What's a Forex Introducing Broker?

A Forex introducing broker is an individual or company that introduces clients to a parent broker. When you open an account with a new broker, you might be working with an introducing broker. Before doing so, it is important to know what these brokers are and what exactly they do.

Forex Introducing Brokers

A good Forex broker is always looking for more customers. Even though it may have thousands upon thousands of customers, you can never get enough. These foreign exchange brokers want to bring on more customers every day. To do this, they use the services of an introducing broker.

This individual or company works as a representative for the company but does not necessarily work directly for the broker. The job of this representative is to try to bring on more customers for the main broker.

Financial Incentive

So why exactly would anyone do this for a Forex broker? Well that's easy...it's called money. I'm sure you've heard of it? Forex introducing brokers make a fee every time they bring in a new client to the Forex broker. In fact, these representatives might make a commission every time the new customer places a trade. Most Forex brokers give the representative a portion of the spread that they earn any time a trade is placed. This can be a large potential source of passive income for the representative.

Example

So let's say that you are approached by a nice guy in a suit named Diego. Diego tells you that he works with Infinity Trade Consultants and he wants to help you make money in the Forex market. Diego tells you that you can open an account through him with any broker that he works with. He gives you a list of brokers that you can open an account with including companies like Gain Capital and FXCM.

You like what Diego has to say and you decide to give him a shot. You give him all of your information and open an account with FXCM through him.

Once you fund the account and start trading, Diego will make money from you without you giving him any money directly. Every time you place a trade, he gets $7 per lot. FXCM keeps track of how many trades you place within a given month and then sends him a check for the amount that they calculate. They take the total number of lots that you have traded and multiply that by the agreed upon rate. This money comes from the Forex spread that the broker is compensated with when you trade.

Rebates

While this might not seem like a big deal to you, you can actually take advantage of this phenomenon. What if you could earn money from the money that the introducing broker gets from the Forex broker? Well, as it turns out, you can. You can sign up with a number of these brokers who will actually give you a portion of or the entire amount of money that they are given by the broker.

These trading rebate programs are a way to earn your business and you can make some significant money if you trade often enough. Of course, if you are trading .001 lots a couple of times a month, you really aren't going to make very much money. But something back is better than nothing that, right?

Scams

Even though there are a number of companies out there that will offer you this type of deal, you need to check them out thoroughly before signing up for an account. You need to make sure that you are dealing with a legitimate representative of the parent Forex broker before getting involved. Otherwise, you might simply be giving your money to some scam artist who is going to use it to buy a new yacht (surely you were planning on investing that much in the Forex market, right?).

When working with one of these brokers, you should still be able to deposit your money directly into the account you set up with the main Forex broker. For example, you would be giving your money to FXCM instead of to Diego. If anyone tries to get you to believe otherwise, you should most likely avoid working with him.

Getting Paid to Trade

If you're interested in signing up with a Forex introducing broker and getting involved in a trading rebate program, Cashback Forex is pretty much the best one around. You can sign up for many of the popular brokers in the industry and get a percentage back for every trade you place. You just sign up for an account, start trading and then get a check every month based on the amount of lots you trade. Pretty easy, right? Click on the banner below to find out more about how it works and to open an account with your favorite broker.

Return From Forex Introducing Broker to Forex Brokers

Return From Forex Introducing Broker to Forex Trading