When you open your first Forex account, you may consider looking for a Forex bonus which you get when you make a deposit. There are a number of reasons why traders want to have these bonuses on their accounts, but there are just as many reasons why they wouldn't. A lot of traders report negative feedback about trading with a bonus. However, in a lot of these cases, the reason for this is simply because they have chosen an inappropriate bonus for themselves. So how do you choose a proper bonus? This article will explain the types of bonuses that are available, and then look at how you can choose the best one to complement your trading.
What are the different types of Forex bonuses?
Brokers will present their promotions in various packages. However, it's possible to subdivide almost every bonus into one of the below mentioned categories. Let's look at the categories of bonus you are most likely to encounter, and explore their benefits and drawbacks.
No deposit bonuses
This Forex trading bonus is given to traders without any deposit from their side. Usually, the size of such a bonus is modest and varies between 5 USD and 50 USD. Brokers usually distribute such offers so that traders become more motivated to complete operations and learn how to trade currencies more effectively. These bonuses can assist in previewing live conditions, as funds are traded are on live servers. It is important to note that no deposit bonuses aren't very common. If you do find one, make sure the broker offering it is trusted, otherwise you will end up wasting your time.
This type of bonus is great for experienced traders. No deposit bonuses are extremely useful when it comes to the development of trading strategies. It allows traders to try out new strategies and styles without risking significant losses on their live account. Opening a no deposit bonus account gives the option of stress-free trading.
The main disadvantage of these bonuses is that traders often choose to start with these Forex trading bonus offers when they are new to the market. Instead of familiarising themselves with the market through a demo account, some newbie traders begin to trade on a no deposit bonus account. This can prevent them from learning the proper rules of risk management and also prevent them from benefiting from proper rewards for their time spent on trading. This is why as a novice trader you should not go for this type of bonus.
You may have heard of FX rebates, which is when a commission or a part of the spread is put back into trader's account, once they have closed a position. In some cases, the process of the rebate is rather fast. However, a lot of brokers tend to pay it back on a monthly basis. It is difficult to say whether this type of bonus is good or bad. In order to say if a rebate is close to the best Forex bonus or far from it, you'd need to examine the trading conditions of the broker. If a broker has, let's say, a spread on EUR/USD of three pips (on average) and promises you a rebate of 20 USD per lot (per side), this can look like an attractive offer. However, through basic calculations, you will find that it is no better than just offering one pip spreads on EUR/USD. In other words, if you can find a broker that offers no rebates, but supplies spreads on EUR/USD that average 0.8 pips, you would be better off not opening an account with such a broker.
Forex rebates can be beneficial, as you are getting compensated for every single lot that you have traded and there are no minimal set of conditions to satisfy in order to be eligible for the bonus. When looking for Forex brokers with bonus and promotions, you will often find that Forex rebates are quite popular through other third-party websites.
The main criticism of FX rebates is that such a bonus is simply not useful to traders. As mentioned, a rebate may look attractive to you, but in most cases it will end up being just a proportional compensation for your trading related expenses. Also, it is quite common for the size of the rebate to be rather small, so by trading with a rebate you are saving only a small part of your funds.
Forex broker with bonus on your deposit
This is probably the best option, as the number of available bonus offers is quite good. Generally, you should be able to easily find a deposit bonus offer that ranges from 10% to something more significant like 400%. Remember though, FX bonuses is not an area where bigger is always better. In fact, in many cases you would be better off choosing a small bonus deal over a big one. When going for a bonus, the selection of the Forex broker bonus offer is absolutely vital.
Many traders choose brokers only by measuring the amount of bonus offered and picking the largest. This is certainly not the way to do it, and in most cases it is a reason why traders have bad luck when trying to cash out their deposit bonuses.
When choosing the bonus for your next deposit, the main idea is to open an account with a reliable broker, and only after that make sure that this broker can offer bonuses. If it doesn't, it's not a big deal, because you will at least be able to trade FX safe in the knowledge that your funds are segregated and you're protected. On the other hand, if you choose to get a 200% deposit bonus through an unreliable broker, you run the risk of facing problems later on when you try to cash out your bonuses. Don't waste your time and risk your funds - stick to what you know.
When choosing Forex broker bonuses, you should shortlist the brokers you feel comfortable with. Once you have your list, start exploring the bonus possibilities. Do not be afraid to make direct enquires - even if the broker does not publicly offer bonus campaigns, you may be offered custom bonuses by an account manager. The main rule here is to select the broker, not the bonus.
Forex trading gifts
You'll often see brokers offering smartphones, tablets and other similar items as a gift for your deposit. This can be an attractive option to a lot of traders. However, the reality is that none of the reputable brokers would offer such a best bonus Forex. Why? Because there is no profit in sending clients expensive items right after they have opened an account. Unreputable brokers are willing to make these offers because they have nothing to lose. Such brokers will often make this offer then simply not send the goods, change the campaign, substitute the item for something of much lower value, or even cancel the offer altogether. They aren't interested in maintaining a reputation, so they will take the negative feedback.
Sometimes gift promotions offer to provide you with a gift only after you have completed a certain amount of trades. This is a more honest and reliable approach, but still the advantages of this are limited. Instead of settling for a gift bonus campaign, you are probably still better off having the best Forex bonuses on your deposit, as the monetary value of bonuses may end up exceeding what a smartphone or tablet is worth.
Best option for a Forex bonus 2016
This year you'll see a lot fewer adverts offering you big bonuses of 50% or 200%. There are a few reasons for this. Firstly, brokers that were offering similar deals have ended up losing money in the last year, so bonus offerings is an area which has become more controlled. Secondly, such bonuses aren't as useful to traders as you would think, so if the broker cares about the success of their clients, they would not offer anything so grand. This year you're much more likely to encounter smaller bonuses ranging from 10% to 25%, and those are the offers you should be looking at - just be sure to check the terms and conditions before you make a deposit.