Facts to Know About Forex rebates and spreads...

Forex Rebates are always engulfed into controversies. Most Forex traders are unable to determine whether they can actually reap profits by availing the option of Forex Rebate. 

Everyone wants to make a quick buck. In the quest to make easy money, more than often people are on the lookout for discounts and coupons. Whether they use it or not, they want to hold on to discount coupons, whether for Forex Trading or breakfast. While selecting a Forex Broker the above points need to be kept in mind.


Ways of Forex Rebate

More than often, the forex brokers will offer you forex rebate without you even realizing the same. Many traders are known to put a few dollars in your trading account while setting it up. This helps you to get your account established and start trading without many hiccups. That’s not all! Many traders would also provide you bonus money when you transact frequently.


FIXED V/S VARIABLE SPREAD

It is necessary to know how a trader prices his spreads when you are shopping around for one. Knowing this will save a significant amount of money and therefore, it should be the prime factor governing your decision when you are choosing a Forex broker. There are two types of spreads offered by brokers but deciding which one is the better option depends upon the trading style of the individual. Here are the two spread options that traders are made available with:


Fixed Spread 

The spreads always remain the same throughout in a fixed spread. The predetermined spread is most cost effective as the trader knows the bid and ask price and therefore will make an effort to keep the spread constant even when the market is volatile. They strategize better having prepared for the unpredictability of the market.


Variable Spread

On the other hand, a Variable spread changes rapidly with the blink of an eye. It depends upon the market conditions and increases with increase in liquidity and decreases during low market times. Take the example of variable spread for EUR/USD pair. Usually, the difference ranges from only 1 to 4 pips but when the market conditions are changeable and mercurial, then the difference can rise upto even10 points in as less as 5 minutes. It all depends upon how quiet or changeable the market is.

The variable spread is a better option for long-term traders, who desist from trading during events like speeches affecting economy or during the opening hours of stock exchange etc., as the opening positions at such times are priced higher. When the time frame is long-term, the loss of a few pips will not matter as much. Traders place positions when the direction of the market is clear.

The low gap may be profitable in variable spread when the market is low and quiet but if the market is volatile, the gap can widen and result in a loss too. Therefore, there are profits and losses in trading using both kinds of spreads. When the spread is fixed, the gap is synchronized and there is no chance of being surprised, as the traders always know the bid and ask price and the parameters.


The best option for you depends upon what kind of a trader you are and how quickly you can react to the changes in the market. While fixed spreads are predictable, variable spreads can be low cost when the market is quiet. The choice on how you wish to trade is exclusively yours.