Do You Think Only Bad Brokers Give Out Bonuses?

So enlightening. Many thanks dearie

Or, it could also be a case of a brokerage is just starting up, and they want to draw in clients as quickly as possible? Yes noobs do fall easily for the magical word called "free", but throwing in a bonus that's used as margin might also tempt a full-time trader that's with another broker, to throw in a few thousand, just to test the waters. It baffles me how many people in this thread have no idea how business works. Someone who is a full-time trader, with a big account, isn't all of a sudden going to close up their account with their current broker, in favor of a new broker that just opened up. Especially considering they would have no reviews or recommendations.

A brokerage is a business. When you open up a business, what's the key to attracting customers? Promotions. You promote the hell out of it. You don't just unlock the front door and wait for the customers to start pouring in. Business owners with that kind of mentality go out of business quick. Not to mention how difficult it was to get a foot in the door in the Forex world pre-SNB snap decision. Everyone just kept on recommending brokers like fxcm/alpari/IB because they were all "long standing and well established". Look at what happened to two of those brokers once the swiss national bank made that decision. They were caught with their pants down, and had to close up some offices (while losing tens or hundreds of millions of dollars). That event gave brokers like XM and Hot Forex a big boost, and I'm pretty sure they were offering bonuses before that happened. So somehow these well established brokers that didn't offer bonuses were bad because of poor money management, which led to their clients losing their accounts. Yet the smaller ones that had good money management, offered bonuses, actually remained afloat, AND their clients didn't lose their accounts.

When it comes to determining if a broker's bonus scheme is within the realm of legitimacy, you always combine the costs first.

1. Spread
2. Commissions (if any)
3. Funding/Withdraw Costs

If spreads are low, commissions are low-to-non-existent, funding/withdraw costs aren't there, and they offer a big bonus package, it's probably a scam. Especially if they throw in some ridiculous leverage like 3000:1. However if spreads are low, commissions are fair, maybe some withdraw charge for wire transfers, and they're going to boost your initial $5k deposit by 50%, it's worth a shot IMO. Providing a deposit bonus to an account is literally the same thing as just increasing the leverage rate. It just gives the trader the option to trade larger positions sooner, which in turn gives the broker larger profits sooner. When I was with XM, they had the tightest spreads I had ever seen, and no charges for withdraws. However, their commissions were also the highest I had ever seen. When I factored in all things though, it was reasonable. Paying an $11 commission on 1 standard lot with a spread of 0.2, is overall cheaper than a $5 commission on a 1 pip spread.

Crunch the numbers, and make sure that the broker is turning a reasonable profit. Every trader wants to be profitable, but you're not going to be if your broker's not profitable. Exercise due diligence, ensure they're transparent (do they have documentation available about costs/fees/commissions/etc.), and that they're regulated with an actually good regulatory body. It's when they don't show you how they make their money, that's when you need to be cautious.

It is important for traders to carry out simple mathematical investigation on the validity of any bonus offer by the brokers from time to time.

I found it difficult to conceive that any broker that offers bonuses is bad.I think brokers do give out bonuses to traders in order to attract more traders.Every broker advertises.Some even sponsor football clubs in Europe for that matter. You can imagine the cash involved in doing promotions.I think where problems come up is when traders are carried away by the huge magnitude of the bonus and ignored the strong terms and strict conditions that apply.
Always read and understand the terms and conditions, and if you think that you are not comfortable with the conditions then ignore the bonus immediately. I found that it is easier to ignore a bonus than to opt out.
Why some brokers do not promote any kind of bonuses, there are tons of good brokers that promote fabulous bonuses.Therefore, I think the argument that bad brokers are the ones that offer bonuses cannot be generalised.

yes

ESMA have come in to outlaw these kind of bonuses in the UK now. Match bonuses etc are often a way of Market Makers getting you through the door and they then put crazy terms in place for you to have access to withdrawing that bonus.

Not bad.
Just scam.
Lol

Bonuses are generally designed to secure someone's money in an account until they meet a volume which is not realistic for that money level. On top of that even if you did meet the bonus most of them won't give you your money back - but they have a legitimate excuse to keep you from withrdawing.

Are all bonus companies scams or dodgy? Probably not. Are most dodgy? Very likely.

All (or nearly all) will be hedging your trades, and mostly bonus money will be a fake representation in your account - like a partial demo account - so the bonus itself (not being real) doesn't put the broker in danger if you go negative.

A lot of those companies will even give you a small withdrawal to incentivize a bigger deposit.

The question is, why bother? There are some very good brokers out there, regulated by proper institutions (check on their site not the broker), that have spreads under 1 pip. Use them and it's a non-issue.

I was always alarmed by the bonuses, which required you to deposit some exact amount of money or have 4-6 digit deposits)) I prefer sometimes to refuse the bonuses, then to work it off later. But the broker rarely understands why I don't need the bonus.

I think it is not your concern if they do not understand why you reject bonuses.our concern is the safety of your capital and profits.

I don't agree with the statement.

Not only bad brokers offer bonuses. That's a fact. Another fact is that not all bonuses are good. So if you know what's good for you, then you better play safe. I am not discouraging those who like free things, I'm simply saying that free things come at acost and you may end up paying for your bonuses with all your savings

I do not like free things, but I disagree with the idea that only bad brokers give bonuses. Though most bad brokers use bonuses to entice newbies and try building spoilt CVs, some good brokers also use bonuses to market their businesses and beat their competitors. It is therefore not true to say that only bad brokers offer bonuses

I'm surprised that in 2019 people are still debating these things. Most bucket shops that pretend to be a legit outfit usually have a common thread: their owners or managers are mostly from the gaming industry. They use bonuses to attract gamblers and those who simply do not know better. Why would any financial services broker (stocks, futures, forex) offer signing bonuses? If they are going to have a sweepstakes or giveaway, it would not be tied in any way to the ability to perform normal operations on the trading account (particularly withdraw restrictions).

A trading contest could be done, but it would not affect the client's ability to withdraw/deposit or place any different restrictions on how they trade in any way as well.

Yes, most of the terms of conditions that accompany those bonuses tend to restrict normal trading activities especially client`s ability to withdraw funds from his account.This alone makes the idea of bonus questionable.

The heading of the thread is 100% perfect.