Broadly speaking, forex bonuses given by brokers can be divided into two categories: welcome bonuses and other bonuses. A welcome bonus is a bonus you get as a welcome gift, often in conjunction with your first deposit, although some forex brokers will also give you a (smaller) welcome bonus simply for signing up, before you have made any deposit.
Big welcome bonuses, and welcome packages, was more common before. Today, many countries and license providers have clamped down on the practise and put in restraints, especially for bonus offers available to non-professional traders. Lawmakers and licensing authorities tightened up the rules because some brokers were using very big bonus offers to tempt inexperienced traders while hiding the also very large trading requirements in the fine print. In their efforts to fulfil the trading requirements, non-professional traders would start making larger deposits and risking larger amounts of money than they originally intended.
There are still forex brokers who hand out big welcome bonuses, but they tend to be based in one of the less restrictive countries. There are for instance a few island nations in the Caribbean that have become popular. A downside with picking a broker based in one of these countries is that the more relaxed approach pertains to everything. Yes, you can get a bigger bonus and access to higher leverage, but you will also lose out on certain types of protection offered by the stricter countries, e.g. rules for not co-mingling client funds with company funds, negative account balance protection for non-professional traders, etcetera.
In this article, we will take a closer look at forex bonuses and mention a few things that are good to keep in mind as you evaluate forex bonus offers. Never accept a forex bonus before fully understanding the terms and conditions.
- 1 Do not pick a broker based on the welcome bonus
- 2 Deposit fx bonus
- 3 No-deposit fx bonus
- 4 What is a trading requirement?
- 5 A few things to look out for when evaluating bonus offers
- 5.1 How is the trading requirement calculated?
- 5.2 What happens to my account while I strive to fulfil the trading requirement?
- 5.3 What happens if I make a withdrawals request while my account is frozen?
- 5.4 Can I return the bonus?
- 5.5 Does any type of trade count against the trading requirement?
- 5.6 Is there a time limit?
- 6 Q&A
Do not pick a broker based on the welcome bonus
It can be tempting to sign up with the broker offering you the biggest welcome bonus, but this is not advisable. In the long run, other factors will determine your profitability and trading experience. Picking a broker based on the bonus is not wise. Select a broker that is optimal for your intended trading strategy and your preferences. If they turn out to offer a bonus, with good terms and conditions, this is simply icing on the cake.
Deposit fx bonus
The most common type of forex bonus is the deposit bonus. You get this bonus in conjuction with a deposit and the size of the bonus is often tied to the size of your deposit.
Example: Make a first deposit and get a 150% welcome bonus, up to a maximum of $400.
No-deposit fx bonus
This type of bonus does not require a deposit. A broker can for instance give you a no-deposit bonus when you sign up with them (before you have made any deposit) or a broker who notices that you have been inactive for a while can send you a no-deposit bonus offer to entice you to come back and start trading again with them.
Even though a no-deposit bonus does not require a deposit, it typically come with a trading requirement that is virtually impossible to fulfil without making a deposit. There can also be terms attached to the bonus that makes it impossible for you to withdraw any bonus money or profits from your account until you have made at least one deposit.
What is a trading requirement?
Naturally, a broker does not want you to deposit $200, get your 100% welcome bonus, withdraw $400 from your account and vanish. To prevent this, brokers put terms and conditions in place that you have to agree to in order to get your bonus. One example of a common requirement is the trading requirement. It means you need to risk a certain amount of money on trades.
Another solution is to just make the bonus amount impossible to withdraw, but brokers are less fond of this since a trading requirement will entice you to trade more. Also, optimistic traders view a trading requirement as more favorable than a bonus which they can never withdraw.
With a trading requirement, you are enticed to trade, and you might even make several additional deposits in your eagerness to fullfil the requirement.
When it comes to trading requirements, some brokers have reasonable terms and conditions – and are very clear about them. Others have rather horrible requirements and/or like to hide them in very find print or make them vague and open to interpretation.
Always evaluate how easy it would be for you to reach the trading requirement while sticking to your intended trading strategy. If the trading requirement is not suitable for your plan, turn down the bonus offer. It is better to be free and clear than stuck with a trading requirement that is tempting you to break your strategy.
WARNING: There are, regrettably, some fx brokers that impose a trading requirement on all deposits. It means that anything you deposit into your account will be subjected to a trading requirement, even if you turn down all bonus offers. You should think twice before selecting such a broker.
A few things to look out for when evaluating bonus offers
How is the trading requirement calculated?
If the trading requirement is 30x, what does that actually mean with this particular broker?
With some brokers, it means 30x the bonus amount. With others, it is 30x the bonus amount and 30x the deposited amount. This makes a huge difference.
What happens to my account while I strive to fulfil the trading requirement?
With some brokers, only the bonus amount is frozen from withdrawals until you have fulfilled the requirement. With others, the whole account gets frozen; you will not be able to withdraw bonus money, deposited money or profits.
What happens if I make a withdrawals request while my account is frozen?
Will it simply be denied? Or will it be approved, but I will lose the bonus and any profits generated from it? Do I lose the full bonus, or only a part of it, depending on how much of the trading requirement I have reached at this point?
Can I return the bonus?
If a realize that fulfilling the trading requirement is too much of a bother, can I return the bonus and get my account unfrozen?
Does any type of trade count against the trading requirement?
Some brokers exclude trades that they deem are not risky enough. They do not want you to make low-risk trades to churn through the trading requirement.
Is there a time limit?
Do I need to reach the trading requirement within a certain time period? What happens if I don’t?
Does brokers ever give bonuses to existing clients?
Yes, and it is rather common. The welcome bonuses get most of the attention, but there are many fx brokers who will extend bonus offers to their existing traders as well.
- Some brokers use a tiered account system, and the higher you climb (through deposits and trading volume), the better your perks – and those perks can include bonus offers.
- Sometimes brokers run campaigns where existing traders can get a deposit bonus or win bonus money in a contest.
- If you have been inactive for a while, the broker might send you a bonus offer to entice you back.
- Some brokers have a recruitment program and will reward you with bonus money if you recruit new traders and they fulfil certain requirements. Typically, the new trader needs to click a specific link or enter a specific code to prove they were sent there by you.
What are “risk free trades”?
With some brokers, so called “risk free trades” have become popular in addition to the classic bonus money offer. Always read the fine print, because they are rarely risk free.
Typically, they are risk free in the sense that if you lose money on a risk free trade, you will get it back from the broker, so your account balance will be the same. But the money you get will be bonus money, and bonus money comes with terms and conditions, e.g. a trading requirement. So you have lost real money and it has been replaced with bonus money.
What are rebates?
With some brokers, important traders will get back a proportion of the money the broker made from their trades each month. A broker may for instance compile all the commissions you paid and give you back a certain percentage of that number.
Giving traders rebates is a way to keep important traders happy and discourage them from switching to another broker. Typically, only traders that are especially profitable for the broker get rebates, e.g. traders who move big volumes or pay a lot in commissions.