Forex is a very dynamic market where many customers have found their second home. New Forex broker companies have been appearing almost on a daily basis. The market is highly competitive, and it is hard for these companies to compete with each other and capture the attention of potential customers. To stand out, a broker company has to offer really attractive services and accompanying bonuses. This article deals specifically with the concept of the Forex deposit bonus and how it applies in the Forex market.
Forex Bonuses and Deposit Bonus
When new traders join the Forex community, they are usually welcomed by a Welcome bonus and a no-deposit bonus. These bonuses are for beginners only and can be used just once. The no-deposit and welcome bonuses are very popular, and they attract a lot of new customers. But when new customers upgrade to regular accounts, they still need something to hold on. Forex is a very risky market where people invest a lot of money, so it is only fair to give them something in return. Also, brokers (the good ones) care about their clients and their well-being and want their customers to stay with them. Hence, they offer a variety of bonuses and promotions as loyalty rewards.
The Deposit Bonus
The Deposit bonus is an offer that has become common practice in the Forex business. The bonus refers to the amount of extra money you receive after you make a deposit. The amount of the bonus depends primarily on your deposit amount. The bonus takes the form of percentage and is calculated accordingly. A deposit is an amount you are required to invest to start trading. Every broker decides individually on the minimum deposit amount, meaning that you cannot go below that amount. As said, brokers define their own minimum deposits, and they vary from very cheap to highly expensive. E.g., minimum deposits can be as low as $10 or as high as $500 (for VIP accounts, these numbers can be much higher). As a trader, you should always stay in the loop and make sure not to miss out on a bonus you are eligible for. The deposit bonus is a great opportunity to boost your trading account risk-free.
Deposit Bonus Example
For example, you decide to deposit $100 and the broker says that they offer an 80% deposit bonus. The bonus is calculated according to the amount of your deposit, which means that additional $80 will be added to your account. Now you have $180 at your disposal to trade currencies. The deposit bonuses by Forex brokers are still not a regular procedure or a constituent part of the service package, but rather a promotion offered for a limited amount of time. For example, you can find offers by certain Forex brokers who offer a 100% deposit bonus to be used once. The offer can last a month, two months, or more. That decision is up to the broker.
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.
Terms and Conditions for Deposit Bonus Withdrawal
Bonus Terms and Conditions are clearly specified with professional brokers. Traders know what to expect, how to apply for the bonus, and what criteria they have to meet to collect the bonus. Forex brokers insist on signing the Terms and Conditions. The broker has the right to exclude individuals from the bonus application with no further explanations. Professional brokers always make sure to reward active traders and account activity is one of the basic requests for a bonus withdrawal. For example, if a trader withdrew funds from their account a while ago, and deposits only before a bonus offer and promotion, they automatically disqualify themselves given that this can be considered fraud or manipulation in the market. Most broker companies operate on the principle of linking bonus withdrawals and trading activity. Namely, to be able to withdraw bonuses, the common practice is to request traders to trade a certain volume of trades before they can withdraw the bonus (or profit made out of the bonus), e.g. 10, 20, 40, etc. times. The policy can be harsh and might leave you where you started, with the exact same amount you started without the bonus, or even less, given that you make additional deposits to trade so many times until you qualify for the bonus withdrawal. Nevertheless, this does not mean that bonuses are worth nothing. One only has to find the right broker who offers fair conditions for executing the bonus. This should not be too difficult anymore, given that many brokers present their Terms and Conditions on their websites, and you can carefully read through them and compare them to bonus policies of other brokers. Once you find the best offer, register with that broker and enjoy your bonus money. The brokers who do not clearly state how the bonus procedure works and under what conditions you can get the bonus should be avoided.
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Deposit Bonus Advantages
The deposit bonus is a welcoming change from time to time in the Forex market which many traders look forward to. If everything works in accordance with the rules and regulations, then traders can truly enhance their trading with the extra trading credit. If they win, they get to keep the profit. These bonuses lower the risk of losing investments, and every reduced risk counts. Traders can even relax a little bit and maybe invest in a currency pair they usually would not with their own money. Many professional traders made use of these promotions, and they genuinely recommend applying for these bonuses.
Disadvantages of Deposit Bonuses
Bonuses as such can never be disadvantageous. They come in handy every time. Still, in the Forex business, bonuses have sometimes been used by scammer brokers. They simply advertise a lucrative and beyond generous bonus and customers are already standing in line to apply for the bonus. The bonuses usually come with rigorous conditions which cannot be met in real life. These brokers will not let you know about the unfeasible conditions before you deposit, only afterward. Also, many brokers have developed a bonus system where individuals end up investing and depositing until they even out the bonus. Sometimes, they pay even more. The brokers are smart and know how to manipulate traders through each step. The main disadvantage of Forex deposit bonuses is that traders sometimes compensate the amount to the broker through the complicated afterward procedure. Sometimes, traders are not even aware of that. Another disadvantage is that deposit bonuses in this business or the Forex market are time- limited and not offered on a regular basis. Traders have to wait for the special bonus promotions to apply for one. Even if some bonuses sound great, traders have to be careful and decide if it is worth applying for. If you have been with your broker for a long time and know that they are one of the good ones, then there is no reason to think twice about it.
Strategic Approach to Bonuses
In the long run, the deposit bonuses can become a part of your trading strategy. If you use the bonus money as trading credit and make a profit few times, you will be trading with the broker’s money not having to use your own. Many experienced traders invest more, to get more out of the broker. If you invest $2,000 with an 80% bonus, you will get additional $1,600. This is a lot of free money, and professionals know how and where to invest it and make even more money out of it. Large deposit amounts are not recommended for new or inexperienced traders who are still in their market and broker testing phase. First, they should make sure that they have the right broker who pays out bonuses as promised and gain more experience to learn how the business and market work in general.
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We have seen that the deposit bonus can be lucrative and beneficial in many ways. Also, we have seen that it is not that easy to get a bonus. Broker companies stipulate many rules and complex procedures for the bonus withdrawal. Bonuses are exposed to potential abuse by traders and brokers try to make sure to eliminate that risk. Many traders find the rules too strict but still, a large number of traders tries to meet the criteria and qualify for the bonus and meet the withdrawal conditions. All in all, deposit bonuses represent a great opportunity if handled right.