Looking for a Way to Boost Your Trading Capital? Read our Guide to Forex Deposit Bonuses.
The variety of people who participate in Forex trading is possibly greater than with any other form of investment. Forex trading has been going on for years, but it is only in the last few decades that it has attracted the attention of the ordinary man and woman on the street. This is because Forex trading has become available to the Average Joe with the introduction of online trading and the large number of online Forex brokers now offering their services. Something else that has led to such an increase in its popularity is the introduction of the Forex deposit bonus. Not quite as favoured as the bonuses offered in other forms of business such as binary options trading, online gambling, and spread betting, it is nevertheless a great way for the small trader to get to understand the market and decide whether it is a suitable form of investment for them. So let’s continue with all the information you need to help you decide whether to take advantage of a spot of free trading cash…
The different types of Forex deposit bonus available
A deposit bonus in the Forex world is a sum of trading cash that is awarded when a trader makes a deposit into their trading account. The amount required can vary from broker to broker, as can the bonus amount. It is generally expressed as a percentage of the deposit made, and could be 5%, 25%, 50%, or more. There are some brokers that offer up to 200% or even more; however, most of the more popular brokers will limit it to 100%. As a general rule of thumb, you will find that most trusted and reliable brokers find that there is little need to offer a huge range of Forex bonuses, while those on the fringe tend to offer much more. However, we have to stress that you cannot judge the reliability of a broker solely on its bonus structure; there are plenty of other factors to take into account when choosing the best Forex broker.
When talking about deposit bonuses, Forex traders should also consider the no-deposit bonus, which is a great way for traders to start trading without risking any real money. While a demo account is also a great way to learn about Forex trading, making use of a no-deposit free bonus means you can trade in a real live environment, rather than a virtual one, which is never quite the same. A no-deposit bonus also allows traders to enjoy a risk-free environment, which offers opportunities for evaluating trading strategies in a real-life situation. As with a deposit bonus, a Forex no-deposit bonus can range in size, depending on the broker. It could be as little as $1 or as much as $1,000. We should, however, point out that there are going to be some restrictions if you want to withdraw any profits made by using such a bonus.
Are there any benefits to using a Forex deposit bonus?
Of course there are. They include the following:
- Increased leverage – The more money a trader has in their account the better the position size, and hopefully the greater likelihood of bigger profits. We should, however, point out that increasing leverage is rather risky, which is obviously a big downside. By using a bonus, a trader is able to leverage his position and gain a greater advantage.
- Greater equity – By using a bonus, a trader can increase the amount of money available for investing, without increasing risk. Compared to a smaller initial deposit, a trader will be able to hold more positions and trade bigger lots.
- The initial investment can be lower – There are a number of brokers that offer truly amazing bonuses, enabling traders to double their investment before they start trading. With a no-deposit bonus, the advantage is even greater, as the risk is completely removed.
Well, those are the good points, but are there any disadvantages?
The downside of using a deposit bonus in Forex trading
Unfortunately, while a Forex deposit bonus may seem too good to turn down, there are a few disadvantages that must be mentioned, as they can limit the freedom traders have over their trading capital in a significant way. There aren’t many Forex brokers that don’t attach some very onerous terms and conditions to any Forex deposit bonuses that are offered, and these terms and conditions have to be agreed to before the bonus is given. We would advise each and every one of you to make sure you read and understand them completely before signing up for the offer, and under no circumstances should you tick the box to say you agree to them without fully appreciating what is involved. Some of the terms that are attached to bonuses are really quite outrageous, and some almost impossible to achieve, and with the potential to lead to traders being unable to withdraw their initial investment.
A deposit bonus in Forex is added as a credit to a trading account, and normally it is not possible for the bonus to be withdrawn. That can be the case even if a trader has satisfied the terms and conditions. A broker will use its discretion to decide whether any profits made with the help of bonus trading cash can be withdrawn or not. While undertaking our research for the information contained on this site, we encountered a large number of disgruntled traders who had been caught out when trying to withdraw profits made using bonuses, and it seems that bonuses rate at the top of the list of issues between brokers and clients.
A no-deposit bonus is no different in this regard, and can cause just as many problems for traders. The terms and conditions are nearly always very strict, and even if the profits made are good it is likely that a deposit will have to be made in order to make a withdrawal.
Is it sensible to accept a Forex deposit bonus, or better to walk on by?
We’re not going to tell you that Forex bonuses are inherently a bad thing, but we will stress that a trader should fully understand what they are letting themselves in for. Appreciating the good and the bad side of a deposit bonus in Forex is vital before choosing to take advantage of one that is offered. The same kind of advice goes for any sort of investment. An investor should take care investing their money, and be completely confident they can satisfy any terms and conditions. How many times do we blindly tick the box when asked to agree to certain terms and conditions? In many instances, this kind of approach is OK and quite harmless, but not with a deposit Forex bonus, as this would be a recipe for disaster.
If you’re just starting out and only have a small initial investment, opting for a bonus will enable you to open more meaningful positions. A bonus of say 200% or 400% is going to boost your account equity in a big way. There are a number of special accounts, such as VIP accounts, that will qualify the account holder for bigger Forex bonuses, but it is rare that such a serious investor will be tempted to take the risk. Whether or not you should opt for a bonus is not a question we can truthfully answer. Each and every one of you reading this is going to have different goals, styles, equity, and requirements, and because of this, it isn’t a one-answer-fits-all scenario. It’s a personal decision that a trader has to make for themselves.
Let’s finish by giving you a few tips if you might be considering a Forex deposit bonus.
Consider the following before accepting a deposit bonus:
- Read the Forex deposit bonus terms and conditions carefully.
- Be certain you fully understand what is required.
- If you have any doubts at all, contact the customer service department of the broker and get them to explain in layman’s terms.
- Remember that every broker is different, and that includes each bonus and its associated terms and conditions.
- Remember what happens if you assume: It makes an ass out of u and me.
- If you just want to get in a spot of practice or try a new strategy, consider using a demo account first.
- Pick a Forex broker that is licensed and regulated by a recognised regulatory body.
- If you have a personal Forex account manager, discuss bonuses with them.
Whether you choose to trade with the help of a deposit bonus is entirely up to you. We can only give you both sides of the story so that you are able to make an informed choice. While some of the bonuses currently available may seem to be truly amazing, it is rarely the case that they are. That being said, there is a place for all kinds of bonuses in the world of Forex trading, and as long as you’re sensible and enter into the arena with your eyes wide open, they can be a really good thing.