Australian Forex Brokers use bonuses such as the Plus500 bonus to encourage live sign ups all the time. In most cases they seem like a pretty good idea and somewhat tempting. However, are they really worthwhile? In this review we assess the benefits and risks of bonus offers in the world of Forex trading. What are they really? How do they work? Which company offers the best bonuses and how does the Plus500 bonus stack up?
What Are Bonus Offers in Forex?
Bonuses in the world of Forex come in a number of different forms ranging from cash to discounted or even free brokerage up to a certain amount. With the hundreds of Forex brokers competing for business out there, companies need a point of comparison in order to stand our from the crowd. It is for this reason that companies boast bonuses such as the Plus500 bonus which we delve into in more detail below. Another reason behind bonus offers is to incentivise traders to deposit more money at the outset, enhancing Forex brokers’ profits if trades go bad. Never deposit more money than you can afford to lose to avoid substantial loss as trading with leverage is highly risky.
What Is The Current Plus500 Bonus?
The current Plus500 bonus offer is one of the highest on offer in the Australian market as of January 2016. The company offers new traders a $30 cash bonus with no deposit required and then up to $10,000 in bonus trading credit. But how can traders access these Plus500 bonuses? The following link describes exactly how a trader can take advantage of the current Plus500 bonus. The table below also shows how a large capital outlay of $75,000 is required by traders in order to access the full $10,000 bonus. Again don’t be fooled by the lure of “free money.” Depositing a significant amount of money in your trading account just exposes you to greater loss. Always trade within your means.
The current deal expires in 3 months time according to the promotions section of the Plus500 website with no further detail given. The deal was current as of the 10th of January 2016. Plus500 offers a number of bonuses throughout the year so if the current bonus expires you can be certain the next significant Plus500 bonus is right around the corner.
Is The Plus500 Bonus a Good Deal?
For traders with experience and a sound knowledge of how currency markets operate the current bonus is indeed a good deal. However, the bonus is not simply free money that the company is throwing at you to sign up with them. There are strings and requirements attached to these bonuses such as the amount of deposited capital required before a bonus is paid to you. A clear understanding of how this deal works will hold traders in good stead and will make the current Plus500 bonus a good offer rather than a bad one.
Are There Different Types of Bonus Offers?
Different companies offer varying forms of bonuses depending on their business goals or marketing objectives at the time. This is not a bad thing and can often benefit customers if they know exactly what impact the deal or incentive can have on their Forex trading successes. At the time of writing Pepperstone were offering a deal that involved free brokerage up to $600 traded while Easy Forex have a 20% bonus on initial deposit up to $2,000. Like any offer or discount in other industries they usually have a time limit but deals are available in Forex all the time as the industry is hugely competitive and companies are always trying to maximise new business.
What Are The Benefits of Bonus Offers?
There are a handful of benefits associated with bonus offers, three of which are ‘free money,’ more money to trade or control more currency and the slight offset of trading costs depending on the bonus type:
The Notion of ‘Free Money’
We mentioned above that there is no such thing as ‘free money’ when it comes to Forex bonuses such as the one we found in this Plus500 review. However, in some instances brokers do award new traders with cash bonuses that require zero or very small deposits to access. Plus500’s $30 bonus for instance really is free money. This is handy for those graduating from a demo account to live trading account as it gives them some very last minute, live trading training without any of their own capital being risked.
More Capital to Trade
A cash bonus awarded to you by a Forex broker such as Plus500 allows you to control more currencies for trade. This can significantly enhance your potential profits due to larger transaction sizes. However, with larger order sizes comes even great risk exposure so this benefit of bonuses tends to be a double edged sword.
Offsets Some of The Costs Associated With Trading
Another plus regarding bonuses is the fact that sometimes these offers can help to reduce the amount of money you might pay in brokerage. When you calculate the number of trades made throughout the day and then the commission sizes of the broker that services you, the money brokers make off you his huge. A bonus that involves discounted or even free brokerage can significantly minimise your trading overheads. Who knows, it might even make your profits look more impressive?
Are There Any Downsides to Bonus Offers?
This review wouldn’t be complete without weighing up BOTH the benefits and risks related to bonuses. The lure of ‘free money’ distracting new traders and encouraging greater or even reckless deposits are slightly concerning:
New Customers Distractions
Often a new trader will select a broker based exclusively on the bonuses that broker offers. This is a huge no-no and beginners should obtain a holistic view of the industry and services each prospective broker offers before choosing a Forex provider. The bonus should only be looked at once all other important facilities or services are ticked off.
Encouraging Greater Risk
The most simplest of bonuses encourage a larger capital outlay or deposit. A larger deposit means you are exposing more of your hard earned to risk. Even the greatest traders in the world get tempted by making more money in larger sized trades. This is counterproductive and sometimes bonus offers can aid in this irresponsible behaviour. Know the risks and how bonuses work adequately before depositing funds in you new trading account.
Final Opinion on Bonus Offers
Like everything in life, moderation is key. Be sure to only deposit money in your Forex trading account that you are prepared to lose. A bonus is just that, a bonus offer, and should not be the deciding factor when choosing one provider over another. While bonuses can enhance your returns, they can also encourage cavalier trading strategies so proceed with caution. We love bonuses but you need to know exactly how they will impact your trading before you commence trading Forex.
Please note, bonuses change all the time. We try to keep this page updated with the latest bonus offer by Plus500 as best we can. Please validate all information found above with that found on the broker’s website.
Plus500 bonuses are probably the most competitive in the market place in Australia in 2016.
Reviewed by Noam Korbl