Rebate meaning
A rebate is a partial refund of trading costs: part of the spread or commission you already paid is returned to you after the trade.
Formal definition. A rebate is a payment from a broker, an introducing broker (a firm or person who refers clients to a broker) or an exchange. It is calculated on traded volume, usually per lot or per million of notional value, and it is credited after positions are closed. It lowers your net cost of trading. It does not change the profit or loss of the trades themselves.
Some websites use the term "cashback forex" for the same thing. The mechanics are the same as a rebate.
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Worked example (hypothetical)
A hypothetical trader closes a total volume of V lots in a month. A lot is a standard trade size; see contract size.
| Item | Formula |
|---|---|
| Cost per lot (spread plus any commission) | C |
| Rebate per lot on closed volume | R |
| Gross trading cost | V × C |
| Rebate credited | V × R |
| Net trading cost | V × (C − R) |
To put real figures into C, use the spread and commission tools on the calculators page.
What the example shows:
- The rebate depends on volume, not on results. A losing trade still loses. The rebate only reduces the cost of having placed it.
- The rebate is always smaller than the cost it refunds, so the net cost stays positive.
- A larger rebate rewards more trading. That can push traders to trade more often than their plan allows. Leveraged CFD and forex trading can lose money fast, and a rebate does not offset that risk. See risk management.
Where the term appears
- Account statements. A rebate may show up as a separate credit line or as a commission adjustment. See account statement.
- Introducing broker and partner reports. These list volume and the rebate per lot.
- Exchange fee schedules. Under maker-taker pricing, some exchanges pay a rebate to orders that add liquidity (resting limit orders) and charge orders that remove it.
- Options. A barrier option may pay a fixed "rebate" if it is knocked out.
- Stock lending. A "short rebate" is interest paid on the cash from a short sale.
- News. The term appears in reports on broker pricing, payment for order flow and exchange fee changes.
Edge cases experienced traders should know
- Rebates are often paid only on closed trades. Some programmes exclude very short trades or certain instruments.
- A rebate does not refund swap charges unless the terms say so.
- A broker that runs client trades as a B-book is the counterparty to those trades. The rebate is then paid by the same party that gains when clients lose.
- Pakistan. Many rebate offers come from offshore platforms. Per the SBP, remitting foreign exchange to overseas forex/margin/CFD platforms is not allowed through any payment channel (FERA s.5(1)). Per the SECP, offshore platforms have no Pakistani licence or oversight and offer no legal protection or recourse. Read regulation and safety before you deal with any such programme.
Related terms
Frequent questions
What is rebate in trading?
It is a partial refund of the spread or commission you paid. It is usually calculated per lot on closed trades.
Is a forex rebate the same as cashback?
Yes. Both terms describe part of your trading cost being returned to you based on volume.
Does a rebate cover losses?
No. It reduces the cost of trading only. It does not change the profit or loss of any trade.
Who pays the rebate?
It is paid by a broker, an introducing broker or an exchange. The programme terms define who pays and how much.
Where can I see a rebate I received?
Check your account statement or the report from whoever pays it. It may appear as a separate credit or as a commission adjustment.