How Do Forex Rewards Work?
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A Forex reward is a loyalty program offered for existing customers to keep them interested in a broker’s services so that the client continues to trade and invest money with the broker. There are plenty of different rewards, benefits, and promotions offered by brokers that are designed to lure traders into opening and maintaining an active account with a company. Such kinds of Forex rewards are ultimately beneficial for the trader, as these rewards can be anything ranging from cash rebates, bonuses, commissions, and other rewards.
Why Do Forex Brokers Offer Rewards?
In the grand scheme of FX brokerages, an honest broker earns its living from spreads, commissions, and SWAPs, which are the only ways by which a broker can make money from its clients. Since all regulated brokers are required to keep their client’s funds in segregated accounts, they can never use their customers’ money for financing the company’s operational cost or for other profitable investments. Nevertheless, the company may be able to accrue interest on the deposited amount, but nothing beyond that. Therefore, it is vital for a broker to entice its clients into making more trades to increase the revenue through multiple spreads, commissions, and SWAPs.
Forex trading is a risky business, and it is a guaranteed fact that a majority of traders lose their invested capital. Therefore, if a trader does not replenish their trading account with more money, the broker can’t earn any income. How do brokers work around this problem? Most legitimate brokers offer a loyalty program that includes Forex rewards such as cash rebates, cash paybacks, loyalty bonuses, gifts, lower spreads, and other types of FX promotions. Such FX rewards will entice traders to deposit more money into a broker and enjoy the benefits of trading rather than choosing a different broker and losing their hard-earned loyalty rewards.
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Does Every Forex Broker Offer Forex Rewards?
Most legitimate, regulated, and high-quality FX brokers offer a rewards program for their clients, and these companies mostly tend to stay away from initial deposit bonuses. For instance, offering an initial deposit bonus can create disputes between a company and its client, especially due to the conditions associated with bonuses. A company cannot pay a bonus to a client and expect them to make a withdrawal without completing the required number of lots for the company to break even or retrieve the money from the trader through spreads or commissions.
On the contrary, scam and shady Forex brokers rarely offer any Forex rewards, as they are more inclined towards attracting new traders through hefty bonuses, and refuse to pay them back when it comes to actual withdrawals. Scam brokers are content with attracting new traders and siphoning off their deposits while doing nothing to retain them or earning money through honest means. Therefore, an unregulated broker that offers exuberant deposit bonuses should only be approached with extreme caution.
The lack of a reward or loyalty program is not a sure-fire way of determining whether a broker is a scam or not. For instance, several accomplished Forex companies rarely offer any bonuses or rewards to their traders; instead, they mostly concentrate on providing better trading conditions that are guaranteed to satisfy a majority of retail traders.
How Do I Redeem My Forex Rewards?
Forex rewards are available and accrued as reward points, loyalty points, or bonus points that can be redeemed for cash prizes, trading credits, deposit bonuses, or even gifts. The broker will have a detailed outline on how traders can accumulate reward points and how they can be redeemed for cash or other prizes. Once again, all Forex rewards and bonuses are subject to the broker’s promotional terms and conditions, and the broker has the right to amend them or change them according to their preferences. Every client is expected to adhere to the strict rules and guidelines to prevent misuse, therefore, if the company finds any trader violating any of the reward terms, the trader will find himself banned, and all credits reversed back to the broker’s account.
Other Forex Rewards For Opening An Account
Some brokers offer unusual gifts for opening an account and making an initial deposit. Forex dealers are known to offer smartphones, laptops, iPods, and other electronic gadgets for clients who are willing to open an account and make a deposit instantly. Typically, electronic devices and accessories are provided for deposits that are greater than $200, although VIP accounts with larger deposits do tend to reward traders with rather expensive gift items.
Can Forex Rewards Be Clubbed With Other Bonuses?
The problem with Forex rewards is that a trader has to choose one type of Forex reward or the other. It is impossible to club together different kinds of rewards and bonuses, as it will hurt the broker in every possible way financially. Of course, some brokers offer a deposit bonus along with a loyalty program, but the initial deposit bonus and loyalty points will be minuscule, making them rather inconsequential when considering the number of lots that a trader has to accumulate certain loyalty points. For representative purposes, a single standard traded lot can at most accumulate 100 basis points, which can mostly be redeemed for $1 or for gifts that are worth that amount. Therefore, even if brokers allow Forex rewards to be clubbed with other promotional offers, it might be too small to enjoy any significant gains.
Can I And Should I Opt Out Of Forex Rewards?
Unlike Forex bonuses, most Forex rewards do not have any severe restrictions, which make them perfect for traders who are looking to make fast withdrawals. A trader usually accumulates loyalty points and other bonus points by making deposits or through trading. Therefore, the broker allows the trader to redeem their points for cash bonuses and use them for trading or for withdrawal as they please.
Although clients are offered the option of opting out of deposit bonuses, most brokers don’t force their customers into forfeiting loyalty points; however, it is possible for a trader to choose out of such promotions to ensure that they don’t have any conflicts of interest with the broker. The customer service department should provide expert guidance for traders on the various rules and guidelines regarding bonus terms of use. Therefore, a trader can decide beforehand whether he prefers to enroll in a loyalty program or not.
Do Regulated Brokers Offer A Good Forex Reward Structure?
In short, yes, regulated FX brokers do offer excellent Forex rewards, and are particularly committed to providing the best trading conditions for their clients. Browse through our list of some of the highly regarded Forex brokers given in the list below to choose your preferred broker, and have a look through their reward structure to find one that suits your requirements.