By: Charley Warady
There is always a lot of discussion on the issue of Forex rebates. Whether they are valid or not; whether they truly provide an incentive to trade Forex; whether or not it cheapens the industry. All these are valid points when it comes to Forex rebates and they should all be taken into consideration when choosing a Forex broker.
The concept of 'free money' has always attracted people since the time money was first invented. And the concept of rebates is a common one; whether it involves a coupon from your breakfast cereal; an electronic device you bought; or a car. Everyone wants a discount or an added extra for trying their product. Why should a Forex broker be any different when offering Forex rebates.
Various forms and ways
Some Forex brokers' sites will offer the potential trader a start-up amount of cash. It doesn't sound like Forex rebates until you read the fine print. They say they'll put up the first few hundred dollars for you if you open an account with them.
Some Forex brokers' sites will give you a 'bonus' for the amount of money you put into your initial margin account. The amount of money varies with the size of the account, the type of the account, and other factors that the trader must read about before signing anything.
It is not free money. Anyone that thinks it is free money should not be trading Forex. There are caveats involved and they're rather obvious. The Forex broker doesn't try to hide anything, and they don't make the print that small. When you accept Forex rebates, you must use that money to trade. It's not like they give you the money and you can then transfer it into your checking account. Brokers are not in the business of giving money away, however they will try to sweeten the pot with some incentives.
There is usually a minimum time the Forex trader must keep that money in his account. There may be other stipulations involved, also. The trader should read the whole deal.
The good and bad
There really is no down side of Forex rebates, when you think about it. They should always be accepted and taken advantage. Why not? However, the 'extra' money should not enter into the Forex trader's decision making process when choosing a broker. It can be the last thing on his priority list, but certainly not within the top ten.
So many other factors should be taken into account before the topic of Forex rebates comes up, it should almost be treated as an afterthought. If it means the difference between you adding a couple hundred more dollars into your account, then it might be something you would consider. Why not? If all things things are even between a couple brokers you are considering but one broker offers more Forex rebates, then that might be the balance tipper.
You wouldn't buy a car solely on the rebate, and you're certainly not going to choose a Forex broker because of the Forex rebates. But it can be a consideration.