THE CASE AGIANST TRADING BONUSES (Don't Take The Bait!)

[Ludvik Cizinsky]

I bet many of you were offered a trading bonus: usually 10, 15, 20 even 25% of your initial investment. Some traders couldn't resist it and took the bait! Sadly, most of them later found out that the bonus, which is not really money, is just a clever ploy to get your attention and designed to accomplish the following:

1. Give you a false impression that you can afford to buy more or higher valued lots; an illusion which is going to screw up your money management, put a big dent in your account balance or entirely wipe it out.
Note: Making money on broker's bonus is a log shot. Most traders (actually about 95% of them) lose money!

2. Make the broker more money. Remember brokers never lose! That extra bonus (the illusory money) earns him more on commission (your real money) regardless of what your trading results are.

3. To squeeze out of your account as much as possible. When you finally realize that you fell in the trap and want to get out, again, it's the broker who wins! He will deduct the full bonus, keep the money you lost plus the commission you paid from your real money and on his illusory money and gives you back (if you're lucky!) much less than you hoped for. For a broker it's a win-win situation; for a trader losing proposition!

The bonus is only an illusion which, eventually, will be taken away from a trader along with his (real) hard earned money. So, don't take the bait!

 

[cowmadagan]

You're right for the most part Ludvik, and I'm not saying you're wrong in any part..but I'd just tell people to actually read their contract to find out the terms of collecting the bonus.
One really slick move we can do that I haven't heard any one comment on is to find a reliable broker, make sure you can withdraw your cash on demand, and then just use it as a deposit account for the higher interest rate they offer than the bank.

Of course, a good broker today is....a good broker today..

 

[Pharaoh]

Most bonuses require so many trades before you can keep them that the broker is really just loaning you a modest rebate on spreads while encouraging you to trade more.

If it's a broker that you've been with for some time, plan to stay with for some time, and plan to make a lot of trades with before making your next withdrawal, then it might be worth it. Otherwise, the rules can be so restrictive that it's just a giant money trap.