Stop! Don’t Take That Bonus!

I hate to burst your bubble but you may not want to take that bonus. I know it is hard to ignore the flashy ads and offers of deposit bonuses up to 200%. Who wouldn’t want free money? I get it. But nothing is really free, especially money. There are always strings attached and that is what you have to be wary of. Bonuses are offered by lots of binary option brokers, most if not all of them to be perfectly frank. These bonuses are meant to attract traders and then get them to trade. A lot of shady brokers attach so many ridiculus stipulations to the bonus you may never see your money again. This does not mean that all bonuses or brokers who offer bonuses are bad, you just need to know what it is you are getting into.

What Is A Free Bonus

Bonuses are a free gift that many binary options brokers give to new clients or for other reasons. They are an additional amount of capital added into your account upon your primary deposit.  Sometimes additional deposits will warrant a bonus and sometimes there are special holiday bonuses. Usually the bonus is a set dollar or percentage amount based on the size of your account. If you deposit $2,000 and the bonus is 50% the broker will make your account balance show $3,000. Free money. Some brokers will add a bonus automatically to your first deposit, others require you to request it but all will come with specific terms and conditions as to what and how the bonus can be used.

binary options bonus

Trading Minimum 

All bonuses come with a trading minimum. This is a minimum amount that you must trade in order win the bonus. This is your first hurdle, you see the fee money isn’t really free. The broker wants to ensure that you trade a certain amount before the bonus money is really yours. This is only fair I guess, but the odds are not stacked in your favor. The smallest minimum you will find will most likely be in the range of 15X the account + bonus. This means that if your account is $1,000 and you get a bonus of 25% you will have to make trades in the amount of $18,750! That is 1,875% more than the account + bonus is worth and a mighty sum to generate from such a small amount. It could take years to reach this sum trading in a measured and managed way. Of course you could try to make a lot of big trades in order to clear the minimum quicker but that will also increase your risk immeasurably. Some of you reading this are probably sitting back thinking to yourselves “oho! I will make a few trades for $500 or $1000 and get up to the minimum real quick!”. I don’t think so, most brokers will not count trades that are 50% or more of account value. Now think about the minimum trading volume offered by your broker? Some are as high as 40X or 50X account value.

Time Limits

Some, but not all, brokers will also have a time limit on the bonus. Not only will you have to meet a minimum you will also have to do it within a certain amount of time. This is OK for some traders, especially if you are trading intraday and making multiple trades daily but that is not how I trade. Being forced to make a certain number of trades in a set time limit is a sure to rush, force trades and lose money. I don’t see this as much as I used to, it is a tactic used by the shadier brokerages to ensure that not only do you trade a certain volume, you are more likely to lose your original balance than you are to clear the bonus.

Withdrawing Your Profits

I’m not saying it can’t be done but it will be a hassle. Nearly 100% of bonuses come with severe withdrawal penalties. For the most part you will not be able to withdraw any money before clearing the bonus. This includes the principal balance, the bonus or any profits associated in any way with the bonus. Basically, your money is tied up and unaccessible until you clear the minimum. This is a real pain, I know that if I double my money I am going to want to take some out, not wait for months until I meet the requirements. Any attempt to withdraw money will most likely result in voiding the bonus and all profits, leaving you left with your initial investment – any losses which could leave you with less than you started with. No bonus can be withdrawn without a deposit, not even the free $50 for signing up.

CySEC Bonuses

CySEC regulated brokers have bonuses that are a little easier to work with. They still come with trading minimums but there are not time limits. The real bonus to these bonuses is that you are able to make withdrawals before you clear the entire bonus. There is a schedule outlining incrementally how much you can withdraw based on a percentage of the account total until you meet the full requirements. However, CySEC is contemplating outlawing all bonuses and free gifts so don’t be surprised if that happens.

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One Response to “Stop! Don’t Take That Bonus!”

  1. I did not take a bonus from Lbinary, the money I traded with was according to the broker going to be given back to me if I lost the trades, what the broker did not disclose was that it was given back to me in bonus money.

    STAY AWAY FROM Lbinary

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