TL;DR — An introducing broker (IB) is a person or company that connects traders to a forex or gold broker and earns a fee for doing so. That fee is built into your trading costs, usually as a mark-up on the spread or a per-lot commission, which is why choosing the right IB can directly affect your bottom line.
What is an introducing broker?
An introducing broker, often abbreviated as IB, acts as a middleman between retail traders and liquidity providers or brokers. The IB does not hold client funds, execute trades, or provide the trading platform. Instead, their role is to bring in new clients and, in return, the broker pays them a recurring fee based on the trading volume those clients generate.
Think of an IB like a local agent for a global service. They handle the relationship, offer support, and sometimes educate traders, while the actual trading infrastructure is provided by the broker. This model is widespread in forex and gold trading because it allows brokers to expand their reach without a massive marketing budget, and it gives traders a point of contact who can assist them in their own language or time zone.
For traders, understanding what an introducing broker is matters because the IB's compensation is not a separate charge. It is embedded in the spreads or commissions you already pay. Therefore, the type of IB you use can influence your effective trading costs.
How introducing brokers get paid
Introducing brokers typically earn in one of three ways:
- Spread mark-up: The IB receives a portion of the spread every time you open a trade. For example, if the standard spread on EUR/USD is 1.0 pip, the broker might allocate 0.5 pips to the IB. This is common with market makers or brokers offering fixed spreads.
- Commission per lot: Some brokers charge a separate commission per trade, and a part of that commission is passed to the IB. This is typical with raw or ECN accounts where spreads are very low but a commission is applied.
- Volume-based rebates: In some arrangements, the IB receives a rebate based on the total volume their clients trade each month, regardless of whether the trades are profitable.
The exact amount an IB earns is usually determined by a contract between the IB and the broker. It can vary based on the client's trading volume, the financial instrument, and the account type. For example, a standard account might have a wider spread that includes the IB's cut, while a raw account might have a lower spread but a commission that is split.
In our view — The traditional IB model often creates a conflict of interest: the IB earns more when you trade more, not necessarily when you trade well. A rebate-based IB, like Expaid, flips that by returning most of the commission to you, aligning your interests with lower trading costs.
Traditional IB vs. rebate-based IB
Not all introducing brokers operate the same way. The traditional model focuses on generating volume for the broker, and the IB's income is a percentage of that volume. In contrast, a rebate-based IB, also known as a cashback provider, passes the majority of the commission back to the trader. Here is a quick comparison:
| Aspect | Traditional IB | Rebate-based IB (e.g., Expaid) |
|---|---|---|
| Who gets the commission? | The IB keeps most of it. | The trader receives most of it as a rebate. |
| Trader's cost | Higher effective spread or commission. | Lower effective cost per lot. |
| Incentive | Encourage more trading volume. | Encourage cost-efficient trading. |
| Transparency | Often opaque; trader may not know the IB's cut. | Clear per-lot rebate rates published. |
When you trade through a traditional IB, you might not realize that a portion of your spread is going to them. With a rebate-based IB, the benefit is direct: you get cash back on every lot, win or lose, which lowers your overall trading cost.
Why the IB model matters for your trading costs
Every trade you place incurs a cost, either through the spread or a commission. This cost is essentially the price you pay for access to the market. Over many trades, these costs accumulate and can significantly impact your profitability. An introducing broker, by design, is part of that cost structure.
If you use a traditional IB, you are effectively paying for their services even if you never speak to them. If you use a rebate-based IB, you can reduce that expense. For example, if you trade gold (XAUUSD) and the broker charges a commission of $7 per lot, a rebate-based IB might return $5 of that to you, making your net cost only $2 per lot. Over a month of steady trading, that can add up.
This is why comparing IB offers is as important as comparing brokers. A broker with a slightly higher spread but a generous rebate program might be cheaper overall than a broker with a low spread but no rebate. Always calculate your total cost per trade, including any rebates you receive.
To see how much you could save, use our rebate calculator to estimate your monthly cashback based on your trading volume.
How to choose an introducing broker wisely
When selecting an introducing broker, consider these factors:
- Reputation and regulation: Ensure the IB is transparent about their relationship with the broker. Check if they are regulated or affiliated with regulated entities.
- Fee structure: Understand exactly how the IB is compensated. Does it come from your spread or a separate commission? Is there any cost to you?
- Rebate terms: If the IB offers rebates, read the terms. Are there minimum volume requirements? How often are rebates paid? Are they paid in cash or as bonuses?
- Support and education: A good IB can provide market insights, trading tools, or responsive support, which can be valuable.
- Independence: Does the IB represent one broker or multiple? An independent IB might offer more objective advice.
It's also wise to compare brokers directly. Our broker comparison tool can help you evaluate spreads, commissions, and other features side by side.
How Expaid fits into the IB picture
Expaid is an introducing broker with a twist: instead of keeping the commission, we return it to you as a daily cashback. We work with several reputable brokers, and you can see the live rebate rates on our broker rates page. When you open an account through Expaid, you keep trading exactly as you would with the broker directly—same platform, same spreads, same execution. The only difference is that a portion of your trading cost comes back to you.
This model is especially beneficial for high-volume traders and those who trade gold (XAUUSD), where per-lot costs can be significant. By lowering your net cost per lot, you can improve your risk-reward ratio and overall profitability. If you already have an account with a broker, you might be able to switch to an Expaid-affiliated account without changing your trading style. Check our switch calculator to see how much cashback you might be missing.
Understanding what an introducing broker is and how they get paid puts you in control of your trading expenses. Choose an IB that aligns with your interests, and you can effectively reduce your costs without sacrificing quality.
Where to go next: If you're ready to lower your trading costs, explore our how it works page to see how easy it is to start earning cashback on every lot you trade. Or, compare the forex cashback and gold cashback rates we offer across top brokers.