Something for nothing?
Benefit, Gift, Reward, Perk – all synonyms for a Bonus. But however you phrase it Bonuses in Online Trading are anything but!!
Search online for a Broker and you will find a large number offering you a bonus – there are too many of them out there to list! But hold on….. Before you deposit your hard earned money take time to research and read the “small print”. So what can be the harm in getting money for nothing? There are a number of reasons of which we will do our best to inform you of:
Many of the bonuses are aimed at new traders – those depositing less than a few thousand. In fact you will find many brokers offering bonuses will impose a cap on what they will offer based on the size of the initial deposit. 10% bonus with a deposit of X, XXX 20% bonus with a deposit of X, XXX and so on. There will be T&C’s (Terms and Conditions) that will state that the bonus will be credited to your account immediately but cannot be withdrawn until certain requirements are met. These vary but, generally speaking, they will require the bonus recipient to trade a minimum amount of volume or trades within a specific timeframe.
So what’s the harm in that? Well, it depends on what volume you have to trade and in what time frame. If the T&C’s state, you will receive a 10% bonus on your $1,000 initial deposit (yes that’s $100) but you need to trade $2 Million in a 30-day period that means (for example): 20 standard lots (20 X 100,000) of USDJPY or 200 mini lots (200 X 10,000) of USDCAD or 2,000 micro lots (2,000 X 1,000) of USDCHF or your “bonus” will be withdrawn! Most months only have 20 trading days so, at a minimum, if you are trading mini lots that means trading at least 10 times a day!!
By now you have realised that you are being forced to over trade – how can you possibly adhere to your trading strategy with these onerous conditions? Is it really worth the $100?
Next “issue” is withdrawing your money. If you have taken a bonus then your money is now “mingled” with the Brokers money. For example you deposited $2,000 with a 10% bonus. Your account balance is now $2,200. Regardless of how much you want to withdraw (even as a result of an emergency) you will find that many brokers will not allow you to withdraw – again read those T&C’s!! This will also happen if you want to “change/switch” brokers. Whilst the majority of your account balance is yours the broker has a vested amount (albeit tiny) and will force you to stay with them per their (you guessed it) T&C’s! Many brokers will only allow you to withdraw any equity from your account until you have met the “minimum required trading volumes” – so beware!!!
It is hard to call such Bonuses a scam – as the bonus requirements are normally spelled out in the small print of T&C’s.
So what is the best advice? Simply put avoid any broker offering a bonus as they are likely to be mediocre at best. A large carrot dangled in front of you may look good but it the stick its hanging from is very long……….
Safe & Happy Trading
#tradesafely #doublehit #fxzoo