What to choose: a bonus or leverage?
Nowadays, it's hard to find a broker that doesn't offer a deposit bonus. The range of offers is quite wide
, ranging from 10 to 100 percent. This means that if you deposit $500, you'll receive up to $500 as a bonus.
deposit bonuses really that important and necessary? How are they better than regular leverage, and is it worth it?
First, let's try to understand the benefits of receiving a bonus in Forex trading.
1. Less risk?
Let's look at a simple example: You deposited $1,000 into your account and received another $1,000 as a gift, giving you $2,000 to trade.
Without leverage, this amount would allow you to open a 0.2 lot trade on USDJPY. One pip would be equal to $2.00, and since the bonus doesn't contribute to drawdowns in most cases, your position would be able to withstand a 500-pip move before being completely wiped out.
Let's try using 1:2 leverage instead of the bonus, but this option is rarely available; leverage lower than 1:10 is rare. If you do find a broker offering this leverage, you'll still be able to open a 0.2 lot trade on USDJPY. Your position would also be able to withstand a 500-pip move.
It would seem that there's no difference between the bonus and leverage in this case, but in reality, that's not entirely true.
• First, try to find a leverage of 1:2, and sometimes this is exactly the amount needed.
• Brokers often use margin calls and stop outs to close positions early. When using leverage, your position will be forcibly closed when you have 10-30% of the amount left in your account. When trading with bonus funds, you will most likely end up with a complete drain. For some, this is a minus, and for others, on the contrary, an advantage if the trend reverses at the last moment.
In addition, there are promotions where the broker's bonus also participates in the drawdown, which further expands the room for maneuver.
2. Additional earnings - this is perhaps the most compelling argument for using the bonus: by replenishing your account with just $1,000, you get the opportunity to take from $100 to $1,000 simply by performing a certain volume of transactions.
On average, you can earn $1-5 per lot, and a trader with $1,000 in their account most often opens trades of at least 0.5 lots. A couple of trades a day equals a lot, while 20-30 lots a month guarantees an additional 5-15% in profit.
While this amount may seem paltry to some, others will consider it a significant amount. Trading is a highly individual matter. However, if you do decide to take advantage of bonus offers, be sure to inquire about any additional terms and conditions, which can often come as an unpleasant surprise.
You can find out which brokers offer the biggest bonuses by reading the article " Forex Account Bonus ."
