One major appeal that binary brokers use to try and net customers is that of deposit match bonuses. These are sign-up bonuses you are offered when you join and make your initial deposit. Usually the percentage of the match bonus increases the more you deposit. You might recognize this type of bonus from online casinos.
The idea is that it gives you more to work with and can help you grow your account faster. These offers are very generous, but there is a reason that the brokers can afford to offer them—most of them come with a catch, and the best brokers are usually very straightforward and forthright about this catch. You have to roll over your deposit plus bonus a certain amount of times before being eligible to withdraw.
Bonuses can take two forms: cash bonuses or leverage bonuses.
Cash bonuses are typically rewarded only after you’ve traded with a company for a certain length of time with a certain turnover. After you’ve turned over enough money, the broker will provide you with a cash bonus for loyalty. The cash bonus may be based on your initial deposit or it may not be; either way, the cash is yours to withdraw or use in your trading. Cash bonuses are not as common as leverage bonuses.
Leverage bonuses are rarely referred to as such, but if you read the bonus terms and conditions, you should easily be able to determine whether a bonus falls under this type. These bonuses are far more common. They are match bonuses offered to you when you join, and they appear in your account right away—but you can’t withdraw them as cash. You can trade using them, which means you can control more funds than you technically own.
This enables you to wager more than you usually would.
This can go quite well if you win, because that helps you grow your account more quickly than would be possible without the bonus. The converse is true as well, however; if you lose, you will lose more money more quickly than you would if you weren’t using the bonus. Only after you turn over a certain amount of money trading does the leverage bonus become available as cash which you can withdraw.
This is why most match bonuses are technically identical to trading on leverage—until you’ve turned over the right amount to claim them as cash, at which point they’re yours. Until then, however, you have to look at them as borrowed funds. They can make you or break you. Most traders lose money and that’s just a fact of life—which is why brokers can continue to afford to offer these bonuses.
Should you accept a leverage based bonus or not?
That is totally up to you. The most important thing is that you understand what you’re accepting. There is nothing wrong with using a bonus; you just need to understand that it is a two-edged blade and that it can help you or harm you depending on your luck and skill. Make your decision with care, and also consider that you could accept the leverage bonus and simply choose not to use it as part of your investment. Once you turn over enough money, you can still claim it later, but you don’t have to elevate your risk. So there is a middle ground.