Binary Options Broker Promotions Come With A Catch
I have been asked many times if there is a catch to binary options broker promotions and if traders should take them. Believe it or not the answer may not be what you think. There are reasons to avoid bonuses but n the end traders shouldn’t fear thems, they should understand them because they are a valuable tool, no pun intended. After all, you are going to trade with or without them anyway, right? Why not take advantage of extra leverage, lower risk and what amounts to free loot.
Promotions Attract Clients, And Keep Them Trading
When you boil it down there are a couple of reasons why a broker would want to offer a promotion. They come down to deposits, retention and withdrawals. Think about this, there really aren’t that many different binary options platforms, only a dozen or so worth noting, with hundreds of brokers based on them. This means most brokers are offering a trading experience EXACTLY like the one next door, and the one next door to that. In order to stand out from the crowd they have to offer unique features and these are often in the form of promotions. Good promotions such as first time deposit bonuses, trade insurance, free webinars, training sessions and other tools are great ways to stand out from the crowd and attract new clients.
Brokers will also offer additional promotions to past and current clients to keep them coming back and make additional deposits. One popular form is what I will call the holiday bonus, you know, the special bonus or gift you get if you make an additional deposit because of a holiday or special event. Brokers know that many times a trader will wash out of the market, or trade their account to a level that is unusable, or be tempted by the attraction of even bigger gains, or just get bored, and will make these offers to precipitate additional deposits. Sometimes the promotion my be in the form of an iPad or other non-cash item but has the same purpose, the get current traders to make additional deposits.
The problem most traders have with promotions is when it comes to withdrawals. Bonuses and promotions come with conditions believe it or not, you can’t just take the money and run. Brokers aren’t int the business to give away money, they want you to trade and they want you to lose. All bonuses come with volume minimums, minimums which are intended to get you trading and trading an amount that, over time, generates profits for the brokers and sometimes other conditions will apply.
The easiest terms I have seen are 15X the bonus amount but this is rare. It is usually in the range of 20 to 40 times the bonus and sometimes it is 20 to 40 times the bonus AND the deposit amount. Sometimes there is a time limit but that is also rare. Other restrictions you may run across include trade size. Brokers don’t want you to clear the minimum with only one or two trades so they limit the size of trade allowed to count towards your commitment.
The Catch To Broker Promotions
Yes my friend, there is a catch to broker promotions and it is as simple as having to trade. If you want something for free a bonus is the wrong way to go about getting it. The brokers aren’t here to give away money so you can withdraw it, they are here to attract deposits, retain customers, get traders trading and to keep as much of your cash as they can. This does not mean that promotions are bad, but you should be aware of the terms before you ever accept one.
So, should you take a promotion? Absolutely, but only the one that is right for you. You are going to be trading anyway, right? Promotional terms aren’t going to keep you from trying to win and in the end they can actually help. Bonuses provide a cushion to your balance providing extra capital and extra time to become profitable. If you trade well enough to clear the terms then it’s free money, if not then you’ve gotten more experience than you would have gotten otherwise.
It will take time to clear the bonus terms so be sure that any money you use to obtain one is not needed for other purposes. You will most likely not be able to withdraw any profits or bonus amount before meeting the terms which can be a real downer. Usually, if you are able to make a withdrawal before the terms are met it will cancel the bonus and any profits associated with it. The worst part in that scenario is that any losses incurred will come out of the initial deposit.
Traders in the EU and those using CySEC/Regulated brokers have an advantage because the terms are a little looser than the average broker. Typically, a portion of the profits made from bonus money are withdrawable on a sliding scale as you meet a portion of the bonus terms so long as the initial deposit and bonus money are left in the account.
My advice. Take a bonus, it’s right to take advantage of the promotions, but only if you understand the terms associated with it. If you do then a bonus can greatly enhance your trading experience and enjoyment, if not it can cause a world of anguish.