“Deposit X amount and get additional 50% as a forex bonus!” We are very familiar with such promotions from forex brokers. Putting aside considerations such as the legitimacy of the forex broker and the terms and conditions of the forex bonus promotion, you will find that often, you are still no better off! That is unless you acknowledge a fundamental truth about forex trading.
Forex Betting. Are You In Or Out?
Over a long period of time (months), the price movement of currency pairs is usually due to fundamental factors such as the economic performance of a country. However over a shorter period of time, price action is more susceptible to the influences of sentiment. This is an important point to note as most retail forex trades are short-term in nature.
Consider this scenario, the US Unemployment Claims report although terrible, was not as bad as expected. You saw the US Dollar rising and you determined that the market was reacting positively. However, moments after entering a long position, the price action turned south and wiped out your trade and money. This is a classic example of a sentiment induced momentum which dissipates after a while. Regardless of a better than expected unemployment claims report, the overall situation remained bleak and hence US dollar weakness continued.
It is important to understand that successful forex trading requires a deep dive beyond the surface indications. You need to understand factors such as the context of the market development and the market undertones. Failing to adhere to this methodology of forex trading will leave your trades no better than a mere bet of chance.
Forex Failure Not A Matter Of If But When
When you are effectively leaving your forex success to the hands of chance, you give up all control to create a successful forex trading journey. Coupled with other common forex trading mistakes such as emotional trading or a lack of proper money management, a margin call regardless of the amount of account balance and forex bonuses you have is almost a certainty. This is the reason why forex bonuses will not help.
How Forex Bonuses Can Help
Now that we are mindful of the disastrous nature of forex betting and the fact that probably no amount of forex bonus will help in that scenario, it is time to consider how forex bonuses can help. Forex trading requires skill and experience and this does not come by without any practice and effort. It is common to have a higher ratio of losing trades while you are still learning how to trade forex. A forex bonus can come in handy by allowing you to stretch your account balance further and thus giving you more opportunities to trade and learn from the experience.
The Bottom Line
Forex bonuses may be a great complement under the right situation but without the proper approach to forex trading, it is likely that no amount of forex bonuses will help you in your forex trading journey.