Who doesn’t love rebates? The entire foreign exchange (FX) industry facilitates rebates and kickbacks like no other. Before opening a live trading account, check to see if you can open the exact same trading account through an introducing broker (IB) that will pay you rebates instead of opening your account directly through the broker. Sometimes you can get identical trading conditions while pocketing free rebates just by going through an IB. That being said, it’s wise to be cautious as there are many more IBs out there that would happily ask the broker to give you higher spreads and commission so that they receive larger trading rebates on your account. In this case, clients that approach the same broker directly receive a much tighter spread. We advise you to be careful and do your due diligence.
We’d like to use this opportunity to issue a word of caution: always double check and make sure that when you are making a deposit you are sending your money directly to the broker and not to the referring agent / introducing broker (IB). NEVER send money directly to your IB. If you do this, you are NOT the client of the brokerage and if the IB runs away with your money, it is most likely gone for good. We still see this happening in the industry on a regular basis, even though it would stand to reason that people would exhibit basic common sense when it comes to their financial investments. In a scenario where an IB that was collecting funds suddenly disappears, what we typically see happen is the clients approaching the brokerage where they thought their money was being held. They usually insist that they have an account at the brokerage, and demand that the broker return their money to them. The broker then informs the investor that only the IB was a client of the brokerage and that the investor was never a client of the brokerage, so it’s up to the investors to retrieve their money directly from the IB. It’s unfortunate, but we see this type of situation happen again and again in the FX Industry, particularly in Asia. It’s our hope that people take this warning seriously and exercise common sense when funding their trading account.