Top Two Forex Trading Bonuses
Forex trading bonuses come in different shapes and sizes with various benefits and downsides. There are so many types that it can be confusing, so this article explains the two main bonuses offered in the forex market. They are the first deposit bonus and the trading bonus.
What is a forex trading bonus?
A forex trading bonus usually means that the forex broker you trade with offers extra funds on top of your own money. This capital can be used in your forex trading and stock investment transactions.
There may be different names for forex broker bonuses and the overall aim is to attract more clients by boosting the trader’s own funds and providing more capital with which to trade.
First deposit bonus
Also known as a welcome bonus, a first deposit bonus or a deposit bonus, this type of bonus adds a percentage of your trading account deposits. The percentage can range from 50 percent to 100 percent depending on the broker.
A welcome bonus can be a chance to multiply – or even double - the initial funds available for trading. If the first deposit is 2000 USD, a welcome bonus of 100 percent will double the amount available to trade to 4000 USD.
Trading bonus
Financial services providers often boost traders’ funds with trading bonuses. These types of bonuses are not based on deposits. Instead, they are based on reaching trading volume targets or other targets like the most successful number of trades or the highest profit within a given timeframe. Trading bonuses may interest experienced traders or investors whose strategies focus on high volume transactions.
Volume trading bonuses are like receiving flight miles on an airline – the more you travel, the more miles are added to your account. Volume in forex trades and CFDs on forex is measured in lots. According to the volume trading bonuses’ terms and conditions, credit is released once a certain number of lots has been traded.
If a competition bonus prize is based on the most successful number of trades, it means the trader who has the highest number of trades going his way receives the bonus. Bonuses paid out by the highest profit are different in the sense that the volume doesn’t matter as much as the returns at the end of each trade.
Are trading bonuses free money?
Trading bonuses are not free money or free capital. They are activated upon a trader’s deposit in most cases, meaning it takes money to receive bonuses.
Upside and downside of forex trading bonuses
One upside of forex trading bonuses is that traders have more funds with which to place trades and increase their opportunities. Another upside is the chance to test different strategies using bonus funds. When bonus funds are added to leverage, potential returns could be increased.
On the downside, some providers don’t allow withdrawals of any trading gains made with bonus money. Another requirement may be to trade a certain volume before you’re allowed to withdraw bonus funds, so it’s a good idea to check the terms and conditions of the program before committing. Keep in mind the risks - when bonus funds are added to leverage, potential losses could be magnified.
All told, trading with bonus money can be helpful to test new ideas and pursue more opportunities in the markets. Although there are many different types of investment bonuses, the top ones in terms of popularity are the first deposit bonus and the trading bonus.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
