What motivates you to sign up with a forex broker? For many people, it’s an ensemble of factors – experience, reputation, accessibility, affordability, fair terms, etc. And now, there’s been an inclination to go with brokers that offer bonuses to their clients. If you have not signed up with a broker who allows you to trade in forex with bonus terms, you may not understand why this is a big deal. Why should it matter either way? Should you stick to brokers that offer such terms, or can you stick with those that don’t? Let’s break this down:
What is a Forex Trading Bonus?
Have you ever received a bonus? Maybe you signed up with a betting company and got something extra in your account. That’s what a forex bonus is – a token of appreciation from a broker. It’s their way of incentivizing you to sign up with them and to thank you when you do. Some brokers also offer bonuses when you make deposits.
So, why do they offer bonuses? It would not make much sense for a broker to offer you a bonus without a catch. So, what is it? Brokers make money off your trades. And the more inclined you are to trade, the higher the revenue they generate. The bonuses thus give you the push to trade. And for newbies who haven’t much of an inkling on how to trade, this is the prompt they need to try out trading. See? It’s a win-win situation.
Can you withdraw your bonus? How great would it be if you could cash in on your bonus? But that’s not how it works. Brokers know that some traders can take advantage of their incentives and use them as loopholes for free cash. So, you cannot withdraw the bonus as such. Instead, you must meet the terms and conditions tied to it. Only then can you get your hands on it. So, if you’re trying to get free money without putting in any trading effort, it won’t work. However, accomplishing the TLCs set out by reputable brokers is not an uphill task.
What kind of bonus can you get? Here is where things get interesting. Not all bonuses are in cash form. Let’s have a look at the standard options in the market:
- The No Deposit Bonus: While many brokers offer a deposit bonus, some allow you to get in on the no-deposit option. And as the name suggests, you don’t need to deposit any of your cash to get this bonus. All you need is to register an account and verify your details. And you can use the bonus to trade and make real money which you can withdraw!
- The Deposit Bonus: Most brokers offer this option to their new and returning clients. It works in two ways. The broker can offer a standard amount regardless of how much you deposit in your account. For example, every customer can get $300 on making a deposit. The other option is to match your deposit to a given limit, e.g., a 100% matched deposit up to $1,000. That way, if you deposit $500, you get an additional $500 to use on the platform. Note, though, that you cannot withdraw the bonus until you have accomplished the terms tied to it.
- The Volume Bonus: If you are a large volume trader, you can look out for such bonuses. They allow you to get cashback on your trades, allowing you to enjoy more equity without adding more cash.
- The Reward Bonus: Bonuses don’t come to an end because you are no longer new to the platform. Instead, brokers must find ways to keep you hooked. And they do this by offering you rewards for accomplishing tasks or requirements.
These are the standard rewards offered by brokers. Of course, each platform has its unique way of enticing its clients. So, you can always read the reviews assigned to each option to see what makes the most sense for your trading goals.
Are Brokers with Bonuses All That?
Getting a bonus for something as simple as signing up or depositing money seems like a great deal. But is it beneficial to you? We have some reasons traders cannot help but lean on such incentives:
- Increased Trading Capital: Most people who start trading with brokers do not have as much capital as they want to have. And a bonus goes a long way in helping them build their capital to score higher profits. For example, if you have $500 and a broker offers you 100% matched deposit bonuses up to $500, you can have $1,000 to use in trading. And if you make money from that bonus, it’s yours to keep – it beats using $500 as the profits from $1,000 would be double!
- Higher Leverage: As much as you get a higher capital amount, your level of risk decreases. For example, when trading with your original $500, you face a high level of risk – if the trade flops, you lose all your cash. But when trading with $1,000, your risk level reduces by 50%. And if your trade works, you end up making a profit from the $1,000.
Bonuses also allow you to test how a platform works before spending much time and money on it.
While a forex trading bonus is a fantastic boost to your trading journey, it should not be the sole reason you choose a broker. Much more goes into forex trading, and you must assess how suitable a broker is for your trading goals. All the best of luck!