Why You Shouldn’t Take the Deposit Bonus From Forex Brokers ?

[fxfarmerashik]

Hi guys, every trader is familiar with the "deposit bonus". This bonus is sometimes useful but sometimes it causes problems. So today I will discuss why a trader should avoid these types of bonuses.

So without losing our time, let's start,

First of all withdrawal problems

The main reason the Forex deposit bonus has not been taken is that it is likely to cause withdrawal problems. Suppose you have deposited $ 1,000 on a Forex account and that for this you get a bonus of $ 200. Even if it gives you $ 1,200 in capital to exchange, you can not withdraw that amount.

In fact, even if you have $ 1,200 in your account, if you withdraw $ 300 in emergency fees, the Forex broker will probably not allow it. Why?

Because now their money is mingling with your money. They have an interest in keeping your capital in the account because they protect them. And if you want to change broker, will you withdraw your money? The bonus you receive requires you to stay.

The only way to withdraw a bonus or your own capital is to trade enough so that the full Forex bonus is "released". Usually, you must exchange $ 10,000 for every dollar of bonuses. So for $ 200 to be yours, you must exchange a $ 2,000,000 currency. And it's huge, but the fact is that you have to negotiate a lot and work very hard.

Some foreign exchange brokers allow withdrawals during the "bonus accumulation" phase, but you will often lose accumulated bonuses, or bonuses are prorated based on the number of withdrawals (that's right, but we still have other issues). This brings us to the next reason why you can not take a Forex broker bonus.

Forex broker bonus is not worth squatting

Think for a moment about the following statement: "You must exchange $ 10,000 for each $ 1 bonus. This statement seems to be typical of all sites reviewed (not all of course), but in some cases, a being traded to release bonuses of only $ 1!

If EUR / USD moves 1 pip when you hold a mini-lot ($ 10,000), which is equivalent to a $ 1 increase or decrease in funds in your account, depending on whether or not the transaction moves to you. Basically, the forex bonus is only 1 pip ($ 1) per mini-trade. It's like squatting when you really think about it.

For potential withdrawal problems, earning $ 1 per mini-exchange is well worth it? Doing 20 pips on the real trade (1 mini-lot) makes a profit of $ 20.Because most new traders are not full-time traders, they will trade for profits above position, potentially 100 pips or more.

If you win 120 pips on a trade, you win 120 USD, or if you lose 120, you lose 120 USD. The $ 1 per transaction bonus of $ 10 starts to seem insignificant.

Thinking about this small quantity will probably encourage you to negotiate more often, to take trades of mediocre quality. Therefore, not only do the bonuses deserve to squat, but they will likely have a negative impact on your transaction.

Forex bonus for the novice or junior traders

Let's continue with the points above. Usually, forex bonus brokers are geared towards new traders, or small-cap traders usually deposit $ 5,000 or less, often $ 1,000 or less.

If you have a USD 1,000 account, even with leverage, most traders (who are not full-time) will put $ 2,000,000 to withdraw (their personal funds) and $ 200 bonus, like in the example above. If you manage your risk and do not risk more than 1% of the balance of your account on a transaction, on a $ 1,000 account ($ 1,200 with a bonus), you can then risk $ 12 per transaction.

If you trade a lot, it means you have to deal with a risk of 12 pips or less (the difference between the entry price and the stop loss order). You have to make 200 transactions like that for the bonus to be yours. In one trade a day, it takes almost a full calendar year.

Negotiating each day means two years of trading before the bonus is yours. And if you want to make a withdrawal at that time?

Not as glamorous as it looks in commercials, right?

Now, if you open an account for $ 10,000 and get a $ 200 bonus, it will work better. Because you have more equity capital, you can take a bigger position and keep your risk per transaction below 1%.

You get a faster deposit bonus, possibly in a few months. But most traders who accept this bonus do not deposit between $ 5,000 and $ 10,000, they deposit between $ 100 and $ 1000. If you take a $ 200 bonus on a $ 200 deposit, you will probably never be able to withdraw your money.

It will take a long time to trade the $ 2,000,000 required for the learning curve in the trade to be consumed by deposit.

So if you deposit more and more, the bonus is good? No!

Final phrase on Forex broker bonus

Maybe there are good bonuses, with minimal links. Forex broker bonuses like these are rare. Read fine fingerprints, because every situation and every foreign exchange broker is different.

However, as a rule ... do not take it!

When you open an account, it is expressly stated that you do not want a bonus. Send an email or call if necessary. If some of their money goes into your account, it will make things difficult. And when the time comes, the bonus is usually very small (relative to the profit or potential loss of the trade), which is really not worth it.

This bonus is the most important value for small traders, but it benefits them at least because it takes years of trading before the bonus belongs to them. Most of the small accounts were deleted at that time.

And maybe it's better to negotiate with an official and regulated broker, in a big global financial center, that does not offer free money from the beginning. If you want to be a real trader, ignore this trick.

Find a good broker and forget the bonus. In the end, the forex broker bonus is tantamount to triggering money whereas the focus must be on a larger amount of money from real trading.

So, in the end, read all the conditions before opening an account at a broker and try to avoid deposit bonuses. And please let me know what you think of my opinions.

[Ndrina]

This is excellent article. I think that all new traders should read it and understand well what bonus serves for. It is part of marketing strategy of brokers in order to attract traders. It is always best approach to look for broker who is legit and not who is offering highest bonus

[Journalph]

Thanks for writing again very valuable information for everyone else who still dealing with bonuses from the brokers. You still should consider bonus only as something which you can and really should spend with amount you want and can loose anyway.