By Admiral Markets

Dear Traders,

Most traders know that a Forex deposit bonus is a reward that brokers extend to traders when they deposit funds to their account.

It’s often considered a great opportunity, yet some remain sceptical.

The reality is that a Forex deposit bonus offers a win-win situation for the broker and the trader, as long as the broker is regulated.

We’ll talk more about regulation later.

For now it’s just worth knowing that:

…for traders, the Forex deposit bonus offers free trading capital (bonus) from the broker for reaching a volume target (e.g. within six months at Admiral Markets)…

…for brokers, the Forex deposit bonus helps generate higher trading volume and can attract new traders.

But as with Forex and CFD financial trading generally – traders must exercise a cautious, balanced approach to using or unlocking extra funds.

Now let’s take a closer look at how you can achieve this.

Stay composed

Most traders rush to unlock the deposit bonus as quickly as possible.

This quest leads to unneeded risk taking and over trading.

Instead, apply a disciplined approach to using your bonus that includes consistently considering the risk of any trading action.

Staying composed like this, can lead to benefits like the availability of more margin and the potential to unlock the bonus later on.

Avoid going all-in

The term all-in is used in poker to describe when a player decides to bet all his/her chips (funds) on one hand.

It’s a move aimed at getting a large win, while risking outright loss.

Using this strategy in Forex trading generally leads to failure, due to the immense psychological pressure of managing such a high-risk trade.

As I said earlier:

… risk management is important at all times…

…including when trading with a Forex deposit bonus.

Check the terms and conditions

You probably get the logic of this tip, but none-the-less wonder if it’s really necessary.

In short, yes.

As I said earlier, using a regulated broker is key because then you know your money is protected.

But if you choose a non-regulated broker – I suggest using a magnifying-glass to read even the tiniest text on the bonus offering.

Not doing so, would be foolhardy.

Review the broker

Traders need to complete due diligence on the broker by asking the opinion of other traders, checking reviews and again – making sure that the broker is duly regulated.

For example with Admiral Markets:

… the regulatory info is transparent via regulation by the FCA in the UK and MiFID in the EU…

…and being awarded best UK MT4 broker in 2015 by industry peers and customers doesn’t hurt either.

Use the bonus for margin

The deposit bonus provides the distinct advantage of higher margin level.

Having a higher margin means your trading account is in a better position to handle larger drawdowns and therein better avoid margin calls.

Apply well defined strategies

The trader can try to unlock the Forex deposit bonus by meeting the volume requirements via short-term and intraday strategies.

Logically speaking, a long-term strategy using monthly candles for example, will never generate a sufficient number of trades.

But short-term strategy is another ball game.

Using a short-term Forex trading system allows a trader to:

…open and close more positions…

…without adding significant risk to each setup.

Pick a suitable bonus amount

Suitable in this context, means right for you.

Although Michelangelo’s words could inspire you to aim for a high bonus, it really depends on the type of trader you are.

However, aiming for a lower first Forex deposit bonus makes it easier to hit the volume target for unlocking your bonus.

This is the main reason why choosing a low bonus is generally a good choice.

But, a trader who opens more trades might be better to aim for a more ambitious bonus.

For high volume traders, choosing a high Forex deposit bonus makes more sense.

What’s the bottom line?

Be cautious when using a bonus and don’t be afraid to ask fellow traders for their opinions, before you make your bonus choice.

Shop around too.

For example, Admiral Markets offers a wide range of Forex deposit bonus options and is therefore a good benchmark to both compare with and/or join.

Cheers and good trading,

Chris

Article by Admiral Markets

Admiral Markets is a leading online provider, offering trading with Forex and CFDs on stocks, indices, precious metals and energy.