Why Do Binary Options Brokers Offer Such Great Bonuses?

Almost all binary options brokers offer very enticing bonuses for new users. The bonuses are usually offered only to new traders and apply only the first deposit made by the trader.

While I personally do not believe a trader should start with a small $100 deposit, as it is just much too limiting, nor do I think  a novice trader should immediately dive in with a $1,000 initial deposit. $300 is usually more than enough to get a good start at any broker and will allow the trader to calmly perform multiple trades and get a good feel of the platform in order to start increasing performance.

However, while these bonuses may seem too good to be true, like a 100% match on any deposit you make, effectively doubling your trade value, they almost always are in fact too good to be true if you read the fine print.

For example, let’s take a look at four of the items listed in terms and conditions from one of the bonuses (100% match on any deposit up to $300) offered by Marketsworld:

  1. Rollover requirement: The allotted value of the Cash Match Bonus must be traded 20 times before it becomes your cash to trade or withdraw.
  2. Bonus account funds cannot be traded or withdrawn until the rollover is met.
  3. Any Bonus that does not meet its rollover requirement has no cash value.
  4. Bonus programs are intended for recreation. Customers considered to be abusing the bonus system by any means may have bonuses revoked at the discretion of Markets World.

OK so what does all this mean?The first item basically means that if you get a $300 bonus, you will need to perform a total trading volume of 300×20=$6,000 before that money becomes yours. If you’re not completely clear about what that really means, item two clarifies: If you get a $300 bonus on your $300, you will not be able to withdraw funds before you have reached a total trading volume of $6,000. They also clearly state that if they’re not happy with how you’re using the bonus money (there is no real definition of what “abusing the bonus system” is), they can just revoke it at any time at their discretion.
In my opinion, after trading $6,000 on a $600 account, you’ll have either lost most of the money anyway, or made enough money that the $300 bonus becomes rather insignificant. I’ll bet the brokers are hoping for the first option.

Now, I took these clauses from Marketsworld just by chance and these terms reflect perhaps 95% of the bonuses offered by all binary options brokers, so I am not trying to say anything bad about Marketsworld.

Consider this little article a fair warning. All the brokers try to offer ludicrous and enticing bonuses to try to get you to deposit more than you intended, and to tie your money to your account.

Now, the question you need to really ask yourself before you opt-in for a bonus is: what’s your game plan? If you don’t have one, stop! Don’t register at a binary options broker, because eventually you will lose!

What you need to do is decide how much money you would like to make trading binary options and how much you are willing to lose before you call it quits. If you really plan to make a lot of money trading, and you think you can turn over more winning options than losing ones, then the bonus clause shouldn’t really be that big a deal since you should be planning on initiating that trading volume anyway.

On the other hand, I say only deposit money that you will be willing to part with. If you take a bonus and end up on the losing end of many trades, you won’t be able to withdraw your remaining funds anyway unless you meet the required trading volume.

If I were to have to guess, I would say that probably more than 50% of trader complaints that brokers refuse withdrawals are due to them participating in various bonus schemes without realizing the consequences.

Summary
In short, the bonuses offered by binary options brokers can be very good and increase your revenue if you have a long term trading plan and intend to perform a high volume of trades. On the other hand, it can limit your abilities to withdraw funds and quit early if you start losing. That’s not the end of the world however if you only invest as much as you would be willing to lose in any case.

Comments are closed.