When you start looking into accounts for trading Forex, one of the first questions that come to mind is what type of bonuses the particular broker is offering. Brokers will compete to get your business and so some brokers will be able to offer bonuses (or gifts) for just signing up for an account. This is a common practice in the industry and is just one of the ways that brokers can encourage you to try their services.
Many top Forex brokers offer a number of different bonuses such as –
- Deposit bonus
- No deposit bonus
- A trading bonus
- Some custom bonuses specific to that broker
- Demo accounts that offer full access to the platform and data without depositing or risking your capital.
A Forex no deposit bonus is offered by almost every broker on the market, where the attraction of offering a bonus is to give new investors an incentive to start a trading account and become acquainted with the platform and service level of the brand without having to give any credit card details or financial commitment. This is in contrast to a standard bonus where an investor deposits some money into their trading account, and they are then eligible to get the bonus either in a fixed amount or a percentage depending on the size of the deposit.
Why Do Brokers Have No Deposit Bonuses?
Bonuses, and especially no deposit bonuses, are the best way to get a feel of the broker. And the broker knows that there is a possibility that the deposit bonus will help to improve your trading chances as it is added to the initial account balance. It is designed to give you a little confidence to help you get started in live account trading, and knowing you have some extra money in your trading account can give you a sense of security or hesitation for making that first trade. A demo account is another way of learning to trade, but in that case, there is no real money traded and is a play money scenario.
Just like any free incentive, sales discounts or specials that you might find that attracts you to a shop, there are brokers offering to give you a deposit bonus. While there is catch to being given the deposit bonus but you really need to read the trading conditions that the broker places on the bonus as you will need to to be an active trader for some time before you can withdraw that bonus. You can get the bonus by signing up and submitting the few necessary documents to set up the account.
The no deposit bonus Forex system has specific rules, and it’s up to the discretion of individual broker to make them. Sometimes you can be given a retainer for the initial deposit or additional funds can be made available without you having made a deposit.
For example, if a broker’s bonus is offering you 200% of your initial deposit, that means your $250 outlay will enable you to trade with $500. You are safe to assume that this is a little bit of leverage being offered to you without you having to worry about the drastic consequences that arise after making a wrong investment decision.
You have to carefully monitor exactly what the brokers are doing because some of them may decide to take back the money and any of the profits that are being generated through the deposit bonus without notifying you. This is very rare, but just an example that highlights that you should have read all the rules.
The Hard and Fast Rule
By providing you with some money that you can lose with a clear conscience, brokers are effectively enticing you into opening an online trading account. There are certain broker safeguards put into place so that you do not withdraw the deposit before trading a set amount, but other than that I would only encourage a trader to read the rules of when the deposit can be made, and make sure that the no deposit bonus is not the only reason you are signing up with that specific broker.