Online forex trading is blossoming as more people are getting to know the new way of working from home. Forex brokers compete for more forex traders promising amazing offers and rewards, while we, forex traders, try to figure out which broker is worth trying and which bonus sounds the best.
Forex bonuses pros and cons
•Additional capital increases profit potential
•In case of no deposit bonus, a trader can test the broker’s conditions without spending their own money and risk free.
•Tough conditions for getting the bonus.
•The amount of no deposit bonus is often quite modest – $5-$100.
•Overtrading due to the necessity to meet the conditions of the bonus program.
After choosing the forex Broker, another factor you should check out is broker promotions. Many forex brokers offer “First Deposit Bonus” or a welcome bonus. The idea behind the first deposit bonus is simple – generally, but not always, the welcome bonus comes in the form of percentage matches on deposits.
What does that mean? You create an account with a forex broker, fund your account and get free bonus. The amount of free bonus is based on your deposited sum, for example, if you deposited $100 and your forex broker gives away 50% bonus – you get free $50. Your account will instantly have $150.
So, as I said, as forex trading gets more and more popular and competition between forex brokers increases, forex brokers are becoming increasingly creative and generous in an effort to attract new traders. This can become a priority for many forex traders over a lot of other criteria.
Before getting all excited about the idea of getting easy money before even trading, you should review and understand the bonus requirements. In this world nothing comes easy and free. There is always a trap. So what can be a trap with free forex bonus?
What Is Forex Bonus and Promotions?
Before understanding what Forex deposit bonus is it is essential for you – especially if you are a beginner in trading experience – to understand what is Forex bonus in general. Forex bonus is always determined as a particular gift that the trading platform or website provides to its clients. Usually, the Forex bonuses are exclusive or seasonal (settled for a particular period of time) special offer. In general, Forex bonus types are also known by the name of a promotion. In all cases, this is a reward given by the broker with no requirement for the trader to pay for it. Still, even if you think that any Forex bonus is zero-cost, note that this is not the entire truth.
Thus, in many cases a Forex bonus might require from you to make a deposit – like the Forex bonus we are now talking about – to have a particular amount of trades or a certain sum of invested money during your experience on the website. Forex bonus can vary not only by the exceptional or regular time it is offered, but also by the reason it is offered. So if you are a regular customer, you will receive the loyalty VIP bonus, but if you are newcomer on the website, you will get the welcome sign up (also a kind of deposit bonus) offer. Regular customer usually get the Forex deposit bonuses.
Free bonus has requirements and rules that you should always review on your forex broker website. These requirements and rules come in a form of withdrawal restrictions. Basically, once you get the bonus you will have to execute a certain amount of trading before you can withdraw your free bonus. I strongly suggest checking bonus requirements before you get one. You can always ask your forex broker not to give you the bonus. Thanks for freedom of speech and choice!!
For example, a bonus requirement might sound like this: in order to withdraw your free bonus you are required to execute a minimum trading volume of 10,000 lot of every $1 bonus. Meaning that for $50 bonus you will have to make lots of trading!
Again, before you deposit a single dollar, I cannot emphasize enough just how IMPORTANT it is to review the forex bonus deals to see which one will give you the best advantage and isn’t too demanding on bonus requirements.
A more “innocent” way of getting some free cash is to invite a friend. Once you are an active trader check if your forex broker gives away free money in case you invite a friend. Usually it requires for your friend to make a deposit, then both you and your friend get free bonus. Refer a friend bonus is not calculated in percents. It is usually a fixed price varies from $50 to $500, depending on the account type.
Below are some examples of promotional offers from various Brokers online:
UP TO $5,000 or currency equivalent offered at XM Forex Broker
- Bonus is instant and automatic
- Trade to maximize your bonus amount
- Limited time offer
- Executive level entry to the XM Loyalty Program
50% Bonus on each deposit offered at Octafx
Compensation of your deposit transfer commission from Litefinance
The commission charged by payment systems at deposit will be returned to your trading account.
$15 000 TO NEW CLIENTS from Freshforex
Find yourself here, did you? But have you not registered yet? Or maybe you observe us for a long time, but you but have never traded? This is not a problem! We give presents to 15 our new friends in honor of our 15th anniversary. Make your first trade with FreshForex and share $15 000 with other lucky ones!
Are forex brokers bonuses really free money?
Forex bonuses is actually free money that is sent to your trading account by the broker. However, while the money is sent to your trading account, it isn’t entirely yours as most brokers have conditions attached to the bonus.
For instance, direct withdrawal of bonus money is usually not allowed. However, profits generated using the bonus are typically available for withdrawal.
