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Bonuses in Forex: pros and cons
Active trader visits, usually multiple sites on Forex-related topics, to know market news and forecasts for currency pairs and in search of other useful information that help improve their trading skills.
On these sites very often you can face with bright ads brokers on the campaigns Deposit bonuses. In this article we will try to understand what the bonuses are, what their pros and cons, and ultimately how to use them to Your advantage.
What are the bonuses?
Brokers are actively competing for customers and realize that it is not always possible to lure them in by offering only outperforms the competition, technology compliance, and lower spreads. So many brokers are trying to attract traders some additional "chips."
Typically, the broker pays a "kickback" in the amount of from 20% to 80 % of spread or commissions, once the trader executes a certain volume of transactions. In other words, the bonuses in the Forex is nothing like regular discounts on spreads, although this compensation tends to increase and be paid only after the trader certain conditions.
Financial advantage - the main reason why people prefer to open Deposit accounts from brokers who offer bonuses. Airlines often compensate its customers the cost depending on the RAID past certain distances, and it keeps customers airline "change" for many years. The same thing happens in Forex. Traders happy, getting bonuses, and brokers are happy to share a part of their income in exchange for the loyalty of the traders.
In addition, many brokers in reality give traders the advance of the award. This means that once the trader deposits on account with a broker $ 1,000, he is immediately rewarded with another 200 USD. This practice allows traders to have a greater margin or just speculate with capital that exceeds their own. Therefore, traders are able to open trades larger and achieve higher profits.
Most often bonuses for traders heralded additional terms and conditions. Sometimes a trader can not withdraw bonus payments even after he performed many decent volume of transactions. So, the only advantage which promises bonus increased leverage, or leverage, and reducing additional financial collateral (margin call) to 0 %. It's not very useful.
Another drawback also contains the view that prohibited withdrawals by the trader if he does not fulfill certain conditions. Although not too standard practice, but it happens quite often. A trader should not use the bonuses that further restrict withdrawal of funds from your trading account.
How to use bonuses to Your advantage?
Ideally, the broker You should not do with the intention of available from it encouragement for the customers. However, if You haven't already opened an account with a broker, keep in mind that at present many serious brokers offer bonuses, and Your choice, this fact should not prevent.
So, if You received a bonus from the broker, then the meaning of such actions is to be able to withdraw these funds from your account. The rule of thumb is to estimate the demand on the volume of transactions and divide it by the number of working days allocated to achieve this volume. For example, if under the terms of the bonus You must earn 25 lots for 20 weeks, you should count on 1.25 lot for a week or 0.25 lot per day.However, we recommend that You aim at achieving the average daily turnover of at least 25% of the above mentioned means, guided by about 0.32 of the lot for the day.
But even if You are ready to execute the plan with a daily volume that allows You to withdraw the bonus, it is also important to note that any bonuses should be considered only as a side income. In the first place, You should have immediate results for trade.
|Category: Forex | Added by: (29.10.2017)