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Author Topic: True and fake bonuses offered by brokers  (Read 25170 times)

Offline fx.mstr

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True and fake bonuses offered by brokers
« on: July 03, 2014, 09:56:04 PM »
I have came across some of the bonus offers from brokers and I must say that most of them are FAKE.

There are very-very few brokers that offer real trading bonus (or maybe I have not found them) and most of them try to fool the traders with their so called "trading bonus" which is not more than only a rebate if you trade a tremendous amount of lots.

In my point of view real trading bonus is that what you can use for trading, make higher gains with it and lose it if your position goes against you. Otherwise it is a complete financial suicide to open a larger lot size just because you have the "bonus" on your account.
The sad part of the story is that most of the brokers tried to convince me to take their bonus and I can open a larger lot size and make more money but when I have asked what happens when my floating loss reaches the level of my original deposit they said the bonus will be withdrawn, which means that they pull the floor out of my feet when I am in trouble.

They set impossible targets to withdraw or even to be able to use the bonus amount for trading, such as trade 1 lot for each $1-2. If you get a $1000 bonus you have to trade at least 500-1000 lots to be able to use it. If you try to do so it is 99.9% sure you will fail.

This practice should be illegal!

What do you guys think about that?

Do you use any of the available bonus schemes of any brokers?
Have you found any honest one that offers any kind of trading bonus?
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Offline ultracat

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Re: True and fake bonuses offered by brokers
« Reply #1 on: July 04, 2014, 01:27:20 AM »
It's not so much fake as it's misunderstood.  It's not free money...it's a "bonus" amount of leverage.  If I ever use bonuses, that's how I use them:  I reduce my risk capital and run roughly normal  risk using the bonus money along with my capital.

Offline forexfish

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Re: True and fake bonuses offered by brokers
« Reply #2 on: July 04, 2014, 02:06:27 AM »

It is simply offering higher leverage, if a broker is offering 1:500 max leverage and also offering 100% bonus so you simply assume broker is offering 1:1000 leverage. Bonus element increase your capital size ( non withdrawable, can withdraw if lot size conditions are met ).

Lot size conditions are very tight normally as each $1 of bonus need to trade 1 RT lot in most of the cases so you simply assume you cannot withdraw.


Offline geektrader

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Re: True and fake bonuses offered by brokers
« Reply #3 on: July 04, 2014, 03:51:32 AM »
I have came across some of the bonus offers from brokers and I must say that most of them are FAKE.

There are very-very few brokers that offer real trading bonus (or maybe I have not found them) and most of them try to fool the traders with their so called "trading bonus" which is not more than only a rebate if you trade a tremendous amount of lots.

In my point of view real trading bonus is that what you can use for trading, make higher gains with it and lose it if your position goes against you. Otherwise it is a complete financial suicide to open a larger lot size just because you have the "bonus" on your account.
The sad part of the story is that most of the brokers tried to convince me to take their bonus and I can open a larger lot size and make more money but when I have asked what happens when my floating loss reaches the level of my original deposit they said the bonus will be withdrawn, which means that they pull the floor out of my feet when I am in trouble.

They set impossible targets to withdraw or even to be able to use the bonus amount for trading, such as trade 1 lot for each $1-2. If you get a $1000 bonus you have to trade at least 500-1000 lots to be able to use it. If you try to do so it is 99.9% sure you will fail.

This practice should be illegal!

What do you guys think about that?

Do you use any of the available bonus schemes of any brokers?
Have you found any honest one that offers any kind of trading bonus?

Well, thats exactly the point, they WANT you to lose all your money. Brokers that offer such bonuses ARE market makers, even if they claim they are not. And such brokers DO make their money if their clients lose and thats exactly the reason they offer such bonuses. Go with a serious ECN broker without deposit bonuses, they are ALWAYS a red flag to me and a way to identify honest from un-honest brokers.

Offline fxview

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Re: True and fake bonuses offered by brokers
« Reply #4 on: July 05, 2014, 03:47:18 PM »
These bonuses aren't fake they just come with terms and conditions which make them much less attractive. It's really the job of the trader to find out the Terms and Conditions of any bonuses they receive when signing up to a brokerage, at the end of the day brokerages are selling a product and are going to make things sound particularly rose tinted.

