A reader has asked: Which forex brokers offer a welcome bonus and won’t scam me?
The quick answer is this, none. No decent broker will offer you a welcome bonus for signing up. If they are it is likely a scam so stay well away from them.
Why are welcome bonuses in forex trading a scam now?
Welcome bonuses being offered by spread betting brokers in the UK started innocently enough. I think it was City Index that offered £100 if you opened an account with them. Much the same as the new account incentives from the high street banks. However, over time as competition hotted up within the derivatives trading section, the bonuses got bigger and the criteria for getting them became more stringent.
For a while, there were good opportunities for taking advantage of welcome offers from reputable brokers. You could arbitrage trades between brokers, and switch brokers to execute trader you would be doing anyway to claim a welcome bonuses. Which was essentially a rebate based on volume.
Then it all got out of hand as binary options brokers started setting up offshore and fleecing people. Essential making the criteria to withdraw the bonus so impossible to achieve that in order to fill it they would have B-Booked any funds deposited.
It was a very dark time for the industry.
Regulators and welcome bonuses for trading accounts
Regulators such as ESMA and the FCA have been cracking on incentives including welcome or trading bonuses, as they are seen by the regulators as encouraging clients to overtrading, or undertake actions that they wouldn’t have taken in the absence of that incentive.
Particularly where the bonus offer is volume related i.e. you have to trade a certain number of lots in a fixed time frame to access the bonus.
Bonus incentives are a form of marketing and CFD brokers that offer them have taken a decision to spend their marketing budget in this way to attract new customers, and to do so they will make the offer sound as attractive as possible.
However, those brokers would rather not payout that bonus if they can help it. And they will often attach a long list of conditions that have to be met before you qualify for the bonus.
Even if you meet those conditions and get the bonus you may not be able to withdraw those funds from your trading account. If you do open an account because of a bonus offer then make sure you understand exactly how the bonus offer works and as ever only trade with reputable and regulated brokers. You can compare FX brokers on the Good Money Guide by clicking this link
Finally, I am sorry to say that if a bonus is important to you then it may be that you are undercapitalised for trading and should wait until you are in a better financial position and have more risk capital available to you.
Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.