A Refund, also known as a ‘rebate’ or a ‘cash back’, designates a small percentage of money that is returned to an investor after having suffered a losing trade.
In binary options, a trader usually loses all of the invested amount if the trade expires Out Of The Money. However, some brokers offer their clients a Refund on certain options. This helps traders recover some of the initial investment amount of the trade that they lost and allows them to execute more trades as well as boost their profit margin over the long run.
The reason for which some binary options brokers do this is to show a sign of fidelity or good faith to their clients after they have lost some trades.
It is important to note that not all traders offer a Refund to their clients, and that this is different to a regular sign-up bonus.
The sign-up bonus that most brokers offer their clients is used mainly to attract them initially, and the rebate offered on losing trades is served to ensure that they continue trading with this specific broker.
Most rebates offered by brokers are usually around 5% of the initial investment amount do not normally exceed 15%.