Certain types of bonuses are banned in certain regulatory jurisdictions. For instance in Europe regulated firms can't offer bonuses which prevent traders from withdrawing their initial deposit.

Choosing a brokerage on the basis of what bonus they offer is probably a bad idea. Some of the best brokerages tend not to offer any deposit bonuses (they don't have too) and you should pick a brokerage you can have a long term relationship with, not one who is going to offer you a flashy freebie.

Offline FredB

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Re: True and fake bonuses offered by brokers
« Reply #5 on: July 06, 2014, 02:26:35 PM »
No broker (or business for that matter) is going to offer you anything for free, its a simple fact of life. The deposit bonuses are tools to lure you in, and are akin to to treating forex trading like a casino. If you choose to trade with a $5 deposit broker with a bonus you are most likely trading with a market maker as its the only way they can make money from you - your trading volume is definitely not going to justify any profits for them!

Offline geektrader

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Re: True and fake bonuses offered by brokers
« Reply #6 on: July 07, 2014, 06:49:08 AM »
No broker (or business for that matter) is going to offer you anything for free, its a simple fact of life. The deposit bonuses are tools to lure you in, and are akin to to treating forex trading like a casino. If you choose to trade with a $5 deposit broker with a bonus you are most likely trading with a market maker as its the only way they can make money from you - your trading volume is definitely not going to justify any profits for them!

Thats exactly how it is, hence serious brokers are not offering you any bonuses because they dont trade against you and just make their profits from commissions, hence cant justify fancy bonuses. For me personally ANY broker that offers a bonus I stay away from exactly for the reason that you know they will trade against you to make this bonus back. An exception is Armada Markets who give some small bonuses here and there, for deposits they dont exceed 15 Euro though as its limited to 10% on a max of 135 Euro. Thats a realistic amount they can really make back through commissions if you trade profitable. But all those 50%+ bonus on ANY deposit amount brokers you simply have to forget, they are ALL market makers and you WON`T win with them in the long run, rest assured.

Offline jemook

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Re: True and fake bonuses offered by brokers
« Reply #7 on: July 07, 2014, 11:34:24 AM »
Geektrader hit the nail on the head.

I'm interested to hear what introduction promotion you guys would like to see from a broker to help get you over the line with testing them out? My question only applies to a broker that doesn't profit from client losses.

Cheers,
Jeremy

Offline Tempestshade

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Re: True and fake bonuses offered by brokers
« Reply #8 on: July 07, 2014, 11:52:14 AM »
I personally don't mind bonuses in some instances. Some brokers allow bonuses to be used as extra margin - obviously only those who trade against you. I could not see a reputable broker taking this risk. But it does help in some instances. You must except that you will never withdraw this however.

Jeremy - I think more realistic introduction promotions could be along the lines of the first 10-50 trades are free, or perhaps first 1 lot of trades are commission free. Making the trade free from commission/broker spread-mark-up (if applicable). This would allow systems to test out your feed without having to pay for the first few trades. Doesn't disadvantage the broker much and gives the trader time to test you out. You could also market this as allowing traders to practice with a live account for free, as from their own P/L.

If I think of anymore I will post them.

Cheers,
David

Offline tcc97

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Re: True and fake bonuses offered by brokers
« Reply #9 on: July 07, 2014, 12:31:11 PM »
interesting topic!

i agree with most here that state that most reputable brokers would not even offer bonus to start with. 

however for whatever reason if a trader decide to use a broker with bonuses,  then one way to think about it is per forexfish point (extra leverage) n use it the way ultra cat suggest (open the account with intended amount less the bonus so u are risking less than the original capital u had in mind).

folks, these are a few of the useful pieces of advice if one intend to stay long term in the fx mkt. n they can only come fr ppl who had been thru a lot in the mkt! 

