With Forex trading becoming more and more popular, two trends developed rather quickly: more people try to turn this into a career, and the market sees more and more brokers appearing. Some of the latter are legit, while some others just try to take advantage of the more gullible and scam them.
One method to attract traders is the by now very well known bonus or promotions system. Basically, the broker offers some “free” money for the trader to start his or hers trading. This bonus is either no-deposit bonus or it depends on the actual deposit the trader makes, usually being a percentage of that deposit, up to a maximum limit imposed by the broker.
Big promotions may come with strings attached
While this additional money may come in handy, not all that shines is gold. Let’s take the deposit bonus, for instance. Most brokers offer one, some of them priding themselves with colossal amount of up to 400% of your deposit. What you need to do is check. First of all, read the “fine print”. The brokers have a bonus policy that you need to check. There you may find some clauses that may not seem so legit, like the broker’s right to revoke the bonus without cause or the fact that you may not withdraw money from your account when you lose the bonus. These are some examples of clauses that may trigger an alarm sign, but such dispositions are far more elaborate than this. For example, one broker, offering some of the biggest bonuses out there requires you to “make sufficient withdrawals that meets, or exceeds, your initial investment before trading can begin to redeem the loan”. So, one thing becomes clearer: FX promotions can come to some strings attached.
Be a bit of a detective
Besides reading the bonus policy, you need to do some research on the actual broker and the market sentiment on its practices. Successful FX trading altogether is based on research – trends and news on currencies, monetary decisions taken by various authorities etc. Since you do make your homework on these subjects, why wouldn’t you do them on the actual broker that you choose to trade with? And you may find some interesting facts about some of them from other traders. Basically, if most traders complain they can’t make withdrawals, or they sense some schemes to make them lose money, maybe it is safer to stay away from that particular broker.
However, some Forex promotions can be legit. They even help you trade more and have a so-called second chance if you lost some/most of your money. For example, a 10-30% of the deposit may be a correct promotion. Even if it comes with limits on withdrawals. Because the trading limit is achievable thanks to the lower bonus value.
Don’t throw yourself at trading big
So, check for the fine print, check for the reasonability of the bonus and determine if you can achieve the targets that come with it.
And let’s say you checked all the above, and turns out ok. Our advice is not to throw at it. See how it works, open a small account, trade some money, see how you get along with the broker and if that one is what you need. And check out the promotions along the way. This is how you would determine if that is the broker for you, if the promotion helps you or not in your trading activities, and id you will get any advantage from it.
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