Before you understand what pip rebates are you should think to yourself of the following simple trading example; a trader buys the Euro Dollar anticipating it to rise. In order to buy it, the broker charges him 1.3193. However when the time comes to sell this currency, he receives only 1.3190 in profit.
The 3 pip difference between the buy price and the sell price is referred to as a ‘spread’ charged by the forex broker. So when this event takes place and you gain that little less profit it is because your broker has charged you a spread on the currency transaction. This is how your Forex broker makes most of its revenue and moreover his profit.
Hence, in order for a trader avoid major costs in the long term as well as gain more profits overtime, he/she must obtain his Forex pip rebates. It is critical to have concern over the amount of commission paid to a broker and at the end of the day it is a bright decision to gain your pip rebates credited back into your account. Traders have the prospect of an Introducing Broker or a liaison between them and the broker(s) of their choice. As long as a trader registers with an Introducing Broker (through his/her Forex broker), he/she has the opportunity of receiving pip rebates through the agreement his IB has acquired with the broker he selects to register with.
So what is an Introducing Broker? Pip Rebate Liaison
An Introducing Broker (IB) is a firm, individual or website in the trading industry that directly collaborates with forex brokers. The IB has a credible role in the trading market with a large size and ability to pass on new clients to brokers and in return receive broker rebates through which he also makes a profit which is mutual beneficiary to all 3 parties involved in the deal as the broker is introduced new clients, the client (trader) receives an incentive to migrate to the particular broker and the Introducing Broker receives a commission for his services by the broker. By signing up with an forex Introducing Broker, a trader can regain some of his commission on each trade he makes because the IB shares a fraction of the broker rebates they receive with the trader.
In order to receive Forex pip rebates the trader simply has to open his Forex brokerage account as he normally would but this time he must utilize the IB link that is presented. By doing so, the account will be tracked by the Introducing Broker and thereafter apply for you pip rebates through the agreement each IB has with the broker himself. Fortunately, at the end of each day, the trader will have received his pip rebates immediately credited back to his account after each trade activated.
A trader’s account will have been boosted up quite a bit after receiving rebates. Although the amount of rebates received seems quite small, they are not. If the trader considers all his previous trades as well as 50% of his commissions, he will have noticed that the pip rebates have affected his profits positively by increasing them.
Receiving pip rebates can seem quite rewarding after a while, especially if a trader makes frequent large trades. The more and bigger trades made, the higher the amount of rebates received. Gaining commissions back will enable the trader to have trust when trading in the Forex market. It also makes him want to continue his trading activities as he is guaranteed pip rebates by the IB.