As a trader, you are always excited to see various broker promotions. Not only that, but you might even consider taking on that promotion. It’s something interesting and cool, not to mention pretty helpful. Not all promotions are great though. Some of them might not be as appealing or useful as you want them to be. And that’s the reason why you want to take them all into account. Here’s what you need to know before accepting any promotion.
Understand the promotion type
Not every Forex deposit bonus is the same. For example, there are deposit bonuses, no deposit bonuses, cashback programs, referral bonuses, trading competitions, loyalty rewards, reduced commission offers and so on. Deposit bonuses tend to be the most popular, but cashback and rebate programs can also be great, just like having a no deposit bonus. In general, bonuses can offer value if you were going to use that service anyway, and that’s exactly what you need to keep in mind.
Check the broker regulations
Regulations matter when it comes to brokers. Traders need to verify the regulatory licenses, the company history, client fund protection systems, negative balance protection, reputation in the trading community but also the withdrawal reliability. If you perform your due diligence, it will be easier to figure out if the broker you want to work with is as professional and trustworthy as you want them to be.
Always read the terms and conditions
The problem that comes with broker promotions is that a lot of the time, they have very egregious terms. You don’t just accept a bonus without knowing what it entails. Otherwise, it could end up being a problem. You will need to know any time limits, the eligible instruments, minimum deposit requirements and also the maximum withdrawal limits.
At the same time, you need to see if there are restrictions on hedging, restrictions on expert advisors, account-type limitations and anything of that nature. A lot of the time, bonuses can’t be withdrawn, and even the funds you get via bonuses have withdrawal restrictions. But a lot of people don’t understand that, and it becomes an issue. Knowing how to maneuver these challenges and adapt is certainly a struggle, but one that’s worth taking here, if you do it rightfully of course.
Examine the trading volume requirements
Another thing that comes attached to these bonuses is the trading volume requirements. For example, you are getting a certain bonus, but you will have to maintain a specific trading volume. For a lot of traders, that will encourage over-trading, which is naturally a problem that you want to avoid. Traders need to calculate the risk exposure, realistic time needed to qualify, additional challenges, how many trades you need to do and so on.
Verify all the restrictions
Most of these bonuses will have restrictions. It’s normal, as most brokers tend to limit the way you use the bonuses, even if they seem very fast and powerful at first. Some of the most common restrictions include profit withdrawal limitations, bonus cancellation if you do a partial withdrawal, not to mention there can be withdrawal delays as well. And to that, there are also locked equity requirements that you need to keep in mind. It’s also a requirement to maintain the minimum balance levels there. So yes, you want to see how you are restricted, and whether the bonus is worth it after those restrictions in the first place.
Assess the impact on your trading strategy
The main idea here is that you want to see if the bonus will impact your strategy in any way. In some situations, it will. That can lead to over-leveraging, strategy deviation, a reduced discipline, higher drawdown and so on. In addition, you also have to think of the challenges brought by the bonus structures and how you adapt to them. It’s a challenge for sure, because a lot of the time these bonuses can end up being more restrictive than expected.
Comparing spreads and trading costs
Brokers will sometimes advertise a large bonus but as they do that, they increase the trading costs in other places. That’s the reason why you always want to compare the spreads, commission rates, swap fees, slippage quality, but also the execution speed in there as well. A broker could offer large bonuses, but they charge higher spreads. So yes, you really have to be careful when it comes to those things.
Investigate the execution quality
The promotion could be great, but if the platform is poorly executed, that can lead to some problems. That’s why before you fund the account, you need to test the platform stability, order execution speed, slippage frequency, their charting tools, VPS compatibility, along with customer support responsiveness. Execution quality is imperative here, and it certainly matters more than the promotional marketing, so keep that in mind.
Regional restrictions are also a major thing to consider as well. You want to know whether the promotions are restricted by region or not. Some offers might be specific to a region, and it’s totally something that you want to address here. There are also promotions that work specifically for new clients, specific account types or if you are using a certain payment method. It might not seem like much at first, but knowing all this stuff is a huge part of the process. It shows that you are doing your due diligence and it will help convey a better result in the end.
Conclusion
We are firm believers that knowing how to trade properly and handling the right broker promotions is a key to success. The downside is that a lot of the time, you will have tons of different brokers to work with, and you will have to encounter all kinds of problems. Yes, there are natural challenges that arise, but in the long term, it comes down to having great promotions and focusing on the experience as a whole. If you get the right promotion, it could help, but be aware that tons of promotions are never as good as you think. So you have to perform your due diligence and find the diamond in the rough.
Finance Monthly Risk warning: Forex and leveraged trading involve a substantial risk of loss and may not be suitable for every investor. Broker promotions and bonuses do not guarantee profits and may include trading-volume, withdrawal and eligibility restrictions. This article is for general information only and does not constitute financial or investment advice. Always check that a broker is authorised in your jurisdiction and read the full promotional terms before depositing funds.
