The welcome bonus is simply a marketing tool used to attract traders. This system has been introduced in the market to better manage competition. Investors see an opportunity to increase their volume, while brokers are gaining more and more listings. But how do these bonuses really work? Is this really a free gift that it would be stupid to refuse? The answers…
A bonus for a deposit
When a broker offers a welcome bonus, in exchange for a registration on the portal, it is certainly not a free account opening. Indeed, this gift is offered to the new trader as a percentage of the amount of his first deposit. No broker offers a no-deposit welcome bonus. The only difference between brokers on the market is the bonus rate they apply. Some limit themselves to 10% on the first deposit, while others do not hesitate to offer a 100% bonus. In all cases, there is always a maximum limit, which can reach €10,000 depending on the broker in question. Once the registration is confirmed, the trader receives the bonus directly on the virtual account and can use it immediately for trading. For example, if the bonus is 100% and the trader makes a first deposit of €200, then he has €400 in his account, which he can invest on the trading platform.
The welcome bonus remains virtual money, which can certainly be used in trading, but which, however, can only be withdrawn in real money under certain conditions. That’s the main concern with this kind of gift, because, in fact, they’re never that free. Most binary option brokers impose minimum trade volumes to be reached before the bonus can be used. This volume is not a lump sum, but depends on the amount offered. Depending on the broker’s conditions, the trader may have to realize a volume of 25 to 40 times the value of the bonus in order to withdraw it in real money.
Thus, if the bonus offered is €100, for example, you must reach €2,500 to €4,000 of trade to pocket it.
Some brokers also take into account all the money in the trader’s account. This is even more difficult because in this case, the latter must reinvest X times the amount of his deposit and bonus before he can enjoy his gift. Moreover, with other malicious brokers, the withdrawal of their own money becomes dependent on the conditions attached to the bonus. It then becomes very difficult, if not impossible, to withdraw your winnings, as the case may be.
Read the UGC carefully
Before accepting the welcome bonus, the first thing to do is to check the conditions applied by the broker. All brokers must provide Terms and Conditions or “Bonus Conditions” on their website. It is therefore necessary to take the time to consult them before embarking on a project, at the risk of having unpleasant surprises.
Some traders complain that they have been ripped off, when in reality, they have simply not read the conditions of use of the bonus.
The fact is that, in order not to scare off traders, brokers do not mention these conditions in their advertisements or on their home page. It is necessary to go further in the pages of the site to discover them. To be more sure, it is also possible to contact the broker’s customer service directly. Most of the time, it is possible to chat live on the platform or to chat by phone to get accurate information. In some cases, the trader may also negotiate with the broker. Especially if he is very active on the portal, the broker can grant him a reduction in the volume to be reached in order to withdraw his bonus. For example, if the broker has to reinvest the amount 30 times before making a withdrawal, he can reduce it to 25 times.
Beware of the too attractive bonuses!
However, regardless of the withdrawal conditions imposed by the broker, the trader must always be vigilant from the outset. In particular, you should be wary when the bonuses offered seem too attractive. If, for example, the broker offers a 200% unlimited welcome bonus, you have to think twice before accepting. Although attractive, bonuses can have unpleasant consequences and can even lead to unnecessary losses. The wisest decision, especially for beginners, is to trade only with your money at first and only accept the bonus when you feel well-trained.
You can also settle for a smaller bonus and thus take the least risk. In any case, the most important thing is to be well informed, rather than blindly tempted. It should also be remembered that large bonuses are often offered by scam brokers.
Thus, bonus or not, it is always essential to verify the identity of the broker and to look carefully at whether or not he is regulated on the market. Not all bonuses are refused, but you only have to look beyond the advertisements to avoid being fooled. The concern is that if the trader has misinformed himself, he will under no circumstances be able to file a complaint with the supervisory institutions. His money will simply have been lost. As we say above, a beginner should not accept this bonus.
On our side we tend to advise against these offers if you have no previous experience.