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Revealing Forex Bonuses Of Brokers: How To Identify A Real Bonus

Author: Martin Moni
Martin Moni
All publications of the author

We all love free goodies, no doubt. Just think of how excited we all get around the Christmas season in anticipation of free gifts. This is why many sellers usually dangle some freebies in different forms. For retailers like supermarkets, these are often in the form of shopping points, while airlines offer ‘frequent flier miles’. Things are not different in the Forex industry, where the agents offer benefits for different ‘milestones’. Just like with retailers and airlines, benefits are intended to bring in more clients for the agent and nearly all of them provide some kind of benefit. However, not all of these are genuine, and if you’re not careful you may find yourself trapped like you do with a mousetrap. In this post, we shall explore the kinds of benefits that are frequently offered and how to distinguish the genuine ones from those that aren’t.

What kinds of benefits are available?

There are three different kinds of benefits that most agents provide marking the different milestones – sign-up, deposit and trading benefits. The first one is pretty straightforward, where a first-time client gets a benefit in the form of margin deposited into their account the moment they open a book with the broker, even before they make a monetary deposit. This is usually the one agents use to get new clients into their doors and, as you would assume, the most tempting one. After all, who wouldn’t want to get some free money to exchange with at no risk to their own account? Later on, we shall look at how an agent can take advantage of such an individual, and why you should be very careful when signing up with an agent because of the allure of a benefit. (Concepts Every Exchanger Should Understand: Leverage, Margin And Hedging)

The next benefit is given to exchangers who make a deposit into their account with real money. It can either be a fixed amount with every deposit or a percentage of the amount deposited. Regardless, there will also be a ceiling to the benefit offered to protect the agent from issuing too high a benefit. Imagine if the agent provided a 10% benefit with every deposit and someone deposited $100,000. That would mean the agent would be on the hook for $10,000! Nevertheless, there are other conditions in most cases attached to these benefits that further protect the agent while trapping the exchanger. (Learn: How to protect yourself from margin call)

Finally, trading benefits are provided as an exchanger continues to exchange. The amount of benefit will be dependent on the number of lots exchanged, and sometimes this can be too high to achieve reasonably. Here too, the agents have ways of taking advantage of their clients, which is why you should still be careful. (Here are some Lessons on self-defence: Forex scams)

There is another ‘benefit’ we ought to discuss though, although it isn’t exactly a benefit, and that is the cashback program. Some agents label it as rebates, but it is the same thing. Basically it means that you get some of your money back after some time to recoup some of the losses to your account and at the same time earn some passive income. Very few agents have a cashback program, yet it is one of the most exciting one. To understand how some of these rebates work, let’s look at an example by ForexTime agents. For a client with a capital of $10,000, they are eligible to a rebate of $2 for every lot exchanged in a week. That means the client could theoretically earn up to $100 in a typical week without having to do anything, and that is extra income on top of their own gains. (GDPR Is Finally Here! All You Need To Know And How It Affects You)

What sort of conditions make a benefit worthwhile?

As we have already said, these benefits are simply meant to get clients to stay with the agent. To ensure the benefits act as traps by some agents, they apply some very bad conditions to the benefits that make it very difficult to get out of the trap. Therefore, if you want to find the best benefits, you will need to look at the conditions attached. Unfortunately, the ‘Terms and conditions’ will be hidden deep into the fine print to make it harder for you to find them. Still, the agents are required by law to reveal all the conditions, so you should be able to find them if you look hard enough. These conditions will be centred around several aspects of the trading conditions such as:

Terms of withdrawal afterwards

Inasmuch as we love free gifts, the agents don’t like to give away anything for free. It is understandable, though, because they are running a business. It becomes unfair when the terms of withdrawal tied to the benefit become detrimental to the client. In all cases, the benefit itself cannot be withdrawn directly out of your account as real money since that would be akin to giving away free money. The best agents, though, will allow you to take back the gains gained using the benefit. An example is XM agents who offer a $30 signup benefit to new clients. The gains you gain from this benefit can be withdrawn as real money. (These are the: Top 10 Most Outrageous Forex Market Scammers)

There’s a trick that some bad agents use to rope you in with the signup benefit that you should be aware of – requiring a real deposit before withdrawal. This is where the agent demands that, to be able to take back the gains made from the benefit, you have to make a deposit of real money into your account. It’s not always used to steal your money, but here is where you need to be aware of the agent’s reputation. Imagine if an agent tricked you using this trick to get your real money and then refused to do so? This is why you should always read the conditions to find out if there are any further impediments to your withdrawals. After all, you wouldn’t want to spend weeks trying to make money only to find out it was just hot air. (You should be aware of these: Main central bank meetings)

Furthermore, check to see how much of the benefit is eligible for withdrawal. You may have noticed that InstaForex agents are offering a $1,000 benefit for signing up, which is very enticing. However, only 10% of this benefit is available for withdrawal. This means that, even if you turn that $1,000 into $2,000, all you get to take back is $100. (This is How to choose a Forex agent: basic rules and useful tips)

Here’s another trick to look out for – cancellation of the benefit upon any withdrawal. Remember how we mentioned some agents demand that you make a deposit with real money before you get to take back the benefit? Well, some agents make any withdrawal you make to cancel your entire benefit. For example, if you got the $1,000 benefit described above from InstaForex, then later made a deposit of, say, $100 and thereafter withdrew just $50, then the entire $1,000 benefit is cancelled and you’re left with just $50 in your account. This is like a run-around to get you to sign up with the agent with the promise of a huge benefit when in the end you actually get nothing.