To withdraw the bonus amount, certain conditions must be met, such as opening a specific number of trades.
Additionally, if the attached criteria aren’t met within a given timeframe (usually between 1-3 months), the bonus might be revoked.
Different type of bonuses
When choosing your forex broker bonus, it is also important to keep in mind that there are many different bonus types available. Here is a more detailed look at exactly the kind of bonuses that are offered by brokers.
Forex deposit bonus: The forex deposit bonus is a certain amount of money offered as a bonus based on the amount which you deposit. In the case of many brokers, this can mean matching your deposit amount with an equal bonus amount.
Forex no deposit bonus: A forex no deposit bonus, as you might gather from the name, is a bonus that is offered to you with no deposit required. in most cases, you simply have to complete the registration process. This money is free and can be used in real trading at no risk to your own money.
Welcome Forex bonus: The welcome bonus can be similar to a no deposit bonus. You will get a bonus money amount for completing registration, and in some cases based on the amount of your first deposit.
Loyalty Program: A forex broker loyalty program, just like any other, is usually based on how much you use the service. In this case, the more you trade, the more you will be rewarded by such programs. These rewards could come in the form of lower trading costs, additional premium trade tools, physical prizes, access to live events and meetings, and much more.
Points System: The forex broker point systems can also be based on loyalty programs. With these systems, the more you trade, the more points you will earn. These points can then be used to access monetary prizes, cars, vacations, and more.
Cash Back and Rebates: Cash back and rebate programs are also a very common form of bonus. Just as the name suggests, with this form of bonus, you can earn money back for each lot you trade.
Money Protection Bonus: This is not a very common form of forex broker bonus, though it exists, nonetheless. This kind of bonus from your broker actually protects your funds from reaching a certain negative level, and in some cases, anything beyond this negative point can be refunded.
Forex Contest Prize: There is a wide range of brokers who organize contests in which you can participate in with virtual funds against other traders. If you win some of these contests by making the most profit from virtual funds, then you can win all kinds of great prizes including cash, cars, and more.
Forex Bonus Can be Tricky and Cause Troubles
Let’s continue with the point above. Usually, forex broker bonuses are aimed at new traders, or traders with small amounts of capital typically depositing $5,000 or less, often $1,000 or less. If you have a $1,000 account, even with leverage it’s going to take most traders (who aren’t full-time) a long time to trade $2,000,000 in order to withdraw (their own funds and) their $200 bonus, as in our example above.
If you manage your risk and don’t risk more than 1% of your account balance on any one trade, on a $1,000 account ($1200 with the bonus) that means you can risk $12 per trade. If trading a mini lot, that means you need to take trades with a 12 pip risk or less (difference between entry price and stop loss order). You need to make 200 such trades in order to make that bonus yours. At one trade a day, that takes nearly a full calendar year. Making a trade every other day means two calendar years of trading before that bonus is yours. What if you want to make a withdrawal in that time?
Not quite as glamorous as it sounded in the ad, is it?
General rules about brokers and promotions.
In most cases, there are some general rules to keep in mind regarding the best forex deposit bonuses and promotions:
- You will need to open an account with a broker and verify your profile on the brokerage’s website
- In some cases, you may need to make an initial deposit of a specific amount
- There is sometimes a limited period of time for using the bonus or promotion
- There might be a minimum required trading activity
- Bonuses cannot be withdrawn. However, the profits made through using the bonus can be
The majority of brokers request that the traders meet rather tough conditions to receive the bonus. These conditions may include the following:
- 1Limited period of using the bonus;
- 2Awarding trading credits increase of real funds;
- 3Minimum required trading volume;
- 4The possibility of withdrawal of only profit earned from trading using the bonus funds, but not the bonus principal.
Some brokers have a really strict policy when it comes to withdrawing the bonus or use it as trading credit. The identity verification process can be a little bit tedious, but one has to understand the broker as well. They want to reward real traders and not random persons who just want to take advantage of the free money. On the other hand, many brokers want to scam people into the business by offering unrealistic sums of money and bonuses, which cannot be fulfilled. Once payment is due, the company simply finds one reason after another why a trader cannot withdraw funds. We see here that mistrust is mutual, and no side can trust the other completely unless the broker and the trader have collaborated for a long time. Professional broker companies have certainly made an effort to define rules so to be acceptable to both parties to avoid any confusion.
The Bottom Line
A broker bonus is a fast and simple way to get some free cash to the balance. It is perfect for beginners to practise their skills and strategies with real money without even depositing. At the same time, claiming the bonus can be a challenge just as meeting wagering requirements. So, you should not expect promotions to bring you real profit. Consider it a good learning and practice method.