What is a Forex Rebates Calculator?
Forex rebates are a wise method that enables traders to earn additional funds. From their completed trading positions in conjunction with their preferred FX broker. Regardless of whether the position resulted in a profit or loss.
Simply, it entails a cashback program provided by a third-party entity linked to the trading account. It rewards traders with a cash rebate for each trade conducted.
This, in turn, leads to a reduced spread and an enhanced win ratio. To illustrate, suppose the rebate is 0.5 pip, and the spread on the EUR/USD pair amounts to 1.5 pips. In that case, the net spread would be a mere 1 pip.
By connecting a new or existing trading account to a rebates program provider. Commonly referred to as an IB broker. The FX broker compensates the rebates provider by sharing a portion of their spread or commission profit for each trade executed. This compensation serves as a gesture of gratitude for the referral of customers to the broker.
The rebates provider, in turn, reciprocates by sharing the majority of its revenue with the trader as a token of appreciation for signing up through the IB broker. Traders receive a portion of the broker’s spread or commission profit. Which is paid back to them in the form of cashback or credited to their trading account. This cashback is disbursed irrespective of whether the trader achieves a win or a loss in a trade.
Our Forex Rebates Calculator is a valuable tool for traders. It enables them to accurately compute the amount they can earn in cashback based on the rebate rate per traded lot and the total trading volume.
To utilize the Forex Rebates Calculator, follow these steps:
Instrument: Rebate rates may vary depending on the selected asset and partner broker. In this field, traders can choose from a range of options, including major forex pairs, minors, stock indices, popular cryptocurrencies (such as ADA, BTC, ETH, LTC, XLM, XRP, etc.), and commodities like Gold, Silver, and Oil. Let’s select the EUR/GBP pair for our example.
Deposit currency: Here, traders select the currency in which their trading account is denominated. This ensures the final calculation displays results converted to the trader’s account base currency. For our example, let’s choose GBP as the deposit currency.
Rebate per lot: This field holds crucial significance in the calculator. Most FX brokers provide rebates as a part of the spread, measured in pips. However, other brokers, particularly those operating in an ECN trading environment with commissions per traded lot, prefer to offer a rebate based on the commission cost.
For instance, suppose an FX broker charges a commission of 6 USD per traded lot. They may then provide a cashback of 0.5 USD per lot traded, derived from the commission cost.
Nevertheless, most FX brokers distribute the cashback from the spread. For our example, let’s assume a hypothetical rebate per lot value of half a pip (0.5 pip).
Lots traded: Rebates are calculated based on the traded volume, measured in lots or units, regardless of whether the position was closed at a profit or loss. In this field, traders have the option to calculate the value of rebates based on the lots traded or the units traded. Let’s choose a total volume of 10 lots traded for our example.
Once these fields have been filled, click on the Calculate button.
The results provided by the rebates calculator rely on a live market price feed containing the current interbank rates, displayed in a 5-digit format, which facilitates the calculation of rebates for instruments not traded in the account base currency. This is particularly applicable to instruments like the AUD/CAD pair.
Consequently, for the EUR/GBP pair, with a total traded volume of 10 lots and a rebate rate of 0.5 pip, on a trading account denominated in GBP, the current rebate value amounts to £50. Traders should bear in mind that when joining a rebates program, such as the one we offer, the cashback is unfailingly remitted, irrespective of whether the traded volume resulted in a profit or loss.