What Forex Bonuses Are Really Beneficial For Traders?
What Forex Bonuses Are Really Beneficial For Traders?
More and more people are interested in Forex trading. And these are potential clients for companies that provide access to the Forex market. Hundreds of brokerage companies operate on the Russian market for these services alone. There is fierce competition between them to attract as many traders as possible, since each client makes a profit. To win the competition, Forex brokers try to offer the most favorable trading conditions, attract potential customers with various kinds of bonuses, discounts, gifts, prizes and contests. This is all part of the marketing strategy. In each company, it is organized in its own way, but there are common signs. In this article, we will look at what bonuses brokers offer and what they give a trader.
The broker’s bonus is usually expressed in an amount of money that is transferred to the trader’s trading account. Bonuses differ according to the conditions for obtaining and how they are used. Brokers often provide a welcome bonus. This bonus is issued only once and only to new customers. This encourages registration and opening an account with a specific Forex broker. The conditions for obtaining may be different, but documentary proof of identity is required. Welcome bonuses are awarded on the first deposit in a fixed amount or as a percentage of the deposit. Some brokers give a welcome bonus with no deposit required. These are usually small, fixed amounts. They are called Forex no deposit bonuses.
The bulk of bonuses are accrued in the form of percentages of the account replenishment amount. Some brokers will charge a bonus only for the first replenishment, others for each replenishment of the deposit. The bonus percentage can be very different and ranges from 10% to 200% of the deposit amount. Often a trader can adjust the percentage of the bonus on his deposit at the time of replenishment. Each broker sets the terms of using bonus funds at its discretion. Usually the bonus cannot be withdrawn, but you can use it to increase the margin and open additional positions. Although the bonus is not withdrawn immediately, brokers usually allow withdrawing part of the funds after a certain volume of trading operations has been completed.
There are two more types of bonuses that can be obtained without replenishing the deposit. But for this you need to fulfill certain conditions. Some brokers offer a customer acquisition bonus. This is usually called “Bring a friend”. The client of the company who has invited a new trader receives a reward in the form of a bonus to the trading account. A more difficult way is demo contests. The winners of various contests on demo accounts receive prizes in the form of replenishment of the trading account. This money cannot be withdrawn, but can be used for trading and withdrawing profits.
What is the point of giving out so many bonuses to brokerage companies? Although, of course, no broker gives money that you can just take. For a no deposit bonus, the company simply buys a new client. If a newbie trader loses the bonus, the company does not lose anything even if he does not continue trading. If the trade is successful, the client will increase the deposit and trade, making a profit. In addition, a no-deposit bonus is usually given for a certain time, after which it is already necessary to deposit your funds to continue trading. Some brokers allow you to withdraw income from the no deposit bonus only after the deposit is replenished.
Deposit bonuses, which increase the margin, encourage the trader to open positions of a larger volume, that is, to pay a larger commission to the broker. The bonus wagering system is also aimed at increasing the broker’s income. For each closed position, some part of the bonus becomes available for withdrawal. But this amount is significantly less than the commission that the trader paid. And in case of withdrawal of the deposit, the bonus amount is proportionally reduced.
At first glance, any bonus is beneficial for a trader. But before accepting the bonus, you need to carefully study the terms of its provision. Often the size and duration of the bonus is limited, and the withdrawal condition provides for a large number of transactions. In fact, this is just a discount on the size of the spread, but organized in such a way as to make the trader trade more actively. For example, if you look at the Forex club bonuses, you can find out that the welcome bonus, although it is 100% of the deposit, is limited to $ 10,000 and is valid for 90 days. After this period, the bonus is canceled.
This is a typical case, this scheme works in almost all bonus programs, differing only in terms and size of conversion. Usually the trader is charged from 1 to 5 dollars for each full lot of the trading turnover. The broker receives from 20 to 50 dollars of spread from each transaction in one lot. There is a small benefit for the trader, but it can be lost if the deposit is withdrawn before the expiration of the bonus. In addition, there is a danger that the bonus will be canceled if the trader’s own funds fall to a certain level. In this case, the bonus funds only act as an increase in leverage.
Really lucrative bonuses are those that do not need to be converted, have no expiration date and participate in drawdowns. In other words, these are bonuses that have equal rights with the trader’s own money. This is extremely rare in the form of a welcome bonus. For example, the Roboforex company gives each new client $ 30, which you can use in trading as your own. If you still accept deposit bonuses, it is better to take a minimum that can be quickly converted.
Forex broker evaluation according to the bonus program
When choosing a broker, potential clients are not least looking at what bonuses it provides. Interestingly, small and young companies offer the most attractive programs. At the same time, the Alpari promo system is limited to one or two bonuses. But this is the largest company on the Russian brokerage market. A large and well-known broker InstaForex provides a very wide range of bonuses and runs many contests. Therefore, one cannot judge the reliability or quality of a broker’s services based on its bonus programs. This is just a characteristic of marketing policy. Recently, European regulators have limited or simply prohibited bonus programs. Instead, brokerage companies are encouraged to simply provide customers with discounts on commission payments.