strategy that you are currently trading and enhance its success without adding any additional risk. Sounds pretty good right?
Although there is no magic strategy that we know of, we can take anyone’s approach, regardless of style, and automatically enhance it with a well kept secret that we traders take advantage of.
Whether you trade a small or a large account, what some fail to realize is that transaction costs can eat up your profits. In an average trading year let’s say you traded 500 lots during the month. This means that on a typical spread of 3 pips you paid $15,000 in spread during the year. Now imagine that your profits for the year should have been $14,000. If you factor in the spread cost of $15,000 you will be seeing a $1,000 loss instead of the $14,000 profit. This is an extreme example, but it’s meant to show you how important transaction costs are and how they cut into your profit.
There is however, a well kept secret in the industry that can enhance the success of your system by minimizing these costs through an IB volume rebate.
An Introducing Broker (IB) is a an entity that brings business to Forex dealing firms such as FXCM, GAIN or FXDD. These are firms that you will most likely be trading. By using an IB and receiving a volume rebate, you will increase your Forex trading success and minimize your transaction costs.
Doesn’t using a middle man normally cost you more? Here’s how it works. When you open an account through an IB you still see the same spreads and pricing at the dealer of your choice. You receive the same level of great customer service from your dealer, plus you have the personalized customer service touch of the IB. The IB is only compensated by the dealing firm through the bid ask spread. So it costs you nothing to work with them. The dealing firm makes a little bit less, but I am sure you can live with that, right?
Now the great thing is that the IB will entice you to become a client by providing you with perks such as an instant bonus on deposits and volume rebates. The deposit bonus will put your account up before you even make your first trade. The volume Forex rebates will put money into your pocket for every lot your trade. In the example above with a $5 IB volume rebate your $1,000 loss will instantly turn into a $1,500 profit.
By: Richard Sobin.