Why You Should Never Accept Trading Bonuses: The Hidden Truth
Why you should always refuse bonuses, contests and other freebies in brokerage centers.
Law 40. Reject free lunches with contempt. What is offered to you for free hides danger: there is usually a clever trick or a hidden obligation behind it. What is worth something is worth paying for. By paying your way, you izbavlyaetes ot neobkhodimosti gratitude, guilt, and deception. It is often wiser to pay the full price - you cannot shine and save at the same time. Do not spare money, make it work, generosity is a sign of power and attracts it.
Robert Greene "48 Laws of Power"
Many brokers offer various bonuses: +30% for every deposit, 100% if you deposit money before date N, and so on.
The point is that this is how they try to attract new clients and make old ones trade more actively. A person gets a bonus on their trading account and thinks: "let me open a position here, it seems to be rising, and those 5 kopecks of bonus are free, so if anything I can lose them". An order opened on a whim loses, the trader is already losing more than the bonus, but keeps the position, hoping. Or he closes the loss and opens the opposite order, hoping to win it back.
"What if I just withdraw this bonus?", some will ask. Do you think fools work in brokerage centers, handing out money to everyone? Of course not. Brokers always set draconian conditions for withdrawing a bonus. You may have to open orders for several hundred lots or keep 500 dollars on an account with the company for at least half a year, and so on. The conditions differ in each particular case, but they are always practically impossible for an average trader. And even if you somehow manage to meet all the conditions, even then you may be refused withdrawal of the bonus (there have been such cases).
There are especially cunning brokerage centers where, if you agree to take the bonus, you will not be able to withdraw not only the bonus, but even your main deposit until you fulfill their idiotic conditions.
Brokers also lure people with various contests. The idea is simple: several people will win in any case, even simply by the law of probability. Everyone else gets a strong subconscious incentive to open as many positions as possible, and in larger size than they should. This leads to the mass blowing of accounts, which is exactly what brokers want.
Lately it has become fashionable to run contests on demo accounts or even to give "no-deposit" bonuses. Again, the scheme is simple: a person earns money on a demo account (any fool can make millions on a demo account because the psychological factor is absent), naive thoughts of repeating that success on a live account creep into their head, and they open an account. The brokerage center's goal has been achieved.
Moral takova: vsegda otkazyvaytes ot bonusov, aktsiy, konkursov i drugoy "khalyavy" so storony DTs. Poverte, v itoge eto budet vygodnee besplatnogo syra.
Why you should always refuse bonuses, contests and other freebies in brokerage centers. Law 40. Reject free lunches with contempt.