Bonuses and Promotions plus Competitions
Fifteenth session of Forex Training
Welcome back to Forex professional training in financial markets.
In this session we will talk about Bonuses and Promotions plus Competitions or contests.
Brokers offer bonuses, promotions, deals and competitions or contests to their traders in order to get them to know their broker better.
These vary from broker to broker and do not take place all the time.
Bonus Purpose
The reason for this is that amateur traders can get a better understanding of the financial market and get more familiar with real accounts and transactions.
It is also a nice way to begin their trading.
Generally speaking, it is also a great way to test a new broker and compare them with others.
Many traders use different offers to test a new broker, their performance and policies.
We will now look at this matter more closely and highlight all the different types.
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Low Deposit with Low Amount
It is somewhere between 50 to 100 dollars as a bonus to his deposit.
The bonus itself cannot be withdrawn from the account by the trader, but the profit that a party makes using this bonus can be withdrawn.
Deposit Bonus with High amount
For instance, a broker gives 1000 dollars to a party as a bonus and again this can’t be taken out of the account by the party, but the profit they make using this bonus is available to be withdrawn.
The difference between this type and the first one is that the profit is available to them under some circumstances.
They must make profit or they must make special trades or a combination of both.
For example, the lowest amount that can be withdrawn from the account is 6000 dollars and the lowest rate to trade is 50 lots so a party must manage to reach these objectives or a combination of them.
The Percentage of Deposited Bonus Amount
This happens only for parties with real accounts and it works based on the amount that a party deposited to his/her account.
If a trader would like to receive this type of bonus there are certain rules they must follow.
For instance, if you would like to receive this bonus, the lowest amount to deposit is $200.
For example, there is a famous broker that provides 30% bonus, and if you deposit $1000 into your account your balance will be 1300 dollars due to the promotion.
Also, they would enforce another clause, as there is a minimum amount, there is also a maximum amount, for instance up to $5000.
Hence if you deposit more than $5000 you will not receive the bonus.
Bonus with a Margin
Some of these bonuses do include margin so the amount of losses can reach up to the amount that has been deposited plus the bonus.
For example, imagine a party deposited 1000 USD. Considering the bonus amount, his account balance would be 1300 USD.
If he loses $1200, all of his deposited capital ($1000) and $200 of the bonus are lost.
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There are some bonuses in which margin is not included.
This means that if your account is facing losses at the time, you can only risk up to the amount that you deposited and bonus is not included.
If you happen to lose your deposit then the broker will take out the bonus, known as “Bonus Out” in financial markets.
For example, if you deposit 1000 dollars and receive 300 dollars as a bonus, your account would be 1300 dollars.
If you lose your initial 1000 dollars then the broker will take out the 300 bonus as well and you will receive a margin call.
Notice:
One important thing you need to know is that a broker can take the given bonus from your account at any time without any reason or explanation due to the contract you sign at the beginning when you open an account with the broker.
Bonus Abuse
It is utilized to stop parties cheating using bonuses.
It can be described as when a party opens two accounts under two different names with one broker, or two parties opening an account with one broker or it can also be two parties who open accounts with two different brokers with bonus offers.
For instance, the first broker is FIBO, they offer 50% bonus and the other one is IronFx that also offers 50% bonus.
For better understanding I shall give you an example here.
Imagine we have two parties and they intend to open an account each.
First account is deposited with 10,000 dollars with 50% bonus, hence total balance is 15,000 dollars. It goes the same for the second account too.
Now what these parties do is they start a trade on one symbol, at the same time with opposite direction, for instance they choose EURUSD, in the first account trader sells 15 lots while the second trader buys 15 lots.
Speculating the correct direction is not important at all. So after 100 pip, one of the account is zero and the other one is $30,000.
Now if you do some calculations it is very easy to see that they have cheated very easily.
The total amount of both deposited funds was 20,000 USD. Now they have 30,000 dollars, deposited amount of 20,000 USD and their profit is 10,000 dollars.
So at any time a broker feels that a party or some parties are cheating using bonuses they can easily take out the bonus from the account.
Credit Bonus
Your account will be credited with a bonus and you can use it to do your trades. There are certain conditions here you should pay attention to.
Bonuses will be available to you after a certain amount of transactions.
For instance, if your bonus is divided into 5 parts and for each 10 or 20 lots that you trade one of these parts is released and made available to you.
For any amount that you trade you will receive the bonus for it and it can be from 1 lot to any amount.
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There is also one bonus with certain conditions using pip, time of the trade and symbol.
For instance, a broker’s policy says that a trade must last more than 5 minutes and transaction must be over 5 pip.
It can also be based on symbols too, for instance a brokers policy is that bonuses will only be available for trades on Oil or a certain currency like EURUSD.
Competition and Contest
These competitions and contests are done in two ways:
In demo accounts, the broker deposits the bonus to traders’ accounts, and usually signing up for this bonus starts 30 days before the competition begins, giving people enough time to sign up.
The contest itself takes 15 to 30 days to complete and at the end there is a prize for top traders.
In these competitions, a broker will usually set up some rules such as: trades must be made by a trader, or using any expert is authorized.
For others, all trades must be done by traders themselves and using experts is banned.
So it is important to read terms and conditions before you enter a competition.
Competitions for Real Accounts
A trader deposits certain amount to enter the contest and because it is his own money, the competition makes more sense.
Also terms and conditions are much more logical and acceptable and the prize for top traders is much more attractive.
In order to keep yourself up to date and find out more about promotions, bonuses and competitions, you can simply send an email to info@pforex.org or visit our website and access the News section and we will notify you in future.
That concludes this session, until next time and another session take care.