Some brokers and introducing brokers offer rebates: a fixed amount returned per lot traded. For high-frequency traders, rebates can noticeably reduce the effective cost.
How to calculate the effect:
Rebate of $2 per lot round turn on EURUSD = 0.2 pips.
If the total cost was 0.9 pips, the effective cost becomes 0.7 pips.
Points to check:
Is the rebate paid as cash, credit, or bonus with withdrawal conditions?
Is it paid per round turn or per side?
Are there minimum volume requirements?
Does the broker allow rebates on raw accounts?
Rebates should not change trading behaviour. Trading more to earn rebates usually costs more than it saves.
Do you use a rebate programme, and how much does it lower your costs?
On my main account the rebate works out to about 0.18 pips round turn on EURUSD, which drops an average 0.85 pip all in cost to roughly 0.67. That is real money across a few hundred lots a month, but only if I ignore the urge to trade more.
Cash versus credit matters. One programme paid as account credit that could not be withdrawn until a volume target, and that credit sat there looking like profit I had not earned.
Minimum volume tiers are the other trap. If the advertised rate needs 200 lots and I do 90, the effective rebate on my actual flow is zero, so I calculate against the tier I will actually hit.
I refuse to change frequency for the rebate. The two months I tried, commission savings were smaller than the extra losers from forcing size.
Has anyone measured whether the rebate survives when you move to a raw spread account? On mine the broker cut it once the spread already looked thin.