Proof that you opened the account

Most agents require that you sign up for an account and that you verify you really opened it before you can take back any proceeds. Some, though, will give you the benefit even before the account is verified. Later on, when you try to take back the gain you made from the benefit, this is when they demand that you first verify your account. Here, to avoid giving you the money, they will ask for something you can’t possibly have or do. Usually, this is not too difficult to do, approving the account, but in some cases it can be. In the end, you could find yourself spending weeks in correspondence with the agent trying to get your account approved but fail. (Just in case of a problem, you should know: How to complain against an agent)

To avoid such a situation, make sure you also get the full details of the welcome benefit before spending too much time making money you will never get. That means also finding out what it takes to get your account approved, and whether you can achieve that goal. (Have you ever wondered: How much money Forex agents make?)

Types of accounts eligible

Be aware of the accounts eligible for a benefit before you start trading. Some agents will limit the benefits to standard accounts, leaving out other types of accounts. It is not common to find benefits for ECN accounts even by the best Forex ECN agents. I wouldn’t blame them, though, since the benefit is coming out of their pocket and they are routing the orders to the liquidity provider. It would mean that any losses incurred will also come out of their pocket. Therefore, check to make sure which accounts receive a benefit before wasting your time. (These are the: Types of Forex trading accounts)

Conditions for trading benefits

Another Forex benefit is that awarded depending on the frequency of your exchanges. You would expect that, with this kind of benefit, the terms would be simple because you’re trading your own money, but it is not so here either. Bad agents will place such a high limit for benefits that it is impossible to achieve the target. For example, an agent may reward about $10 for every lot you exchange. Imagine now that you don’t have a lot of capital and only exchange 0.01 lots per exchange to reduce risk. That means you would have to make 100 exchanges before you receive a $10 benefit. How much money do you think you would have lost after 100 exchanges? Probably a lot more than $10. Moreover, the agents may target an amateur exchanger who loses more than they gain, meaning that even before they achieve the target, their entire capital would have been wiped out. (You need to know: How to find best Forex spreads)

Also look out for how the trading benefits are issued – as margin or points. Certain agents will reward you using points instead of actual money, making the process of withdrawing the benefit even more difficult. Alpari, for example, issue Alpari points as a benefit for keeping your trading turnover, ensuring that you keep trading throughout the week. However, to convert those Alpari points to real money, it is up to the company to set the rate and that can change from one time to the next. Such measures can be introduced to increase the difficulty of enjoying your benefits while keeping you churning money for the company. (For the entrepreneurs, this is: How to create your own Forex agentage firm)

Conditions for receiving rebates

Benefits may be enticing, but cashback programmes are too lucrative because the returns do not require a lot of effort. In spite of that, some agents will still try to use these programmes to take advantage of their clients. In the aforementioned case with ForexTime, their conditions are very straightforward and the Forex company itself is trustworthy as the Forex agent reviews show. Other agents meanwhile will try to hide their intentions by placing other conditions into the rebates. For example, they could require such a huge number of trading requirements that couldn’t possibly be achieved within a week. If, say, you were required to reach 100 lots in a week, then that would be nearly impossible to reach with a regular account. On the other hand, a good agent with honest intentions will keep their requirements reasonable.

From these, what should a good benefit entail?

After reading the above, you may start to think that all Forex benefits are just tricks to lure you into a trap, but this isn’t always the case. In fact, the above conditions were only meant to highlight some of the tricks the unscrupulous agents use to make the benefits harder to enjoy. Nevertheless, there are still some benefits that can be a big help, and the trick is to find the right balance between the offer and the conditions. As long as there aren’t any conditions too difficult to achieve and the agent is trustworthy, then you can choose to accept the offer. (What Is The Financial Commission And Can It Be Trusted?)

When you do find an agent with Forex benefits that hit all the right spots, then they can be very beneficial. We had previously discussed about how a person should practice extensively before making a real deposit. What better way to do so than through a Forex benefit because you get the experience and the thrill of earning real money. In fact, this may just be one of the best ways to find which agent has the best features to offer long before you risk your own money. One thing to keep in mind, though, is that when the deal is too good, think twice. Whenever you find a broker offering a very large bonus, then this may be a trick and you need to read extremely carefully between the lines of the fine print.

What does the law say about Forex benefits?

As you can see from all the above conditions to be considered, it’s not so easy to know all the ways you could find yourself and your money entangled. The Forex regulators know this too, which is why they have been working on new laws to regulate the benefits. On the 30th of November 2016, CySEC sent a circular to all the Forex agents they license informing them that they shall be putting an end to all Forex benefits. Their argument was that many amateur exchangers were joining the Forex market while they still didn’t know exactly how it works. The regulator’s hope was that amateur exchangers would be less inclined to risk their own money initially until they had a good understanding of the markets. (Good agents are licensed by: The 3 Most Trusted Exchange Authorities in The World)

Soon thereafter, other regulators like the FCA followed suit, also banning Forex benefits for all FCA regulated Forex agents. Together, the laws on Forex benefits were bundled into the MiFID II regulations that guide Forex agents across Europe. You may be wondering now, why some agents in the EU still offer benefits. That is because the new regulations did not dictate that agents cancel all their benefit offerings. If an agent had been offering Forex benefits before the laws were implemented, then they could still continue to offer them. However, to implement new benefits, then an agent would have to receive authorization from the regulator after they had reviewed the conditions attached. (Upcoming: Changes In Forex Regulation Through MiFID II)

Therefore, you can still receive benefits by agents even presently, but you should be careful about the conditions attached. By following the guidelines above, you should be able to avoid any mousetraps laid by some unscrupulous agents and enjoy real benefits.


Assuming you do get a benefit with reasonable conditions, here’s what you might do with the money:

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Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.
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