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Bonuses – Advantages and Disadvantages

One of the most frequent questions that I get is about bonuses. Particularly about the first deposit bonus. This offer, which most brokers give, implies acceptance of some rules that are important to explain, since the information given by the brokers is not always totally clear, or customers do not give it the proper importance.

The 1st deposit bonus, also known as the welcome bonus, is just one of the examples that exist currently. Read the article about all the Bonus Types .

Many people ask if in reality it is worth accepting bonuses, because in addition to receiving the offer we also make some commitments. For this reason I think it’s important to clarify some points and give my opinion on the advantages and disadvantages of using bonuses.

Bonuses – Rules to Receive them

– You must make a deposit while respecting the values stipulated by each broker in order to benefit.

– For the bonus to be credited into your account you must receive the broker’s documents, print, sign and return them. There may be brokers who do not require documentation. In those cases you only have to accept the conditions by clicking on a link that they provide. However, the most correct and frequent procedure is the first.

– In order to withdraw the value of the bonus and/or profits, generated in the account in the meantime, you must achieve a minimum trading volume. This volume will vary from broker to broker, but most use the same formula: you must trade 20 times the value of the bonus. If you have received a value of $200 in bonus to withdraw your profits you must trade 20 x $200 = $4,000.

Then there are brokers who allow you to withdraw the value of the bonus and others who do not. Some brokers require that the volume be calculated on the bonus amount only and others require that the volume be calculated on the deposit and the bonus. In this case, suppose you deposit $200 and receive a $200 bonus. The calculation of 20 times the volume is on $400. But in this situation, the broker usually lets the client withdraw both the profits and the bonus.

When the bonus is smaller, for example 20% of the deposit, the volume that will be required is also lower.

Bonuses – Advantages

– The biggest advantage is that we can have more capital to trade – For example if you deposit $250 and the broker offers $250, you get $500 to trade. Not only can we place higher value orders, even following the rules of risk management, we also have more leeway to make mistakes. Thus, we duplicate our profits, because we’re working with $500 but only deposited half.

– A higher account balance to use Martingale – Although I’m not a proponent of this system, the truth is that there are many strategies and traders that use Martingale as a trading system. By receiving a 100% bonus you have more leeway to use this strategy.

– Being able to withdraw the bonus – In the case of traders who can achieve the volume required by the broker and in the cases where they can withdraw the bonus, it’s more money and more profit for the trader. One of the brokers offering the value of the bonus is Banc de Binary.

Bonuses – Disadvantages

– Withdrawing Profits – The existence of a bonus prevents us from withdrawing our profits before we trade the entire required volume. We can only withdraw our capital until we achieve this goal.

– Second Deposit – At many of the brokers even the second deposit, as long as the trader has not reached the required volume, is subject to the same rules, therefore it is necessary to think before you deposit more money in the same account, if you used the bonus. In these cases sometimes it is better to change brokers.

Bonuses – Conclusion

Think carefully before accept bonuses and read the broker’s rules. Unfortunately, most people don’t read the rules and procedures and later regret it. Weigh the advantages and disadvantages.

Rui Oliveira

Trader for more than 20 years and author of several blogs. After the success of my Binary Options training lessons, I decided to offer my services on a worldwide basis. That is how this blog was born. I hope you enjoy it and share it. Thank You.