On this website, we place a lot of focus on how to save money and how to get the best deals that there are out there. The Yuletide holidays come with a lot of spending. In some countries, workers are paid their salaries before the holidays and the tendency to want to spend it all is very strong. But the reality is that if all that money is spent before the New Year comes around, then January can turn out to be a very tight month.
For those who trade forex or other financial markets, the month of December can turn out to be very slow for the markets. However, the US Federal Reserve has just raised interest rates, so December 2015 is turning out to be a very interesting month indeed. You will need to maximize the opportunities that are presenting themselves in the financial markets so as to make some extra money for yourself. However, a discerning trader will also know that there are deals which can place less demand for your money in the market, so that some money can be freed up for other things such as buying that extra gift for a family member this holiday season.
What Are Cash-Backs All About?
Cash-backs in the financial market are full or partial cash refunds paid by brokers to traders after a certain period of trading activity. You can call cash-backs in the financial markets as a way of rewarding traders for their loyalty in pushing ahead with trades irrespective of the results. Cash-backs in forex are therefore a risk-free form of trading currencies, and they come in various forms.
- a) The first cash-back model is where traders get a full refund of whatever capital they invested into a trade once they have opened and closed a certain number of trades. In this case, the broker is rewarding the trader primarily for trade volume generated. The cash-back amount has a threshold which cannot be exceeded, irrespective of trading volume.
- b) A second model provides cash-backs to traders after the trader must have traded for two months and incurred a negative PnL on the trading activity. The cash-back amount is also determined by the trader’s trading volume, but is paid out on a percentage basis. Greater cash-back payments are given to traders with greater trading volumes. For instance, Trade 24 pays 7% cash-back to traders who trade up to 100 lots over a 60-day period. To get a clearer picture of this model, look at the description of Trade 24 on Crunchbase for a more detailed description.
How to Benefit from Forex Cash-backs
To benefit from a forex cash-back, you need to be sure that the forex company you want to trade with offers a cash-back program. It is also a good idea to know if the company offers full or partial cash-backs. Some companies will also give cash-backs through affiliate partners only. You need to be sure what the conditions are before you go ahead with the deal.
Since the first step is to open an account with a forex broker offering a cash-back, this is where the trader should start. All supporting documentation requested should be assembled and utilized. If the cash-back is provided by an affiliate partner of the broker, then the trader should use the affiliate link to open the account.
The amount a trader can receive as a cash-back payment will differ from one forex brokerage to another. There are companies that will pay a cash-back which is equivalent to the trader’s initial capital, while others will only pay a part of the initial capital or pay a percentage of the traded volume within a time frame. As a rule, cash-back amounts are never lower than the initial deposit capital. This is why they are considered a risk-free method of trading forex.
In addition to getting cash-back payments for your forex trading, it is also important to know that some brokers will actually pay you money for just keeping your trading funds with them. Not all brokers do this as some actually penalize the trader for keeping funds dormant. These special interest accounts can be opened with selected brokers on request.