With an increasing number of forex brokers setting up shop in a highly-competitive market, one of the ways that they entice new clients to sign up with them is to offer welcome bonuses of various types. These bonuses are hyped as being ‘free money’ that can greatly increase the amount of your trading capital. But are these bonuses all that they are advertised as being, or should you accept them with caution?
What Are Welcome Bonuses?
These are bonuses that are offered to traders as an incentive to open an account with a broker. They are awarded the bonus once they make their first deposit into their trading account. There are many types of bonuses, the most common of which is the match bonus. This bonus matches the amount of money you have deposited into your trading account up to a certain percentage. For example, if you deposit $2,000 into your trading account and the match bonus is 50%, then you will be given an additional $1,000 to trade with.
Other types of bonuses offered include bonuses for referring a friend, in which you get a bonus when a person you referred signs up with the broker and makes their initial deposit; no-deposit bonuses in which you are given a certain amount to trade with when you sign up for an account, without the need to make a first deposit.
The Small Print
One of the things you should remember about these bonuses is that they are not given for free. There are usually terms and conditions attached to them. For example, you may be required to trade the bonus a certain number of times before you can withdraw it. Other brokers may not allow you to withdraw the bonus at all but allow you to keep whatever profits you make from trading it.
Before you avail of any bonus, you should familiarize yourself with the conditions attached to it so you won’t be surprised later on. You should also consider the reputation of the broker before you sign up with them instead of only being enticed by the bonus.
Keep in mind that opening an account with a broker is like starting a relationship with them and so you should make sure it is based on trust.