When funding a binary options trading account, many traders are offered bonus funds. What could be better than free money, right? Well, not always. If you plan to trade binaries, you will need to select a broker and fund your account. It is at that time that the broker is most likely to offer you free money in the form of a bonus. Should you accept those funds? The answer depends on several different factors, which we will discuss in-depth here.
Why are Bonuses Offered?
Brokers offer bonuses for one reason only – to entice traders to choose their platform. There are a large number of binary options brokers in operation today, which means that there is a high level of competition among them. One way to appeal to a larger number of traders is to offer large binary option bonuses. Typically, the bonus amount is directly linked to the amount of deposit, so not only does the offer help bring clients in, it may also result in the client depositing a larger amount than he or she was initially considering.
Types of Bonuses
There are several types of binary option bonuses available. The most common is the aforementioned deposit bonus. This is typically a percentage amount that is based on the deposit amount. Let’s take for example, a 50% deposit bonus. With this rate, if you were depositing $100, your account would be credited with $150 (your original deposit plus the bonus). Although more rare, there is such a thing as binary options no deposit bonus. This is a bonus that does not require that you make a deposit. Clearly, binary options brokers cannot afford to hand out loads of free money, so you can expect that the terms and conditions surrounding a no deposit bonus are going to include strict requirements.
A sign up bonus may be offered to you if you refer friends and family members to a broker. These funds are provided once the individual that you have referred create and fund an account, using a personal link that you have provided to them. Sign up bonuses typically do come with some of the same conditions as deposit bonuses, so keep this in mind. Lastly, there is the re-deposit bonus. In the unfortunate scenario that you have traded away all of your funds and need to re-deposit, you may be offered another deposit bonus for continuing to trade with the original broker (rather than changing to a different broker).
Bonus Terms & Conditions
The exact terms and conditions surrounding a bonus will vary from broker to broker. In most cases, you will be required to complete a set financial trade volume before your free money is released for withdrawal. There may be other conditions, such as needing to complete a set number of trades or having the account open for a certain length of time. In some cases, your deposit may even be locked from being withdrawn until the trade volume requirement is met. In this case, you would need to be very clear on the requirement and willing to accept the terms & conditions surrounding the bonus.
There very well could be a time limit for completing the requirements. You may have only 30, 60, or 90 days during which to meet the requirements before the bonus funds are removed from your account. Such restrictions could cause you to trade more than you are comfortable with in order to complete the required actions before the offer expires. If you are new to binary options trading, risk levels should be kept to a minimum, so a time limit would most definitely be something to consider before accepting one of these offers.
A Final Word on Bonuses
The decision of whether or not to accept a bonus is entirely up to you. With that being said, it would be wise to read all of the terms & conditions associated with the bonus to ensure that you fully understand what accepting a bonus means. If the conditions seem unreasonably complex, then you may be better off bypassing the bonus altogether. While traders will never find a bonus offer with zero strings attached, some offers are better than others. If you really want a bonus, take the time to see out the best binary options broker bonus offers.