Forex broker bonuses have become a common feature of working in the foreign exchange market and often serve as a decisive factor when choosing a company or determining the amount credited to a trading account. However, received bonuses sometimes turn against the client, instead of increasing their profit, they only accelerate the process of emptying the deposit.
Contents
- Forex Broker Bonus Amounts from Thin Air
- 25,000,000$. When Size Really Matters
- Forex Bonus as a Fair Way to Take Client Funds
- 3 Signs of Using Forex Bonuses as a Trap for Clients
- Conclusion
Forex Broker Bonus Amounts from Thin Air
At first glance, everything seems quite transparent – a fixed bonus amount or a certain percentage is added to the client’s deposit. Accordingly, the client can enter the market with a larger volume, work with a wider range of financial instruments, and make more significant profits from each deal.
But how large is this profit to guarantee each client a bonus of 30, 40, 50, or more percent while maintaining business profitability? Does the Forex broker add virtual amounts to client deposits? But how will these virtual money increase your real profit from trading on the financial market? Does the broker increase the deposits of new clients at the expense of losses of existing ones? In that case, there would be no talk of honest business in the financial markets.
25,000,000$. When Size Really Matters
In principle, rewarding clients and motivating them through a bonus system is a normal practice in almost all areas of business. However, it is important to clearly understand that bonuses from Forex brokers cannot be excessively large on financial markets. Here we encounter a paradoxical situation where less means better.
A Forex broker running an honest and open business can only increase its clients’ deposits using its own funds, part of its profit allocated to advertising and marketing expenses. However, these expenses cannot be limitless, so small bonuses of 5% or 10% up to 20% can be considered normal. Welcome bonuses on small amounts can also be considered an acceptable marketing move. Usually, they are covered by the budget.
The size of the bonus can also increase up to 25-35% or even 50%, but in such cases, it cannot be offered to all clients. Such privileges are used as incentives for a narrow group of traders or as exclusive offers for VIP clients, birthday clients, etc.
Let’s do a simple calculation: let’s say 5000 people participated in the promotion. Each of them topped up their trading account with an average amount of $10,000 and received an additional 50% as a bonus. Thus, the total amount of bonuses received by clients should amount to $25,000,000.
This is an excessive marketing expense even for a large multinational corporation, not to mention the average brokerage company whose business is focused in Russia, the CIS, and Asian countries. If we take into account that such bonus promotions are repeated almost every season, the advertising budget for a company that operates solely as an intermediary and earns profit through the spread mechanism and SWAP becomes simply astronomical.
Forex Bonus as a Fair Way to Take Client Funds
Such amounts simply cannot be actually credited to client accounts, so we are left with assuming three unpleasant alternatives:
- The declared Forex bonus is just as virtual as a demo account deposit and does not bring any benefit to the client on the real market;
- Receiving the bonus according to the promotion rules automatically means impossibility or difficulty in withdrawing the trader’s own funds;
- Bonus funds are taken not from the broker’s operating profit, but from the losses of clients if deals are not sent to the market, and orders are offset within the company.
In the first case, the bonus can be read as a not very honest marketing move. In the second option, the money never leaves the brokerage company, and it can offer any bonuses to new and new clients up to 200% real payments since in any case, there won’t be. The third option represents an open fraud and something like a classic financial pyramid: new clients are attracted at the expense of the funds lost by those who joined the company earlier, and then the newcomers lose their invested money along with the bonus amount.
3 Signs of Using Forex Bonuses as a Trap for Clients
- The bonus amount exceeds 25-30%.
- A significant bonus is given to everyone or at least to a very wide circle of clients.
- According to the terms of the bonus promotion or the company’s policy, it is impossible to withdraw not only the bonus amount itself, but also the client’s own funds or the profit he has made without meeting additional strict conditions.
Conclusion
There is no doubt that discounts and bonuses from Forex brokers are loved by everyone, but chasing a high percentage against common sense is not worth it. Carefully review all the terms of the promotion, calculate whether the broker can honestly fulfill its promises and credit real money to the accounts of all participants in the promotion. And if in the next ‘beneficial’ offer from the broker or the DCM you find one or several of the above warning signs, remember the instructive saying about ‘free cheese’.
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FAQ
What are forex broker bonuses?
Forex broker bonuses are promotional offers provided to traders to encourage them to open accounts or deposit funds.
How can I tell if a bonus is legitimate?
Look for clear terms and conditions, check the broker’s reputation, and avoid offers that seem too good to be true.
Are high bonus percentages always a red flag?
Yes, bonuses exceeding 25-30% often indicate a potential trap or misleading marketing tactic.
”
