When you decide to start trading Forex online, you will of course need to select a proper broker. While traders will look for many useful features when choosing a Forex broker, they will also come across a lot of aggressive advertisements from various FX brokers that will try to entice new traders with an attractive Forex deposit bonus. This article will explain in detail what this bonus is, how it can be useful and what the best method for choosing a proper bonus is. Later we will also highlight the best available offers in the year 2016. Let's begin.
In general terms, a bonus is simply a way of compensating traders for choosing a certain broker. Once a person has opened an account with a Forex broker, he will be trading currencies and will have to incur the same expenses as any other trader. The bonus is just a way for the broker to reward the trader's choice and give all or some of these expenses back to the trader once he has proven himself as an active one.
There are many bonuses offered by brokers with some of them being given to you post-trading, and others are deposited to your account as soon as you have completed a deposit. Bonuses that are known as rebates are credited to your account once you have completed a trade, while regular bonuses may require you to carry out quite a number of trades first.
In this article we are going to focus on the most beneficial bonus for all traders, which is a bonus that is given to you straight away and can be cashed out. So how does it work? As this is a deposit bonus, a trader has to of course make a Forex bonus deposit. Usually, once the account has been deposited, it may take a few hours (or days, in some exceptional cases) to actually receive the bonus on your account. Once the bonus is there, a trader may start opening and closing positions with the aim to trade the needed volume in order to claim the bonus as his own property. Once a trader has completed the needed volume the bonus money can be transferred from the broker to the trader. After this, a person can do whatever he wants with these funds. Whilst this sounds relatively simple, it can get tricky. Let's look at why below.
It may seem like a simple idea - open an account, deposit and get your bonus, however it is never this easy and there are often tricks that will try and trip you up. First of all many novice traders are looking for the biggest possible bonus and they simply think that the largest bonus is the best Forex deposit bonus. This is of course wrong in many ways, as the only way to understand bonuses is by carefully reading the terms and conditions. Brokers that are offering 50%, 100% or even 200% bonuses are not actually offering a trader anything of any real value. In most cases such a bonus simply increases your leverage, blocks your withdrawals and let's you perform risky trades. It is important to note that large bonuses are usually not available for withdrawal or the trading conditions attached to them are hardly achievable, especially when a trader implements proper risk management. The rule of thumb here is that you should always read the terms and conditions and look for the bonus that you can cash out. Once you have found such a bonus, check the trading requirements in detail and see if this is something you can achieve. Never go for the bonus just because it's bigger than other offers on the market. Also, many shady brokers will provide you with very attractive offers - do not fall for a scam and avoid the offers which are attractive but from untrusted brokers.
When it comes to bonuses, it is often hard to find decent articles that illustrate the best practices of choosing FX bonuses. We will not be promoting any of our offers - we will simply state the methodology behind selecting the most appropriate FX bonus offer and we will do it in just three easy steps.
No matter how good the offered bonuses are, always remember - the broker comes first. Initially you should only open an account and deposit with a broker that you trust, whose platform you can use with ease and whose conditions you find attractive. It is vital to understand one simple thing - you are going to trade in order to achieve profit, and this should be treated as your main income and a bonus should only be seen as a secondary benefit.
Once you have shortlisted a few brokers that you feel comfortable with, only then should you start checking which one of them offers attractive bonuses. If you don't see any bonuses on offer do not be afraid be afraid to ask - some good brokers are happy to offer custom bonus proposals.
Many deposit bonus Forex brokers will offer you terms that cannot be achieved unless you completely neglect risk management principles. This is of course something we do not want to happen. When going for a deposit bonus offer, always go for brokers that can offer you terms that you can achieve with your normal trading regime. In fact, you should actually choose terms that allow you to trade in a relaxed way. How do you do this? Check how many days a broker offers to achieve the trading volume, then check how much volume you have achieved within the same amount of days in the past, and simply take 80% of it. This way you will be able to focus on your trading rather than measuring the volume daily and thinking how much more you have to achieve. This is a very important rule, as some bonus traders often make silly trades just so they can achieve the volume. In such cases, your losses due to the silly trades may easily exceed the size of the bonus. Also keep an eye on the deposit Forex bonus terms and conditions, as some brokers can often restrict scalpers from achieving their trading volume by limiting the amount of the minimum qualifying trades to 15 minutes.
In general, you should not employ any trading strategy just to to cash out the bonus. The main idea is to choose a bonus that fits your trading strategy, rather than adapt your strategy to the bonus. Once you have selected such a bonus, cashing it out will be rather easy, so trading it is not as important as selecting it. However, you may often find yourself in such situations that the bonus is about to expire, yet you still have some some volume to achieve. In such cases you should simply calculate what the trading expenses for this volume are and compare it to the size of the bonus. If the size of the bonus is larger, then you should simply hedge your deals and achieve the volume without much risk. However, this should only be completed if the Forex broker bonus deposit terms allow hedging.
As you have now understood what the bonus is in the FX market, got an overview about the common malpractices in bonus selection and a good picture on selecting the bonus bonus, let's take a look at the offers that are available to you this year.
In the year 2016 many brokers have actually dropped the amount of their offered bonuses. This has happened for a few reasons, but one of the most prevalent is that a lot of brokers that have been giving large bonuses have actually experienced bankruptcy or quite high losses. Nevertheless this is not a lost opportunity for you, as those were the bonuses that would not do you any good in the first place. This year, when getting your Forex first deposit bonus, expect to get a bonus around 15-25%. However, it is important to note that the brokers would be happy to provide favourable conditions, as it is important to get loyal clients, especially this year. When selecting your bonus promotions, always take a look at the conditions and make sure your broker choice in front of the bonus size.