Rebates and cashback programs quietly push scalpers to overtrade

[Amanhasnoname]

Rebate deals look like free money. Trade a lot, get a slice of the spread or commission back. For a high-frequency scalper, the monthly payout can look impressive.

The trouble is what it does to decision-making. Once a rebate is in play, a marginal trade that would have been skipped starts to look acceptable, because the rebate offsets part of the cost. Trade count creeps up, selectivity drops, and the strategy's edge gets diluted by setups that only break even after the rebate.

There's a second catch. Rebates often come through introducing brokers or third-party sites, and the broker may offset them with wider spreads or lower-quality execution. A rebate of 0.3 pips is no help if the average slippage got worse by 0.4.

A clean way to judge it is to compare trading results before rebates, after rebates, and against a version of the strategy with a stricter filter. If the filtered version earns more without the rebate than the full version earns with it, the rebate is hiding a problem.

Has anyone seen their trade count creep up after joining a rebate scheme?