Rebate trading / strategys

tho93  
Hey, im currently building a Rebate EA, the goal being to stay break even and generate volume (turnover).

We make money for the Brokrage and the Brokrage gives back 60-80% of the spreads generated, its a scalable winn winn Situation.
Technically its easyer and more doable then being longterm profitable in trading.

What im looking for is someone who can help me with the last part of my strategy, im willing to share my rebate EA with you once its done for your help.
I would truely appreciate it!

Befor i describe what i need, the goal is to have as little risk as possible, best case below 15-20% draw down, we want to earn rebates longterm and passivly, for that we need to avoid exponetiall risk like martingale, grid and zone recovery, the Key is not running out of equity (free margin)

So what i need for the last part of my EA is the safest Alternative to strategys like martingale, grid or zone recovery, basicly a no SL approach which either closes profitable or takes on a little draw down to add in, in a safe way, its hard to explain since i dont know what exactly im looking for.

I need linear risk, not too much exposure into long or short, so i guess hedging and averaging to Cover if the exposure to the long side is too big or if exposure (volume/lots) to the short side is too big, we want to reduce the possibility of big draw down but close all bucket of trades slightly profitable in the end.

i would appreciate any help and ideas!
Fernando Carreiro  

Try to think about it a little—if it were so easy to create an EA that generates great volume while breaking even with little risk, only to gain on Rebates, do you really think brokers would continue to offer it?

The answer is no, because the spread alone is going to eat away at any rebates you earn.

Rebates are only worthwhile if your strategy is already profitable.

tho93  
Fernando Carreiro #:

Try to think about it a little—if it were so easy to create an EA that generates great volume while breaking even with little risk, only to gain on Rebates, do you really think brokers would continue to offer it?

The answer is no, because the spread alone is going to eat away at any rebates you earn.

Rebates are only worthwhile if your strategy is already profitable.

I think you missed the point, In your normal trading you have to Deal with spreads anyways. Anyone who doesent do it misses out on a potentiall edge.

Rebate trading simply means having to be less profitable and just Covering the spread.

Lets say you have 1.4x pips spread, thats 14$ spread revnue per standart lot in most instruments, some brokers will pay you back 8$ - 10$ per lot.

So if you can Cover the spread and close break even, thats 8-10$ per lot depending on the Broker.

If you do 2.5x lots a day on a small 500$ account, that means you made 550$ in rebates in one month within 22x trading days.
Meaning you are risk free after 1x month.

Why shouldent Brokers offer it if its a winn winn Situation? The Brokrage earns as well and creates tax write offs, its not like they pay Partners 100% of the spread revnue.
If they choose to pay 10$ per lot, why should they stop offering it? i would argue they thought it through, specially those brokerages which payed out over 300. million$ total in partner programms
Fernando Carreiro  
tho93 #: I think you missed the point, In your normal trading you have to Deal with spreads anyways. Anyone who doesent do it misses out on a potentiall edge. Rebate trading simply means having to be less profitable and just Covering the spread. Lets say you have 1.4x pips spread, thats 14$ spread revnue per standart lot in most instruments, some brokers will pay you back 8$ - 10$ per lot. So if you can Cover the spread and close break even, thats 8-10$ per lot depending on the Broker. If you do 2.5x lots a day on a small 500$ account, that means you made 550$ in rebates in one month within 22x trading days. Meaning you are risk free after 1x month. Why shouldent Brokers offer it if its a winn winn Situation? The Brokrage earns as well and creates tax write offs, its not like they pay Partners 100% of the spread revnue. If they choose to pay 10$ per lot, why should they stop offering it? i would argue they thought it through, specially those brokerages which payed out over 300. million$ total in partner programms.

Covering spread means that your EA/Strategy needs to be profitable enough consistently to be able to cover the spread. And in order to win on the rebate, it has to do this with with little to no risk while working with large volumes.

Do you thing that is easy for a trader/strategy/EA that is unable to be consistently profitable otherwise?

No, it is not. Only when a trader/strategy/EA is already consistently profitable, can it be done, but by then there is no longer a need to be "only break-even" when it can already do better than that.

There is no "magic" here. Brokers use rebates as a incentive to get traders to trade large volumes, but it is statistically in their favour because of what I have just described.

You are welcome to continue trying if you wish, but just keeps these thoughts at the back of your mind.

tho93  
Fernando Carreiro #:

Covering spread means that your EA/Strategy needs to be profitable enough consistently to be able to cover the spread. And in order to win on the rebate, it has to do this with with little to no risk while working with large volumes.

Do you thing that is easy for a trader/strategy/EA that is unable to be consistently profitable otherwise?

No, it is not. Only when a trader/strategy/EA is already consistently profitable, can it be done, but by then there is no longer a need to be "only break-even" when it can already do better than that.

There is no "magic" here. Brokers use rebates as a incentive to get traders to trade large volumes, but it is statistically in their favour because of what I have just described.

You are welcome to continue trying if you wish, but just keeps these thoughts at the back of your mind.


im not here to explain my strategy in detail, but i actually have a smart strategy to generate big Volumes with the least ammount of risk possible, i agree

there is a point where it cant be done better with less risk, thats where im at.

Im not saying it has to be risk free, thats not possible.

Lets say it like that, the big lots are hedged, the small lots try to cover the spread of the big lots. it cant be done more efficiant (less risky) then that!


 Im here to finish the last part of my strategy, looking for help or ideas.

