More people are showing a keen interest in forex trading, and brokers have been experiencing a business boom. Of course, this increased interest has also influenced the market competition – brokers must now find a way to stand out. And they have devised all sorts of ways to attract new clients – draws, promotions, bonuses, special offers, etc. Even those with outstanding performance ratings have had to put in the work. Take Plus500 as an example. It now offers the Plus500 bonus to its clients, enabling it to remain ahead of the fray. But should customers always jump on the forex bonus bandwagon? Is there anything you must consider before taking up such an offer?
What is a Forex Bonus?
As earlier mentioned, the forex trading market attracts many people who want to trade and make profits. And as a result, the market share is quite sizeable. Best forex broker have made their way into the market, and getting the lion’s share is no longer guaranteed. Brokers must thus find ways to make them more desirable to the market. And they do so by offering a bonus which serves as an incentive to clients. These bonuses come in the form of:
- No-Deposit Bonuses: These are available to you after signing up on a site and verifying your details. You do not need to deposit actual money.
- Deposit Bonuses: You get these once you deposit money in your trading account. They can be fixed or can follow a matched deposit scheme.
- Volume Bonuses: High volume traders can use these incentives to get cashback on their trades to increase their equity.
- Special Bonuses: These are available occasionally and often come tied to completing tasks or accomplishing fetes in the platform.
Why are these bonuses significant? Using them allows you to reduce your level of risk, increase your trading capital, and survey a trading platform. But before you sign up for such a bonus, you should research its terms and conditions.
Why Should You Research Forex Bonuses?
Bonuses are not entirely free. Instead, they come tied to some terms and conditions that relate to how you can use the bonuses. And if you do not read the fine print, you can feel swindled. Moreover, bonuses are tied to brokers. If you sign up for a bonus, you inevitably link your trading future to the broker offering the bonus. The two do not exist separately. Here is what you should read about before taking on any offer:
The Program Rating
Bonus programs are subject to ratings. Those with fair terms and easy to work with have the best ratings. And the vice versa also holds. Take your time to review what other traders think of a bonus. Do you like what you see? If not, you are better off seeking an alternative.
The Terms and Conditions
As earlier stated, bonuses do not come unencumbered by terms. Any bonus you get on the market will come tied to some restrictions and limitations. The difference lies in how strict these terms are and how easy it is to work around them. For example, some brokers offer terms that mess up your risk management strategies. And that leaves you exposed to losses. Such conditions can make it harder for you to hold onto your capital. An example is a broker that puts a short time limit on how fast you should achieve the minimum trading volume. That forces you to trade larger volumes in a short period, and you might fail to assess all the risks that come with such a move.
So, it would help if you looked for favorable terms compatible with your trading level. Moreover, before choosing a bonus, you should develop a trading plan. You can then vet the potential broker bonuses with how well they fit in with your goals. It allows you to be objective with your choices rather than allowing the broker to dictate your moves.
The bonus does not exist on its own, and a broker must enforce it to fruition. So, can you trust the broker behind the reward? It would help if you always vetted a broker before even vetting their bonus program, as the former has more control over the latter. What should you look for?
- Their regulatory compliance: Do they operate within the bounds of the law, or do they do as they please? An unregulated broker will have no qualms about cheating you out of a bonus – it’s in line with their operations.
- The types of accounts available: Can you find an account type that aligns with your experience level? How about your trading capital? If you can’t, the bonus will not help you out much.
- The tools offered in the platform: Are they ideal for your trading goals? Can you rely on the platform? How fast is the execution speed?
Also, review the customer support, the resources offered to traders, and general reputation. You can then cross out brokers that don’t meet the cut and focus on the good ones with reputable bonus programs.
There is a lot of truth in the saying that All That Glitters is Not Gold. Some brokers are known to offer enticing offers that promise to triple your trading capital. Unfortunately, most of these bonuses come tied to stringent terms and conditions. So, you either have to forfeit the bonus or implement risky forex trading strategies to meet the trading volumes. You end up losing out, yet you thought you were getting a good deal. We can’t emphasize this enough – read between the lines and take your time rereading those terms and conditions.