Today, traders have a chance to use different types of Forex broker bonus. They make it possible to get extra free cash to the balance and enhance their trading strategy. Besides, it is a good way to test the approach with minimum risk of losing capital.
Companies offer various types of promotions. They generally include a welcome Forex bonus, deposit offers to new and returning customers, no-deposit and reload promotions, etc. This time, we are going to discuss how to claim the best Forex bonus and what pros and cons it might have.
How a Forex Broker Bonus Works
Each bonus is available as part of the broker’s promotion. It can be of various types. The main mission is to attract as many new customers as possible. Additionally, companies use them as a way to improve their clients’ loyalty.
Here are some of the most popular packages you can claim:
- A Forex welcome bonus us a special offer for all new traders who join the platform. Everyone can get it. The main benefit is that sometimes you are not even required to make an initial deposit. This fact makes this offer similar to the no-deposit bonus type. One can actually start trading without prior expenses.
- A Deposit Forex broker bonus is another typical promotion available for both new and returning clients. Also known as a reload bonus, it guarantees a predefined match to the sum you reload your balance with.
So, what are the main hits and misses of using these promotions?
Forex Broker Bonus Advantages
Different bonuses make it possible to save your own cash and reduce the risk of losing capital. Additional benefits include:
- Some bonuses are available with no prior deposit. This fact ensures low or zero costs to those who only get started.
- Beginners get a chance to try out their strategies and practice in real-time with real money. With all the benefits a demo account has, it sometimes makes people trade recklessly. With real capital, you start implementing various risk management strategies to keep funds under control.
- Bonuses help to clarify if a chosen broker is a scam. If a company strictly follows all the requirements and obligations, it is worth working with. If not, at least, you managed to identify a scam without investing much right from the start.
- Even with free cash, you can test the platform with minimum risks. Bonus money helps to try various tools, test the order execution speed and other instruments to decide whether they suit you.
Forex Broker Bonus Disadvantages
In reality, bonuses are not as generous as some may expect. Getting free cash to the balance and withdrawing it can be a challenge. So, the main drawbacks are as follows:
- Strict wagering requirements will define the number of lots you need to trade as well as the level of profit you can use or withdraw. Sometimes, it is impossible to meet them.
- Not all brokers are ready to pay. This fact generally refers to scam platforms that simply do not have enough funds to provide the announced promotion.
- Frauds often take place. Some people cannot get their bonus funds even after claiming them. Besides, the process can be quite time-consuming, as some companies will require additional confirmation (IDs and other personal data).
- To get the money, traders are obliged to reach a pre-defined trading volume. If not, they will never be able to withdraw cash. For example, if you get a $200 bonus, you may need to complete more than 20 trades. 20 x $200 = $4,000. It is the sum you need to earn in order to withdraw your bonus. The lower the bonus, the smaller the trading volume you need to achieve.
What is Fund Trading?
Trading mutual and investment funds are different as compared to stock trading. Mutual funds are professionally managed portfolios that pool money from multiple investors and sources to buy shares of stocks, bonds, or other securities. When you buy or redeem a mutual fund, you are directly purchasing and selling with the fund, whereas with ETFs and stocks, you are trading on the secondary market.
When you initiate a trade to buy or sell mutual fund shares, it will be executed at the next available net asset value (NAV). This net value will be calculated once the market is closed for the day; the price may go higher or lower than the previous day’s closing NAV.
What are the advantages of Fund Trading?
Fund trading is a simple process. It needs no experience nor expertise to buy and sell mutual fund units.
Buying and selling mutual funds is easy and can be done at brokerage firms, mutual fund companies, online broker sites, and other venues.
It helps the investor gain market exposure and diversify the investment portfolio to balance risk.
Anybody can afford to trade funds as the minimum initial investment standards are low and affordable.
Who should consider it?
Fund trading is suitable for those who actively take part in analysing the market and switch between funds.
The extent of risk an investor wants to take determines what kind of returns they can earn from fund trading. Those who are willing to make high profits may want to try trading high-risk funds.
Depending on an investor’s current financial situation, income from mutual funds can have a serious impact on an investor’s annual tax liability. Returns received from fund trading together with the income from salary or other sources can impact the taxes to be paid. Therefore, one must carefully pick the funds.
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