Illusion of “specials”

Today, almost all Forex brokers offer many different bonuses, promotions, competitions, even money for the initial deposit, and there is only one goal of that – to bring more clients as far as possible. Just think why it’s worth opting-out this.

Law 40

Despise the Free Lunch

What is offered for free is dangerous – it usually involves either a trick or a hidden obligation. What has worth is worth paying for? By paying your own way, you stay clear of gratitude, guilt, and deceit. It is also often wise to pay the full price – there is no cutting corners with excellence. Be lavish with your money and keep it circulating, for generosity is a sign and a magnet for power.

(“The 48 Laws of Power”, by Robert Greene and Joost Elffers)

Today, many brokers offer a variety of bonuses, for example, 30% for every deposit, or 100%, if you’ve made the money before a certain date, and so on.

The bottom line is that such “specials” are developed in the end, to entice more customers and get them to the more active trading, sometimes even increasing the risk. For example, the newbie got a bonus to his trading account and think: “10 dollars, it’s for free, it’s not a pity to lose them”. So through the stupidity open position becomes negative, and the trader loses more money than the bonus but does not close the position as he still hopes or close the current position with the loss and opens the opposite one, hoping to lean back.

Some will ask: “Can I withdraw the bonus money?” You think brokers are stupid to divide the money in any event? Of course not. Always, to withdraw the bonus money you must meet many conditions. For example, you must trade until the number of lots would exceed 100, in other words, you must “buy back” the bonus. Each case can vary, but the bottom line is the same - in practice these conditions are often met for the beginners. In addition, there are cases where the bonus money is not allowed to withdraw, even when all of the conditions are met.

Scam brokers also occur. If you agree to take the bonus, scam brokers will not allow you to take just a bonus, but also your money from your deposit until you’ve fulfilled all broker conditions.

Very often brokers also invite traders to participate in various contests. The essence of this is simple – one way or another some trader will win but the majority will lose and all their deposits will go to brokers. While putting all the efforts into winning traders often ignore the risk and are trying to increase their own profits of the positions, and brokers are just waiting for this.

Recently, there are very popular contests with demo accounts. The scheme is simple: trader makes a lot of profits quickly and since there is the psychological factor, traders are starting to look at that as if it could be repeated in a real life, so a newbie quickly opens the real account. A broker objective is finally achieved.

Thus, if a broker catches you to take a bonus or you decide to participate in contests or promotions, you create a powerful incentive to win in mind, and it makes you increase your risk, so trading became wrong, and often ends infamously and quickly.

A moral of this post: always opt-out from bonuses, promotions, competitions and other “specials” which offer you the broker. Trust that you will economize a considerable amount of your money and nerves.