+1 to the 2 of u. 
equity dd in yellow (real risk) is lower than the posted dd! <br /><br /> http://www.donnaforex.com/forum/index.php?topic=12110.0<br/> <br />manual trading<br />

Offline tcc97

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Re: True and fake bonuses offered by brokers
« Reply #10 on: July 07, 2014, 12:36:18 PM »
totally agree with David here. generally if u make it as little friction as possible for traders to open an acc ie little to no cost to send funds n 10 - 20 commission free trades, it should help many traders who are contemplating between broker a or broker g, to decide to go with broker g!

p/s: broker g = global prime.


I personally don't mind bonuses in some instances. Some brokers allow bonuses to be used as extra margin - obviously only those who trade against you. I could not see a reputable broker taking this risk. But it does help in some instances. You must except that you will never withdraw this however.

Jeremy - I think more realistic introduction promotions could be along the lines of the first 10-50 trades are free, or perhaps first 1 lot of trades are commission free. Making the trade free from commission/broker spread-mark-up (if applicable). This would allow systems to test out your feed without having to pay for the first few trades. Doesn't disadvantage the broker much and gives the trader time to test you out. You could also market this as allowing traders to practice with a live account for free, as from their own P/L.

If I think of anymore I will post them.

Cheers,
David
equity dd in yellow (real risk) is lower than the posted dd! <br /><br /> http://www.donnaforex.com/forum/index.php?topic=12110.0<br/> <br />manual trading<br />

Offline Istherehope

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Re: True and fake bonuses offered by brokers
« Reply #11 on: July 07, 2014, 12:54:08 PM »
I would like to see free wire transfers (maybe setting a bank account in an European bank?) and electronic withdraws using ewallets.
The cost of transfers to and from Australia easily adds to the total cost of trading if your account is not big

Offline Tempestshade

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Re: True and fake bonuses offered by brokers
« Reply #12 on: July 07, 2014, 01:11:28 PM »
I would like to see free wire transfers (maybe setting a bank account in an European bank?) and electronic withdraws using ewallets.
The cost of transfers to and from Australia easily adds to the total cost of trading if your account is not big

I don't think this is very plausible for exactly the reason you mentioned - wire transfers easily add up. My experience has been in the ballpark of say $15-$40 for each transfer. I would expect that a broker makes - in pure profit - perhaps only $2-$4 (if that) per lot traded. This means that you would have to trade 4-20 lots depending on their profits to make up for the transfer. Definitely not worth it for a smaller account where this could take several months.

Offline Istherehope

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Re: True and fake bonuses offered by brokers
« Reply #13 on: July 07, 2014, 04:33:26 PM »
I would like to see free wire transfers (maybe setting a bank account in an European bank?) and electronic withdraws using ewallets.
The cost of transfers to and from Australia easily adds to the total cost of trading if your account is not big

I don't think this is very plausible for exactly the reason you mentioned - wire transfers easily add up. My experience has been in the ballpark of say $15-$40 for each transfer. I would expect that a broker makes - in pure profit - perhaps only $2-$4 (if that) per lot traded. This means that you would have to trade 4-20 lots depending on their profits to make up for the transfer. Definitely not worth it for a smaller account where this could take several months.

A SEPA wire transfer costs 50 cents. That is why a bank account with a reputable European bank would be a good idea for costumers of Global Prime and for the broker itself if it wants a share of that market

Offline Tempestshade

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Re: True and fake bonuses offered by brokers
« Reply #14 on: July 07, 2014, 04:52:28 PM »
I would like to see free wire transfers (maybe setting a bank account in an European bank?) and electronic withdraws using ewallets.
The cost of transfers to and from Australia easily adds to the total cost of trading if your account is not big

I don't think this is very plausible for exactly the reason you mentioned - wire transfers easily add up. My experience has been in the ballpark of say $15-$40 for each transfer. I would expect that a broker makes - in pure profit - perhaps only $2-$4 (if that) per lot traded. This means that you would have to trade 4-20 lots depending on their profits to make up for the transfer. Definitely not worth it for a smaller account where this could take several months.

A SEPA wire transfer costs 50 cents. That is why a bank account with a reputable European bank would be a good idea for costumers of Global Prime and for the broker itself if it wants a share of that market

Interesting - I have never seen such wire transfers. My canadian bank charges me much more for transfers. I will have to inquire.

 

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