Practical nature of a rebate service was described here and now we will introduce to you the negative side of this type of service. The opportunity to receive compensation for part of the spread after free registration attracts even professional traders. But the rebate is no more than a type of affiliate program that is advertising. While any advertising has the reverse side of the coin.
What is the danger of rebate service
The purpose of the broker to attract more traders. Retention — the same problem, but another level, because every broker is trying in any form to persuade a trader to register. Some examples of marketing moves:
promotions and bonus programs. Dangerous methods for a trader because not everyone knows that bonuses should be worked back. Unreasonable use of the bonuses results in a loss of deposit due to misunderstanding of the precedence of write-off of money loss;
affiliate programs. Provide a fixed bonus to the trader for every new customer, or a percentage of his turnover;
rebate. Free registration for the service, which allows to compensate the trader part of the spread.
Partnership agreement of rebate service with each broker is individual — someone suggests a compensation of a fixed percentage of the transaction, someone offers the part of the lot. Traders are more attracted to the fact of payment of the spread for any result of the transaction (profitable or unprofitable). The numbers of compensation attract traders, but the question is: why the broker is not offering a portion of the rebate himself? Because the work of rebate service requires money.
The negative sides of the rebate service:
in order to receive compensation of spread, you need to pass the affiliate link on the broker’s website and open a trading account. Procedure of binding of the current accounts is also provided, but not all think about it. Opening two accounts with one broker (the current account and account through rebate service) leads to blocking both accounts without refund of the deposit;
rebate service can use the classic technique of “black Friday” — the spread of one broker is 3 points, but with the rebate service, this is reduced to 2 points. Another broker, who in such programs is not involved — 1.5 points;
the technical side of the compensation of the commission is imperfect. If during the day the trader conducts many transactions (scalper), you may lose part of the spread, which is credited once a week or a month;
the psychological factor. Understanding that part of the spread is returned, the trader starts to increase a lot increasing the risks.
Rebate service is an advertisement. All advertising must be approached with a grain of salt. There are ads that really try to bring to trader something attractive. But there are also that are misleading. If the rebate service really would have been so unfavorable, this service would not have had the demand. But like everywhere else, every good service has its flaws, and also fakes. Carefully analyze all the conditions of the broker, specify the conditions of the rebate and look for the best option for yourself!