One of the reasons binary options market sweeps people off their feet is that it comes with a lot of extras and perks for the traders. Many brokers offer a variety of bonuses, first to make people sign up, then to make them stay with them. Besides the famous welcome, no-deposit and deposit bonuses, another very appealing bonus type, which more and more brokers have been offering lately, is the cash-back or rebate bonus. The binary options market can be merciless, and brokers have been reaching out for different tricks to make it easier on those who sometimes really need all the support they can get to be able to stay in the market. In that situation, the rebate bonus comes in very handy, helping to keep traders on the market.
What is a Rebate Bonus?
The rebate bonus refers to a special cash-back bonus offered to traders on losing trades. It is a financial compensation, where a fraction or a part of the trader’s initial investment is being refunded to them in the case of a losing trade contract. The rebate bonus has been very popular with long-term traders and many even incorporate it to increase their long-term profit margins. The usual percentage offered back by brokers is 10% or 15% of the initial investment. The percentage might not be high, but traders appreciate getting at least some of their money back when they have traded without success. The 10% or 15% are especially not insignificant when it comes to large investments. The rebate bonus is not connected to the deposit or no-deposit bonus. It is simply meant as a refund for the loyal traders.
What’s in it for the Broker?
The broker companies have been competing for clients since the market’s beginnings. Brokers always try to reinvent themselves to attract new clients and keep the old ones. Given that the market is really ruthless with a clientele counting more losses than winnings, the brokers added the cash-back bonus in an effort to try and keep their clients. This bonus can also be seen as a reward for loyalty and incentive to encourage traders to keep doing what they are doing.
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How It Works
Let us illustrate an example of how the rebate bonus may enhance your profits. Let’s say that you have invested $50 on ten trades with a payout rate of 80%. Out of the ten trades, you have won five, which means that your winning rate is 50%. This sounds good, but with a 90% payout rate, you still have not covered for your investment. This means that you need an over 60% success rate to actually make some money. Now, let us see how a rebate bonus helps your cause. Let’s say that you get 15% on each losing contract (i.e. you get 15% back on every of the five losing trades). In that way, you do not need a success rate of 60%, and your trades will be profitable when adding the rebate money to your account. Many investors trade following this logic and rely on the bonus in developing their trading strategy.
Rebate Bonus Terms and Conditions
Many traders have been subject to broker manipulation and have ended up losing more money than they should have. This usually happens when the terms and conditions are written in a complicated manner, hardly understandable to the traders who walk into a trap and sign something that they do not understand. Other times, brokers do not even reveal the terms and conditions publicly but present them to the confused traders later. Traders have to be careful and read every legal document related to their money, including the Bonus Terms and Conditions. Many brokers, for example, claim to have a rebate bonus but avoid paying the trader later. If your broker refuses to give or send you the relevant information on the terms and conditions even after you’ve personally requested it, the best thing to do is to walk away from that broker. Terms and Conditions are already complex and vague by nature, and you do not need additional complications. The brokers first promise that bonuses are paid without delay, until payout time; then, they give you a list of requirements you have to fulfil in order to get refunded. Not surprisingly, the requirements include spending more money.
Conclusion
Traders should understand that brokers have to employ a certain criteria system, but this is not a reason to be exploited by the broker. Bear in mind that decent brokers will have a clear policy, and you will know ahead of time what is expected from you to claim all the money you won. This does not only apply to the bonus policy, but to overall deposit and withdrawal regulations. Rebate bonuses are in general a positive thing and help traders cope with losses better, but on the other hand, make sure that the requirements are feasible and not a mission impossible. Once you find a high-quality broker, you will be entitled to everything that is specified in the terms and conditions.