I truely appreciate your thoughts and intentions, but that dident brought me forwhard, still appreciate your thoughts!


I would rather like to hear any ideas how to cover the spread of my hedged big lots with the least ammount of risk possible through small lots? It can be crazy, it can have draw down, but it shouldent be exponentiall risk (martingale)

Always happy to share it when im done with it.

Paul Anscombe  
tho93 #:

im not here to explain my strategy in detail, but i actually have a smart strategy to generate big Volumes with the least ammount of risk possible, i agree

there is a point where it cant be done better with less risk, thats where im at.

Im not saying it has to be risk free, thats not possible.

Lets say it like that, the big lots are hedged, the small lots try to cover the spread of the big lots. it cant be done more efficiant (less risky) then that!


 Im here to finish the last part of my strategy, looking for help or ideas.

I truely appreciate your thoughts and intentions, but that dident brought me forwhard, still appreciate your thoughts!


I would rather like to hear any ideas how to cover the spread of my hedged big lots with the least ammount of risk possible through small lots? It can be crazy, it can have draw down, but it shouldent be exponentiall risk (martingale)

Always happy to share it when im done with it.

It’s all been done before doesn’t work
Rebate brokers charge much bigger spreads in the first place
If hedged means opposite trade to you then all you are doing is paying double spread to be flat
Either way you still need a profitable strategy and if you have that the rebates are peanuts by comparison to trading the strategy 

In the words of blackadder you’ve invented pure green 
Fernando Carreiro  
Paul Anscombe #It’s all been done before doesn’t work. Rebate brokers charge much bigger spreads in the first place. If hedged means opposite trade to you then all you are doing is paying double spread to be flat. Either way you still need a profile strategy and if you have that the rebates are peanuts by comparison to trading the strategy. In the words of blackadder you’ve invented pure green 

I agree! Unfortunately, almost no one ever does the math. Besides rebates, it is the same with hedging, grids, and martingale.

When we try to warn them, they take it as an attack or an insult, when all we are trying to say is that we did the same thing when we started out and got burned.

No matter how many times I post the math to calculate the net result, no one ever takes the time to calculate it and see for themselves.

tho93  
Paul Anscombe #:
It’s all been done before doesn’t work
Rebate brokers charge much bigger spreads in the first place
Either way you still need a profile strategy and if you have that the rebates are peanuts by comparison to trading the strategy 

Thats not true, spread is not increased for rebate/IB partners, you also need spread to earn back spread.

Thats your responsibility as well, you choose the best option.

If you choose a brokrage which pays 2.40$ per lot and increases spreads on you, thats your fault and unprofessional.

Try to look at it this way, if a brokerage pays you back 80% of the spreads you generate, you basicly have great trading conditions!

Doesent matter if you trade manually or specificly for Rebates.

If you get back 8$ per lot on 1x pip spread, you are basicly trading 0.2x pips spread, there is no reason not to do it, if your brokerage offers it.


"doesn’t work Its all been done before" is a argument i cant accept, doesent even make sense.

some people trade profitable, others dont, some get rebates on top, others dont. Saying it doesen work is truely unproffesional, do you mean the brokerage just wont pay out rebates or is it a limitation in your mind that you are just saying but you never tryed it?

Why wont it work? Did you ever try it? Do you understand the numbers behind it?


i dont want to convince you, your statement is just inaccurate in my eyes, or maybe i dont get it
Fernando Carreiro  
tho93 #: Thats not true, spread is not increased for rebate/IB partners, you also need spread to earn back spread.

He did not mean that they increase spreads. He means that the rebate is a small percentage compared to the spread or the commission, so the broker always wins out.

No matter which broker you find, their rebates are ALWAYS a percentage of the trading costs. All that rebates do is act as a discount on trading costs. You can't make a profit from them.

But hey, I know that you don't want to believe us, and that you believe that you are able to do it, but the simple fact is that you are here trying to find help or advice in order to make it a reality.

In other words, as it is now your current ideia or strategy or whatever you want to call it, is not able to achieve your objective, and you are grabbing at straws to find a "fix" for it.

So, just take the time to truly do the maths and see if it is really can do what you think.

tho93  
Fernando Carreiro #:

He did not mean that they increase spreads. He means that the rebate is a small percentage compared to the spread or the commission, so the broker always wins out.

No matter which broker you find, their rebates are ALWAYS a percentage of the trading costs. All that rebates do is act as a discount on trading costs. You can't make a profit from them.

But hey, I know that you don't want to believe us, and that you believe that you are able to do it, but the simple fact is that you are here trying to find help or advice in order to make it a reality.

In other words, as it is now your current ideia or strategy or whatever you want to call it, is not able to achieve your objective, and you are grabbing at straws to find a "fix" for it.

So, just take the time to truly do the maths and see if it is really can do what you think.

Well, look at my last Messages, did i say brokers give back 80% of the spreads generated (precentage of trading cost)?

Or did i say, you can just make profit from rebates? so dont put words in my mouth.


Did i point out the math?
I did, i calculated what it takes to make money from rebates, what spread has to be Covered and what spread reduction a 8$ rebate per lot is.
So dont tell me to take time to do the math, since im actually the only one who mentioned and went through some numbers in this topic, its ironic.

Further Discussion is pointless, so lets leave it at that.

Fernando Carreiro  
tho93 #: Further Discussion is pointless, so lets leave it at that.
Ok, I will respect your opinion and leave you to it.