With thousands of foreign exchange (forex) brokers operating in the online trading market, the industry has become saturated in recent years. As a result, platforms have become increasingly competitive to differentiate themselves from the crowd.
Forex brokers will offer a sign-up bonus to individuals who still need to create an account. This typically appears as a matched deposit bonus, which means that a specific percentage will increase your first deposit. In other cases, a no-deposit bonus may be presented to you.
To get started, find reliable brokers with welcome bonuses here.
What is a forex bonus?
A forex bonus is a promotion that you’ll get from brokers. Sometimes, the bonus will be offered only to those who sign up for the accounts. Although the bonus may cost the broker money in the near term, it is offered in the hoped that you will stay with the platform in the long-run.
For example, the broker may offer new customers a 100% matching reward of up to $500. Once you deposit, the broker will credit your account with the bonus amount.
No deposit bonuses work just as the name implies: you receive the bonus without making any deposits.
Forex bonuses always come with terms and conditions, which you should familiarise yourself with before joining. Crucially, you must trade a particular amount before you withdraw the bonus dollars for real-world currency.
What are the pros and cons of forex bonuses?
Here are some pros and cons of forex bonuses:
Pros:
- It allows you to trade with more money than you put in.
- Available for all traders who have opened an account
- You can typically utilise the bonus funds to trade any currency pair.
- Specific bonuses are provided on a “no deposit” basis.
- Obtain a bonus with as many brokers as you desire.
Cons:
- You need to trade a specific amount before you can withdraw.
How does a forex bonus work?
Let’s discuss how a forex bonus works.
Deposit bonus:
The deposit bonus is considered the most well-known bonus offered by forex brokers.
- You receive a 100% matched deposit bonus from a forex broker.
- The forex broker allows a maximum bonus of £1 000, which is the amount you choose to deposit.
- The broker will credit your account with an additional £1 000 following your deposit.
- Your initial balance is £2 000, even though you only fund your account with £1 000.
- Once the bonus is credited, which is usually quick, you can start trading immediately.
No deposit bonus:
A no deposit bonus allows you to receive free bonus money without depositing. These incentives are popular because they allow traders to begin trading without risking their funds. However, no deposit bonuses are typically smaller than deposit bonuses.
For example:
- A UK broker offers a £20 no deposit bonus.
- To avoid misuse, you create an account and authenticate your identity.
- The broker deposits £20 into your account when your ID is validated.
- You can start trading with the bonus immediately.
Terms and conditions of a forex bonus
It is important that the terms and conditions of a forex bonus are followed. Generally, these will include:
- Minimum trade amount to withdraw
- Time limit
- Eligible pairs
- Supported nationalities
- Minimum deposit
These guidelines should give you a good understanding of what a forex bonus is and how it works. You will also know that brokers typically provide a matched or no deposit bonus. In either case, you must verify that you understand the bonus's terms and conditions – particularly with regards to the quantity of trading required before withdrawing.