If you have ever thought of opening yourself an account with a binary options broker you will no doubt have come across many deposit bonus offers. These are offered by most brokers as a way in which to attract new clients. While the promotions vary, a binary options broker deposit bonus will be anything from 20% to 100% of your initial deposit. This swells your account when you first start trading, allowing you to trade at higher levels and thus increase your potential profits.
But are these offers too good to be true? How exactly do they work? We take a look and point out the advantages and disadvantages of these offers.
The concept behind the binary options broker deposit bonus for new clients is not new. It started in the world of Forex trading and has since extended to both Spread Betting and Binary Options. The intention of the bonus offer is to attract new clients to the broker.
With broker services offering so much similarity in features these days, the bonus is one area where the broker is able to differentiate itself from its peers. This has proven to be an effective technique for recruiting new clients.
How They Work
New traders are offered a bonus when they make the first deposit into their account. The amount that they are awarded generally depended on promotion and the level of their deposit. Higher deposits generally attract higher levels of bonuses. This provides an incentive for a new trader to open their account with as much capital as then can afford. In turn a bonus will then be awarded to the trader.
Let’s look at an example. Say a trader has $1000 with which to open a new account. If they receive a 50% bonus on their deposit their account balance will grow to $1500. This is available for trading with immediately. So in effect they have 50% more capital with which to trade on their account. The more money that is in your account, the greater the profits you can make. Therefore the binary options broker is providing the trader with the potential to increase their gains. Of course this opportunity must be used by traders to profit.
Profiting From a Bonus
In order to make the most from your binary options deposit bonus, you need to know how to profit from it. Firstly don’t go sticking your bonus on the outcome of one position. You could lose it straight away. Instead you need to be sensible and make your bonus work for you. From the example above you might increase your stake from $100 to $150 if you are using 10% staking rules.
In this instance this would effectively increase your return by 10% on each trade and still stick within your original risk limits. It pays to approach your trading in a sensible manner and get the most from your bonus.
The biggest problem with bonuses is that most people who accept them don’t understand the conditions of binary options terminology attached to them. These state that you are not able to immediately withdraw your bonus from your account. This is perhaps logical, however if often leads to a number of complaints against the broker. Instead before you can draw out your bonus amount or any monies made by using it, you need to have traded a required volume through your account.
This practice is known as ‘round lots’. You will need to do it several times before you can withdraw your profits. In some instances this can be 30 times the bonus value. Therefore you should be happy with remaining deposited in your account for a long period before accepting the bonus on your account.
There both pros and cons to accepting deposit bonuses when opening your account. There is no such thing as a free lunch and therefore you need to be happy with the terms on offer. Even fully regulated brokers offer deposit bonuses, so this is not some shady practice but one that you need to be aware of. Some traders will accept them simply because they are there.
If you are not the sort of person who feels they want to accept a binary options broker deposit bonus then don’t. If in doubt turn them down and stick to trading with your own deposited money.