What do Forex bonuses accomplish?

What do Forex bonuses accomplish?

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Written on

May, 2019

Updated on

Aug, 2020

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Receiving a Forex no deposit bonus, or even a deposit bonus always serves a purpose for the company as well as the customer. However, many traders tend to ignore the background intentions of a Forex broker, when they offer a financial benefit the size of their whole account.

So what exactly does the bonus system accomplish? Why do Forex brokers keep offering it?

Bonuses are there to keep you engaged

Most Forex brokers encourage their traders to use their bonuses in the hopes of keeping them engaged on their platform. No matter how you look at it, trading with money you don’t necessarily own, takes away the whole stress aspect of Forex and allows traders to learn far more than initially intended by the broker.

By trading with the bonus in order to hit the imposed cap for withdrawals, traders tend to get used to using a specific platform, which then leads to them at some point depositing more money if they managed to lose it all from the get-go.

Therefore, bonuses can be considered as something like a conversion tool for the broker. Similar to a trial version of your web services.

The more you trade, the more the company benefits

It’s no secret that Forex brokers make money through commissions and spreads. The more funds a customer trades, the more they can charge for it, which then directly impacts their revenue books.

But in the beginning, it was not about making money by offering bonuses, it was all about the previous point, conversions.

Brokers quickly learned through various other industries that offer bonuses, that additional funds can indeed be made through bonus offerings.

For example, when Australians started to rely heavily on bonuses offered by their gaming operators, the companies started to include a small commission in every bet they won. Soon enough, every single online gaming website in Australia started offering these benefits to their players.

It was a “get two for the price of one” deal as, the platforms not only converted new players into long-term customers but also benefited on their gaming habits, from the funds they gave them. It was sort of like a larger return on investment than just a conversion.

Soon enough the brokers started adopting it and increasing their spreads here and there sometimes if more than 50% of the trade was done through a bonus. Naturally, this is not active anymore as the demands of the market have changed, and traders pay attention to spreads more than they have ever done before.

Is a bonus worth it?

No matter how we look at it. Even if the company takes away 50% of your profit that you generated from the bonus, it’s still a massive win. The funds that you used for starting the trade, weren’t yours, to begin with, they were given to you by the broker, ultimately allowing you to trade without funds.

Basically, it was an opportunity to make money out of nothing, not even a loan.

Getting a bonus is usually the best choice for beginners, while veteran traders are more likely to use high leverage-based brokers instead of the largest bonus-offering ones.

In conclusion, bonuses are there to convert you into a customer, which is fine. As long as you can benefit from the process, all types of marketing campaigns are acceptable. Just make sure that the bonus you’re getting is legit and withdrawable once the target traded volume is met.

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