Bonus trading is becoming more and more common, but what exactly is it, and how is it beneficial to individuals looking to learn a new trade, or brokers offering trading bonuses?
Trading has been the world's leading platform for individuals to buy and sell goods, as well as profit exponentially from these transactions, for centuries.
According to an article published by the American business news channel CNBC from September 2020, there was a noticeable spike in the number of people who began trading as a result of the coronavirus pandemic in 2020 in comparison to 2019.
This sudden and dramatic surge can be attributed to different factors, including one of the most obvious ones; online ads appealing to individuals interested in beginning their journey in the trading industry.
The most successful ads are usually the ones that entice curious individuals with an incentive known as a trading bonus. Simply put, a bonus that can be used when trading, in addition to deposited funds or instead of deposited funds.
Trading bonuses are known to increase the likelihood of individuals, otherwise disinterested in learning to master the skill of trading, or afraid of the many risks trading poses, signing up to trading platforms.
Following the rise in the number of individuals who actively began trading in 2020, it is no surprise that plenty of new and enticing incentives aimed at recruiting new traders — and to keep money flowing in the trading industry — continue to be introduced.
Bonus trading explained
Bonus trading, in short, is the act of trading using bonus funds that have been offered by a broker with the belief that said bonus funds could potentially give the new trader's account a boost in returns. If your account has £1000, for example, and you are given a £500 bonus after fulfilling a broker's criteria, you basically have "free money" to use on trades.
Bonus trading is practiced in numerous industries, although some appear to be more popular than others. A couple of other popular trading platforms apart from financial trading platforms are sports betting and online casino platforms.
Some of the same actions found in financial trading, like forex and stocks, can also be found in sports trading and, similarly, trading in casinos. However, the bonuses, and their functions tend to vary.
Sports trading can be explained as the act of placing two opposing bets on the same market selection, such as is usually observed on sites like Betting.com, where a variety of bookmakers and tips on various sports events exist.
By placing opposing bets, an individual is essentially betting on two different outcomes; a win or a loss. These opposing bets are classified as a back bet (betting on a winning outcome) and a lay bet (betting on a losing outcome), whereby the back bet is usually placed on a bookmaker platform and the latter on a betting exchange platform.
To get started with bonus trading, an individual will first need to join a bookmaker where a bonus is being offered.
Joining a bookmaker platform usually rewards individuals with a match bonus in the same way joining a financial trading platform like forex may reward first-time traders with a match bonus. In essence, this means a person will receive the equivalent of the amount they have deposited back. If a deposit of £10 is made, then an additional £10 will be given to the individual who deposited the amount.
A bookmaker bonus usually caps at £30 and a minimum £10 deposit is required to activate it.
The bonuses typically found on bookmaker platforms can be divided into three categories; bonus, free bet, and risk-free bet. These give the individuals who receive them the opportunity to buy and sell sports bets on betting exchange platforms with additional funds at minimum cost.
While free bets are not returned to an individual once a win is made, bonuses, on the other hand, are. For example, if a bet is placed with a specific outcome using a free bet, the winnings from the bet will be returned without the free bets amount that was initially given.
On the other hand, if a bet is placed using a bonus and the outcome that the bet was placed on happens to win, the winnings will be paid out alongside the bonus money that was used to place the bet.
Whether to place a bet on an outcome with low or high odds usually depends on the individual, as either one has its pros and cons.
Low bonus odds are less costly, but may force a person to complete the entire rollover in a short amount of time, whereas high odds increase the chances of losing a bonus into a person's exchange account, but may be more costly over time.
To maximise profits made from such a bonus, an individual will have to make sure that they are completely aware of the "rollover" criteria tied to it (the amount of times a bonus will have to be wagered before winnings can be withdrawn). There would be nothing worse than running out of money before this criteria is met.
It is important to note that there is usually a set of days in which a rollover needs to be completed by (30 days is quite common).
Bonus trading in casinos
Bonus trading in casinos is a slightly different form of trading compared to both financial trading and sports trading. While the concept of carrying out trades with the possibility of obtaining greater financial gains by using a bonus is fairly similar, the difference between them lies in their approach.
Where sports trading and financial trading platforms require individuals to buy or sell a commodity, bonus trading at an online casino requires individuals to place bets against the casino they are playing at.
There are three common types of casino bonuses; a no-deposit casino bonus, welcome bonus, and a deposit match bonus. The most common out of the three is the welcome bonus, which rewards an individual for signing up to an online casino.
In most cases, what an individual can potentially earn while wagering their money, or bonuses, on slots at online casinos is available in the Return to player (RTP) information tied to these slots.
The higher the RTP percentage, the more a person stands to gain from their time spent placing bets on a slot at an online casino.
Just as what is observed in forex trading and sports trading, where a new trader, in many cases, is required to make a certain amount of trades before they can profit from their bonus, a casino may ask for individuals to wager a bonus a certain amount of times before being able to withdraw their winnings.
Several bonuses displaying such examples can be seen on sites like https://www.yggdrasilcasino.com, which collaborate with operators to create bonuses that can be used as trade at different casinos.
The lower the wagering requirement attached to such bonuses are, the more individuals stand to gain from their trade. This makes it possible for people to earn more on top of the bonuses they use to engage in their trade.
The idea is that this sort of trading is supposed to pose less risk to the trader and, in some cases, be more rewarding than when an individual only has their money to do trading with. Besides, adding bonus money to one's initial investment will give the investor bigger trading equity (capital) to work with.
Potential benefits of bonus trading
The idea of trading with less risk is, unsurprisingly, appealing to most new traders who tend to find themselves persuaded by brokers to make a deposit to claim their bonuses.
While some deposit thousands of pounds straight away, others remain more cautious and deposit with lower amounts to begin with. And even though depositing with lower amounts is the reasonable thing to do, an increase in deposits can lead to holding more positions and being able to trade bigger lot sizes.
As some trading bonuses require a low deposit amount, such as a minimum of £100, for example, new traders are given the opportunity to increase their possibilities of making more profit, the more money they deposit.
The broker's primary interest is for a trader to perform as many trades as it is possible to perform, as this can influence continued investment.
While there are many perks attached to bonus trading, not every bonus will lead to a winning trade, and rarely does any bonus come entirely free of charge, which is why it is so important to be aware of all the requirements attached to a bonus before using it.
The above mentioned industries are some of the biggest trading platforms in the world, worth billions of dollars put together, and the market is only expanding.