If you're trading in overseas forex,lose money on every trade if you don't use cashback. Cashback is a system where a portion of the actual costs (spreads and fees) you pay on each trade is returned to you in cash.If you open an account through a cashback site, you can receive cash based on your trading volume every time you trade, just by trading as usual.Not using it is like throwing away a discount coupon.
However, many people probably have the following questions:
- What exactly is cashback? How does it work?
- What should I do to get the best deal?
- Are there taxes on profits earned through cashback?
- Are cashback websites even safe?
This articlethe basic mechanisms and types, making it easy for beginners to understand.key points and precautions when choosing a site. For more detailed information, such as comparison rankings and tax details, please refer to the links to specialized articles. Feel free to read on to find the topics that interest you most.
What is cashback in overseas forex trading? A simple explanation of how it works
In simple terms, overseas forex cashbacka service that returns money to users who have made trades. By opening an account and trading, you can receive money based on your trading volume (number of lots).
There are two main types of cashback offers:
- Direct Cashback: A bonus offered independently by overseas forex brokers. It is not given as cash, but as trading margin (account opening bonus, deposit bonus, etc.).
- Indirect cashback: A bonus received through a cashback website (a company specializing in cashback).The cash is deposited directly into your account.
Everything offered by cashback websites is this "indirect cashback." A major feature is that you receive it as cash, so you can withdraw it and use it immediately
How cashback sites work | Why can they offer free cashback?
A "cashback site" is, simply put,like an agent for overseas forex brokers. When you open an account through the site, the overseas forex broker pays the cashback site a referral fee (IB commission).
Every time a user makes a trade, the cashback site receives a commission from the overseas forex broker. The basic mechanism is that a portion of that commission is thenreturned to the user as a bonus. This cashbackcan be received for every trade.
For users,the transaction terms remain the same whether you use the site or not, and there are no additional costs. To get the best deal possible, let's first understand this system.
You can understand cashback as a "mechanism that effectively lowers transaction costs." If you have knowledge of overseas forex trading, it's easier to understand if you think of it in terms of spreads
Example: If you can receive a $3 cashback for every lot (100,000 units of currency) traded
- You can receive $3 in cash for each lot traded
- If the spread is 1.0 pip, then $3 is equivalent to approximately 0.3 pips
The discount effectively reduces the spread to (1.0 - 0.3) pips, resulting in an effective spread of 0.7 pips
In other words, the logic is that the effective spread (transaction cost) is narrowed through cashback . *The above is just an example to explain the mechanism, and the actual cashback amount will vary depending on the broker, account type, and instrument.
Why do businesses offer cashback?
You might think, "It sounds suspicious that they'll give me money just for making a transaction." However, in reality, it's a win-win system for all three parties: the service provider, the cashback site, and the user
Overseas forex brokers make profits from spreads and fees incurred for each trade. As the number of users increases and the trading volume rises, the broker's revenue also increases, so theypay rewards to referrers as a means of attracting more users.
Since only a portion of the rewards is returned to the users,users do not suffer any disadvantages and can use the service with peace of mind.It's important to understand that this is not suspicious money, but rather a portion of the broker's marketing costs being returned. Furthermore, even those who think, "Cashback is impossible for me,"realistically receive cashback through overseas forex trading.
Three benefits of overseas forex cashback
Indirect cashback (via cashback websites) offers three main advantages:
- Cash is returned with every trade: Whether you win or lose, you receive a return based on your trading volume, effectively lowering your trading costs.
- Can be withdrawn as cash: Unlike bonuses that are limited to a certain margin deposit, the deposited cash can be withdrawn and used directly.
- Trading conditions remain unchanged: Even when trading through the website, the trading environment, including spreads and execution, is the same as usual.
Even if the cashback per unit is small, the difference becomes significant as trading volume increases. For example, for someone who trades 100 lots every month, even a cashback of a few dollars per lot adds up to a large amount annually. The longer you trade, the more the presence or absence of cashback becomes a difference that cannot be ignored
If you want to learn more specific ways to make money, check out our article on how to earn money using overseas forex cashback , and if you're curious about how realistically possible it is, also see our verification of whether it's possible to live solely off overseas forex cashback
Points to note (disadvantages) of overseas forex cashback offers
While cashback offers offer significant benefits, there are some points to be aware of before using them
Profits earned are subject to tax (a tax return must be filed)
Bonuses received from cashback sites are deposited directly into your account as cash and can be withdrawn immediately. Therefore,the cash received is considered profit earned from FX trading and is subject to taxation.
Profits earned from overseas forex trading (including cashback) are subject to comprehensive taxation as miscellaneous income . The tax rate is progressive, ranging from 5% to 45% in seven stages depending on income , plus a local tax of approximately 10% (Source: National Tax Agency Tax Answer "No. 2260 Income Tax Rates" and "No. 1500 Miscellaneous Income" ). The larger the profit, the higher the tax rate, so be sure to carefully manage your profits and losses. The overall tax rates, calculation methods, and tax filing procedures for overseas forex are explained in detail in the Complete Guide to Overseas Forex Taxes
On the other hand,bonuses offered by FX brokers (direct cashback) are generally not subject to taxation.This is because they are awarded as margin or points, and not as actual cash.
