Binary Option Bonuses
Binary options bonuses are offers made to existing or prospective traders by binary options brokers in return for opening new accounts and making deposits into such accounts. It could also be extended to existing traders whose accounts have become dormant to activate their accounts and resume trading activity.
Bonuses were initially created as a marketing tool for brokers. As the competition for global clients heated up with the deregulation of the market in 2008, it became obvious that brokers needed more ingenious ways of acquiring new clients without the attendant marketing costs that came with such ventures, especially when many of these clients were located in many other countries.
Bonuses came to be seen as a persuasive way of giving prospects that extra nudge to choose the broker offering them over another broker. Furthermore, many traders were generally too fearful to commit money into a relatively new form of investment after the chaos that occurred in global markets in 2008 from relatively unregulated subprime mortgage-based instruments. So it was necessary to boost investor confidence and interest in financial markets once more and bonuses in binary options came to be seen as an avenue to generate such interest.
Binary options brokers have joined their forex counterparts in offering bonuses for intending traders as well as selective bonuses for existing ones. Bonuses are now a mainstay of the binary options market.
Now everyone is giving out bonuses and the traders are coming back in droves.
Types of Binary Options Bonuses
Binary option trading bonuses are of different types. Initially there were only cash-based bonuses provided, but this has changed and new bonus types have evolved in the market. There are different types of bonuses:
- Account Opening Bonuses
This is the bonus type given usually to new traders making their first deposit. Bonus amounts are usually given as a percentage of the deposit amount or the account type. These are deposit bonuses and are cash-based. These bonuses come in the form of additional capital in the trader’s account which ordinarily cannot be withdrawn as cash.
- Non-cash Bonuses
Over time, the type of bonuses given to traders evolved. Instead of cash bonuses, these were non-cash bonuses that were mostly based on providing trading hardware or other items which would tickle the fancy of traders. Items given out as bonuses under this category include laptops, tablet devices, smartphones, cars, travel and hotel packages, etc. These trading bonuses are not dependent on the initial or subsequent bonuses but are more dependent on trading volume. Some of the bonuses are also given out to traders who have participated and excelled in trading contests.
- Seasonal bonuses
Seasonal bonuses are given out at special times of the year. These are used when brokerages go on active drives to get more clients, or when there is a large pool of dormant accounts that can be activated by careful persuasion of the owners of those accounts. Some of these bonuses are given out at Thanksgiving, Easter, Christmas, etc. or are given out when there are spectacular market events. Many of these bonuses were given during times of extreme market volatility such as occurred during the peak of the European sovereign debt crisis.
The Catch with Binary Options Bonuses
Bonuses are not available for withdrawal, and they are not provided freely. Something must be given in exchange for the bonus. Brokers require traders to generate a particular volume of trade. Trade contest also have specific terms and conditions and traders must be able to fulfill them to benefit from the non-cash bonuses. It is very important to understand what the requirements for enjoying a bonus offer are before you sign up to it to avoid conflicts and a lot of problems down the road.
The Present State of Bonuses
Some brokers have abused the benefits of bonuses and have used them as a snare to ensure that they get money out of traders without necessarily paying out any withdrawal requests. This has led to a deluge of complaints by aggrieved traders who complain that the trade volume requirements are far beyond what could be achieved. This has led to the Japanese financial market regulators coming down hard on the use of bonuses as marketing tools by binary options brokers.
The present state of bonuses is that some regulators allow it, some have banned them outright and some are weighing the options. The JFSA and FFAJ have outrightly prohibited the use of bonuses as marketing tools by binary options brokers in Japan. The Australian regulators have begun to consider actions in the same direction. In the USA, brokers cannot by the very nature of their setup, offer any kind of bonuses. Brokers regulated by CySEC still offer bonuses very freely.
As a last word, trading bonuses are there for your benefits, but they must be used wisely.