When is a bonus not a bonus?




All the time now you see binary option brokers offering new clients a wide range of incentives to get them to sign up to their platform, these can be anything up to a 100% cash match on the initial deposit made. Whilst this seems a great offer to get you on your way, by giving you a bigger pot to play with the devil is in the detail of the bonus being offered, each offer will have a different set of terms attached to the bonus offering. In all cases this is not a cash bonus and has no value unless the terms of the bonus are reached, the chances of receiving this bonus in cash is pretty much zero for the average trader. As the saying goes if it looks too good to be true it most probably is, binary option brokers are in this game to make money so why would they offer money back to clients with no restrictions, basically they don’t. The broker at the end of the day is attempting to get the new client to deposit more funds into their new account than originally intended.

A typical example would be a new client deposits $500 onto their newly opened account and the brokers welcome bonus is a 100% deposit match.

Example 1

Terms of the bonus offering are that the initial deposit and the bonus are combined giving a trading pot of $1,000, the terms of the bonus are the initial deposit and bonus must be traded 20 times (common level but there are higher) before it is possible to withdraw the bonus offering in cash there would needed to have been $20,000 total trading volume ($1,000 x 20 = $20,000) on the account. Should a withdrawal be made of the initial deposit the bonus offering is normally cancelled.

Example 2

Terms of bonus are almost identical except that the two amounts are not combined so the initial deposit is kept separate to the bonus, so then the bonus amount will not be included in the trading pot but will be released in cash to trade or withdraw. So $500 initial deposit matched with $500 bonus in this example to be able to withdraw the bonus in cash or trade it $10,000 in trading volume would need to occur on the account. ($500 x 20 = $10,000)

So with both the above examples the amount of trading required to be able to obtain your welcome bonus makes the bonus not a bonus. If the average trader traded say 5% of their account per trade and deposited $500 as above that would equate to $25 per trade, even on example two that is potentially 400 trades needed to qualify to receive the bonus in cash.

The above is a guide as to why when opening a new account you should refuse the welcome bonus in 99% of all cases, the broker is not interested in paying, they are just interested in taking your money. A lot of complaints about binary option brokers are around not being able to withdraw all or some of the funds in an account and nearly every time it is to do with a way a bonus offer is applied and the terms and conditions attached to the bonus.

In conclusion ALLWAYS read the terms and conditions attached with any bonus offering and if you are not happy with them but still want to open an account, check to see if you can elect not to receive the bonus, some providers include this option in the signing up procedure.

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