It is often not possible to combine this with direct cashback offers
- Bonuses offered independently by overseas forex brokers = direct cashback
- Bonuses received through cashback websites = indirect cashback
In most cases, you won't be able to receive both simultaneously . Therefore, before opening an account, you should first check whether direct cashback ( account opening bonus and deposit bonus ) is available
a cushioning feature, it may be more advantageous to open an account directly through their official website. Conversely, for brokers that don't offer direct cashback (or offer very little), it's more beneficial to open an account through a cashback website.
»For a summary of other points to note, please see the disadvantages and points to note regarding overseas FX cashback
How to choose an overseas forex cashback site
When choosing a cashback site, it's recommended to check the following three points in order
- Is it affiliated with the overseas forex broker I want to use?
- Reliability of the operating company
- Cashback rate (rebate rate)
① Choose from the overseas forex brokers you want to use
I don't recommend choosing a website or broker based solely on the high cashback rate. Even if it seems like a good deal at first glance, if the broker's spreads and fees are wider than other companies, you might end up losing money overall
The correct procedure is as follows: ① First, decide on an overseas forex broker you want to use (or trust) → ② Find a cashback site that handles that broker → ③ Compare and narrow down your choices based on cashback rates. Don't be fooled by temporary campaigns or high cashback rates alone
② Check if the management is trustworthy
Some cashback websites are malicious, misrepresenting the amount of cashback or collecting personal information without actually providing the cashback. Always check whether the operating company's location and operating history are clearly stated
While the number of service providers can be a useful reference, "more = better" is not always true. Prioritize whether the service provider you want to use is available, and consider the number of service providers as simply an indicator of the range of options you have
③ Compare based on the cashback rate (rebate rate)
While a higher return rate is always preferable, as mentioned earlier,the trading costs of the partner broker. Even within the same broker, return rates, eligible account types, and withdrawal conditions can vary depending on the website. Note that the spread itself, which is the core of trading costs,overseas FX spread and fee comparison tools.
If you want to compare different sites side-by-side, specialized comparison articles are helpful
»A thorough comparison of overseas FX cashback sites | How to choose and recommended brokers: You can check the cashback rates, withdrawal conditions, and ease of use of major sites in one place.
Even if you already have an account, you can open an additional one
If a broker allows you to open multiple accounts,open a new account. However, some brokers only allow you to open one account, or they don't support opening accounts through cashback websites at all.
For those just starting out, it's a good idea to check two things before opening an account: ① the number of accounts you can open and ② whether they are affiliated with your desired cashback site. Detailed instructions are explained in the section on how to open an additional overseas FX cashback account
Why choose Money Charger (Manecha)?
Money Charger (Manecha) is an overseas forex cashback site that partners with a wide range of overseas forex brokers popular among Japanese users. It covers many of the major and popular brokers , including HFM , XS , Exness , Axi , FXGT , and AXIORY
Partner companies, account types, and reward rates are updated regularly, so please check the latest figures on this official page
- View the latest partner companies and cashback rates in the ranking of participating companies
- View all partner companies and cashback conditions
Moneycha operates primarily in Asia and boasts a top-class track record in customer referrals to brokers. Its deep connections with brokersenable it to offer favorable cashback terms. The partner brokers it works with mainly offer services with Japanese language support, making it a safe and reliable option even for those new to overseas forex trading.
Frequently Asked Questions (FAQ) about Overseas Forex Cashback
What is cashback for overseas forex trading?
This system returns a portion of the actual costs (spreads and fees) you pay each time you trade. By opening an account through a cashback site, you can receive cash or bonuses depending on your trading volume (number of lots)
Are there taxes on money received through cashback?
Profits received in cash from cashback sites are subject to taxation as miscellaneous income (comprehensive taxation), just like profits from overseas forex trading. On the other hand, margin bonuses (direct cashback) offered by brokers are generally not taxed. For more details, please refer to the overseas forex cashback tax and tax return guide
Can direct and indirect cashback be used together?
Many providers do not allow you to use both methods simultaneously. Generally, you can only receive either a provider's own bonus (direct) or cash back through a cashback site (indirect). For providers with generous bonuses, direct transactions are usually more advantageous, while for providers with smaller bonuses, using a cashback site is often more beneficial
Can I use this service even if I already have an account?
If the broker allows you to open multiple accounts, you can use this feature by opening a new account through a cashback website. However, some brokers only allow you to open one account, so be sure to check beforehand
Are cashback websites free and safe to use?
There are no usage fees, and the terms of the transaction remain the same even if you use a site. However, since the reliability of the operators varies, it is important to choose a site that clearly displays the location and operating history of the operating company
summary
Cashback offers from overseas forex brokers are a great way to effectively lower your trading costs. Let's review the key points one last time
- Cashback offers effectively reduce your costs with each trade, so it's a good idea to use them if you're trading in overseas forex
- There are two types of cashback: "direct cashback" offered by the vendor, and "indirect cashback" where cash is returned via a website
- Direct and indirect cashback rewards often cannot be received simultaneously
- When choosing a website, I prioritize the following criteria: "Does it partner with the service provider I want to use?", "Is the site reliable?", and "What is the cashback rate?"
- Profits earned as cash through the site are subject to tax (a tax return must be filed)
Understand the system correctly and find the overseas forex broker and cashback site that best suits you!
