A lot of the times Forex Brokers you offer you so called forex bonuses in order to lure you into trading with them. However prior to rushing into opening an account just to get a higher percentage bonus, it is important to know the truth about forex bonuses in order to ensure you get the best forex bonus.
This is the most common form of bonus. Simply open an account ,make a deposit and the broker will offer you an additional percentage of what you have deposited. Instead of just going for the broker that offers the highest bonus you need to examine the bonus terms and conditions to understand how it works and ask the following questions.
1) Is the Welcome bonus a Rescue Bonus or just a Leverage Bonus ?
If it is not a Rescue Bonus also, then you should avoid this bonus as you are not getting the best Forex Bonus.
Rescue Bonus: Is a bonus that can be used to not only allow you to open greater trade sizes but will also allow you to maintain these positions open once your initial deposit is lost. In other terms it can serve as additional free margin and you can also use it to trade with it after once the initial deposit is lost.
Leverage Bonus: Is a bonus that can only allow you to open greater positions but not allow you to keep them open once your initial deposit is lost. Once your initial deposit is lost,effectively all open trades are closed and the bonus is removed from the account.
Leverage Bonus offered by brokers is usually much higher as they try to push you to over-leverage and blow-up your account .
To stress the importance of the Rescue Bonus we will look at an example.
In Broker A you get to open 1.3 times bigger positions than your initial deposit ,get an additional $300 to be used as a free margin ,protecting you 1.3 times from stop out in case your trades go against you. In addition you can trade with the bonus only if you lost your initial deposit.
In Broker B you get to open 2 times bigger positions than your initial deposit but cannot get any additional free margin or protection from stop out, in case your trades go against you.
So overall what Broker B gives you is the ability to double your leverage and risk, and hence twice the chance of blowing your account.
Therefore you need to ensure that it is a Rescue Bonus, because otherwise all the bonus gives you is the ability to increase your leverage and risk.
2)Can I withdraw my profits any time?
If the answer is no then avoid this bonus.
Some brokers may put restrictions on the profit you can withdraw or may require you to complete a certain trading volume prior to allowing you to withdraw all or a portion of your profits. If there is such a conditions you should definitely avoid such a bonus. Any bonus that requires you to complete trading volumes to withdraw your bonus will result in added pressure towards you to trade more and eventually you will make bad trading decisions. Please note that this is different from bonuses that require you to complete trading volumes in order to withdraw the bonus itself.
3)Does the bonus have an expiration period?
This is another important factor not to be neglected. You need to be aware for how long you can use this bonus and ensure it is enough for you to utilise your trading strategy. Some brokers may offer you a bonus that can last for only a month while others offer bonus with no expiration. If the bonus you are being offered has an expiration period avoid rushing into making extra trades when the expiration is near as will only result in bad trading decisions.
Here are our suggestions of brokers offering the best Forex Bonus where all the above conditions apply