What exactly is a Forex deposit bonus and how does it function? A Forex deposit bonus refers to an incentive provided by certain Forex brokers in order to attract new clients or encourage existing clients to deposit more money into their trading accounts. This bonus typically involves the broker offering a percentage of the deposited amount as a bonus, which can be utilized for trading purposes or withdrawn under specific conditions.
For instance, let’s take the example of PU Prime, which offers a 20% bonus on the initial deposit made by clients who register for this promotion, up to a maximum of $1000. This means that on the first deposit, clients can increase their trading equity by 1.2 times for deposits. To illustrate, if a client deposits $5000, they will receive a 20% bonus of $1000, resulting in a total equity of $6000
It’s important to note that Forex broker deposit bonuses can vary significantly in terms of their magnitude, terms, and availability, so traders should carefully evaluate the terms and conditions. One common characteristic of trading credits is that they cannot be withdrawn, but they can be used for trading purposes. However, any profits derived from such trading can be withdrawn.
How Can You Take Advantage of Trading Credits?
The primary benefit for traders is that they receive additional equity to engage in trading activities. This enables them to open more positions or larger trades, potentially leading to higher profits, all without incurring any additional costs or leverage. For instance, by utilizing PU Prime’s 20% Deposit Bonus, traders can have a total of $1200 in tradable capital with a mere $1000 deposit.
To provide a clearer perspective, this means that the usable margin increases by 20%, allowing traders to open trades with 1.2 times the total amount (in notional value) compared to what would have been possible without the deposit bonus. As a result, profits can also be 1.2 times higher, without multiplying the risk undertaken. Despite trading with $1200 in capital, the risked amount remains at $1000.
Conditions For Maintaining a Deposit Bonus
The brokers’ provision of bonus credit is accompanied by certain terms and conditions to mitigate the risks involved in offering deposit bonuses. These conditions may require your account or positions to fulfill specific requirements; otherwise, the granted credits may be revoked.
| Other Brokers | PU Prime |
| Only takes into consideration account balance | Takes into consideration account balance and floating P&L (equity) |
What this means for you:
Because PU Prime’s consideration for maintaining credit takes into account your floating profit or loss, any profitable open positions you have will contribute to the minimum amount needed to hold onto credit should you make a withdrawal. In the case of other brokers that only take into consideration balance, any withdrawal on a low balance will result in credits being deducted.
Credit Attributes
| Other Brokers
Nhà môi giới khác |
PU Prime
PU Prime |
| deposit bonus cannot bear losses
Tiền thưởng Nạp tiền không thể chịu lỗ |
deposit bonus can bear losses
Tiền thưởng Nạp tiền có thể chịu lỗ |
What this means for you:
While most forms of trading credit can be used to open more positions on the onset, PU Prime’s credits are unique in the fact that they can be used to cover losses. This means that unlike many other brokers, PU Prime’s credits do not automatically get removed once a customer’s balance goes below zero – thus effectively bearing your losses and increasing the amount of margin you have.
What is a Margin Requirement?
In the realm of CFD trading, margin pertains to the funds that traders must possess in their account to uphold their open positions. This margin acts as security for the leveraged trades they engage in.
The specific amount of required margin varies based on the leverage employed by the trader. Leverage is a CFD trading feature enabling traders to access larger positions than their own capital would allow.
Should the market move unfavorably and a trader’s losses surpass their available margin, the broker may issue a margin call, prompting the trader to deposit additional funds to sustain the necessary margin level. Failing to meet the margin call may lead to the broker executing a margin stop-out, wherein the trader’s positions are closed. In the case of PU Prime, the margin stop-out level stands at 50%. Consequently, if the trader’s equity (comprised of balance, floating profit and loss, and credit) falls below half of their utilized margin, their open positions will be forcibly liquidated.
Margin Calculation Formula:
Margin Level = (Equity/Used Margin)*100%
Final Thoughts
During periods of high volatility, especially when dealing with highly leveraged or substantial positions, PU Prime‘s deposit bonus and its ability to cover losses become exceptionally advantageous. Traders essentially benefit from an additional 20% buffer in price movement before facing a stop-out, significantly reducing the risk of being forced to close their positions. This allows for more opportunities for the price action to reverse favorably.
Frequently Asked Questions (FAQs):
What does a deposit bonus mean?
A deposit bonus is an incentive provided by certain Forex brokers to attract new clients or encourage existing clients to deposit additional funds into their trading accounts.
What is trading credit?
Trading credit refers to extra equity granted by brokers, typically in the form of a bonus given on a deposit.
Can I withdraw trading credits?
Trading credits themselves cannot be withdrawn, but any profits earned using these credits can be withdrawn.
How can PU Prime’s credits benefit me?
PU Prime’s credits can be utilized to open larger positions or increase the number of positions taken. They also serve to absorb losses and enhance margins.
Is there a maximum limit for the deposit bonus amount?
The maximum deposit bonus amount that can be received from PU Prime is US$10,000.
Can I combine a deposit bonus with other promotions or bonuses?
The deposit bonus promotion cannot be used simultaneously with any other promotions or bonuses offered by PU Prime unless explicitly stated.
Are there any eligibility restrictions for receiving a deposit bonus?
Only PU Prime’s Standard and Prime account holders are eligible to participate in the deposit bonus promotion.
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Source: Vietnam Insider