a look at the bonus culture among German forex traders

A forex bonus may be defined as a financial incentive offered to forex traders to motivate them to increase their trading activities on the forex trading platforms. Forex bonuses are available in different forms – points, cash, and other tradable benefits. In the financial world, traders can enjoy additional benefits in the form of forex bonuses while trading foreign currencies in financial markets. 

The most common type of bonus offer is the forex deposit bonus made available by the best forex brokers in Germany in order to entice more German traders into their platforms. The main aim behind providing deposit bonuses in exchange for funding trading accounts is to give additional tradable funds to the users in the form of a percentage of the initial deposits. In most cases, the deposit bonuses are offered only once and generally apply to newly registered traders.

The German Forex Market and Bonus Offers

Buying and selling foreign currencies in Germany has always been a popular trading activity among German traders. Although it is highly recommended to choose forex brokers regulated and authorized by the Federal Financial Supervisory Authority (BaFin or Bundesanstalt für Finanzdienstleistungsaufsicht), many brokers do not require this regulatory criterion to accept German traders. BaFin was launched in 2002 by merging three supervisory bodies to create one regulatory agency to monitor credit institutions, financial services companies, banks, insurance companies, stock exchanges, and forex brokers. German traders are recommended to work with a forex broker with bonus offers that are strictly regulated and licensed within the Eurozone. Such forex brokers operate under MiFIG directives, so German traders can enjoy additional protection against theft and scammers. 

Most commonly, the best forex broker in Germany offers high-security levels that segregate client accounts from brokerage accounts and provide compensation schemes to the traders. This means German traders’ deposits are always protected up to €20,000 if the brokers become insolvent. Note that Forex trading in Germany is not precisely regulated, but the forex brokers are regulated and licensed to allow traders to participate in the trading activity.

Coming to forex bonuses, the best forex brokers in Germany provide many types of offers. Some provide these offers post-trading, while others provide them as soon as funds are deposited in the trading accounts. Most commonly, forex bonuses include deposit bonuses, cashback bonuses, reload bonuses, rewards, and other lucrative welcome or sign-up bonuses.

Types of Forex Bonuses Available to German Traders

German traders can enjoy a variety of bonuses in different packages. These forex bonuses can be subdivided into different categories mentioned below – 

• No deposit bonuses – These trading forex bonuses are offered to German traders without deposit requirements. Usually, they range between $5 to $50, and the forex brokers distribute these offers to motivate traders to trade more and learn how forex trading works more effectively.
• Forex rebates – Forex rebates are a part of spreads or commissions returned to the traders when a trade position is closed. In many cases, the rebate is processed quickly so that traders can get their payments back every month. Forex rebates are beneficial since the traders get compensated for every lot traded. There are no such conditions required to be eligible for forex rebates.
• Deposit bonuses – This forex bonus is probably the most common and best option for German traders. Generally, the no-deposit bonuses range between 10% to as high as 400%. However, note that bigger forex bonuses are not always better. Traders are often better off with smaller bonuses over big ones.
• Forex trading gifts – Gift promotions are also offered to German traders after they have completed a certain number of trades or the trade amount. This approach is more reliable and honest since traders must make deposits on the platform, meaning the brokers are not simply giving away bonuses without deposits. Generally, trading gifts include smartphones, tablets, or other such items. However, the best forex bonuses are deposit bonuses since the monetary value of the deposit bonuses ends up more than what tablets or smartphones are worth.

The Psychology of Bonuses in Forex Trading

There is no denying that bonuses affect the propensity of a trader to trade in the financial market. It also improves the traders’ performance as they make more transactions even though of smaller sizes. This helps them familiarize themselves with the forex trading market. The study by Elena Pikulina on Bonus Schemes and Trading Activities showed that traders’ performance is usually poor (even when there is no transaction cost) without bonuses in forex trading. 

Offering different forex bonuses on the intensity of individual traders to trade in foreign currencies certainly has a positive impact. They play an important role in motivating traders to trade and perform well. At times, they may evoke emotions, risk appetites, and aspirations, leading to aberrant behavior and severe losses. However, bonuses may also serve many purposes than just increasing the risk-taking behavior of the traders. 

For instance, they may increase the trading intensity, which would be relevant if professional traders earn higher profits by making more trades or trades of larger amounts. This is a form of random reinforcement where traders are rewarded randomly for participating on the brokerage platform. However, because of this random reinforcement in the form of bonuses, traders may become overconfident on the forex trading platform, adversely affecting their bankroll.

Best Practices for Choosing and Using Forex Bonuses

To get and use the best forex bonuses effectively, traders must choose the best forex brokers in Germany by considering the overall experience, over and above the bonuses on offer. The key idea is to choose a brokerage platform that allows German traders to make trades seamlessly and benefit from starter deals like welcome bonuses, no deposit bonuses, and many more. 

Ease of use and design – Traders must be able to find their way around the website. The brokerage platform must be easy to use on a desktop or mobile and display important information like currency pairs, bonus offers, and other features and functions. 

Currency pairs – Currency pairs are normally divided into three categories – majors, minors, and exotics. Choose the best forex brokers that offer all three types so that traders have options to make trades uninterrupted on majors, minors, and exotic currency pairs. 

Deposit limits – Most brokers require a minimum deposit amount to allow traders to register and create an account with the platform, ranging between $50 to $100, but it can sometimes be a lot more than that. Many brokers may also offer bonuses on deposits. Hence, traders must choose their forex brokers wisely to make the most out of forex trading. 

Fees and other charges – Brokers charge a fee for providing brokerage services. There may also be charges on transactions, deposits, and withdrawals. As a general thumb rule, traders must prioritize platforms that have the lowest trading fees to avoid paying hefty forex trading costs.

Bonus Abuse and Scams

Bonus abuse refers to registering on a forex trading platform multiple times using different accounts and IDs to claim bonuses run by trading platforms in the German forex market. This process is also known as multi-accounting, bonus hunting, promo abuse, and bonus abuse fraud. It mostly affects forex trading websites, but any platform that leverages welcome bonuses as its marketing strategy may be at risk. 

The problem involves fraudsters and scammers attempting to create new accounts by relying on various stolen IDs that result in synthetic ID fraud. This is one of the biggest issues in the forex market in Germany and is undertaken by sophisticated and large criminal rings that have huge resources. These bonus abuse and scams can be prevented by creating complex bonus terms and conditions, lowering bonus payouts, and blocking risky locations.

Conclusion

Forex trading in Germany is legal and highly regulated by a leading regulatory agency called BaFin. Even though the country has witnessed several economic setbacks, the financial forex sector continues to bring more opportunities for German traders to earn a living from forex trading. There are no such laws governing forex trading in Germany. However, the objective of the EU to unite the entire Eurozone has allowed regulated brokers to accept German traders into their platforms. 

These brokerage websites can also provide exciting bonuses and promotions to entice traders to join their platform. However, it is the traders’ sole responsibility to conduct extensive research on different forex trading platforms and the bonuses offered before registering with them to avoid potential losses and risks associated with forex trading.