Binary options are normally defined as a type of option in which the payoff is designed to be either a fixed amount of return especially if the option expires in the money or zero if the option expires out of the money. Some of the brokers usually pay a small return to the losers as well. It is a form of financial trade in which there is very high payout for the successful traders and nothing, or close to nothing, for the losers.
What are binary options bonuses?
Many brokers offer binary options bonuses to investors when opening a new trading account. These promotions are a great boost for traders to start out in the market: For example, you could deposit $500 to get a $250 bonus (50% depositing bonus). Normally the bonuses are in the range of 25% – 50% of your initial deposit up to a maximum capped limit.
You possibly think that the higher the bonus amount the better the promotion. But it’s not as simple as that and you have to read the particular terms and conditions carefully: Bonuses are only redeemable once a certain trading volume has been met.
Bonus Changes in 2017
Recently the CySec announced that it is not longer allowed to promote brokerage services with deposit bonuses. That’s why you won’t find any Cysec regulated broker any more offering a bonus (without getting fined). So we highly suggest that you do not rely on bonuses any more as CySec regulation is what you should be looking for and not trade with an unregulated broker.
The practice began back in the year 2006 in the Forex market as a clever way to reign in competition in the business. As such, some brokers began offering bonuses to their clients as a way of keeping them around for longer. This practice caught on and has turned out to be more of the norm than the exception in the Forex market and – since recently – in the market of binary options as well. Currently, new clients are normally offered binary options bonuses upon the opening of a new account.
Reasons for giving binary options bonuses
The main reason behind the practice by traders to offer binary options bonuses to their new clients is to increase their capacity to operate in the market. This in essence provides the trader with an amount of money that would otherwise not have been available to the trader. As such, the trader gets an opportunity to radically increase his or her payouts while creating business for the broker. By generating commissions that are equal to or more than the bonus offered, the trader is not only able to regain the investment in the bonus, but also create more opportunity for himself or herself. If used properly, the bonus can help the trader develop a portfolio and earn himself or herself a proper return in the process.
Time to take binary options bonuses
Typically, the best time to acquire these bonuses is when a new account is being opened. This allows for new traders to acquire liquidity and increase their activity levels. However, brokers can also give bonuses during a volatile market season. By offering bonuses during periods of volatility, brokers get to encourage new accounts by showing some of the advantages of the market, while traders get to take advantage of the opportunities that the market offers.
It is advisable to study the operations of the market as well as the rules guiding the issuance of these bonuses before engaging in any trade. Such a study shall provide you important information on how best to play the market, take advantage of the opportunities and determine how best to operate within the regulations. The best bonuses are those that are approximately 50% of the trader’s equity so as to put the controlling equity in the trader’s hands. If used wisely, binary options bonuses can be very beneficial; however, if they are misused, these bonuses can bring doom to a trader.