A Forex No Deposit Bonus is “free money” that brokers offer new traders to encourage them to start trading forex on a live account. It’s given solely to new traders as a ‘welcome bonus’.
A No Deposit Bonus is regarded as powerful leverage available to new traders and allows them to start trading forex almost instantly without an initial investment. It does come with rules and restrictions and new traders qualify for the bonus based on certain criteria.
In this in-depth guide you’ll learn:
- What is a forex no deposit bonus?
- What does a No Deposit Bonus entail?
- Who qualifies for a No Deposit Bonus?
- Why do brokers offer a No Deposit Bonus?
- What happens to profits made trading with a No Deposit Bonus?
And lots more…
Let’s dive right in…
What is a forex no deposit bonus?
Forex No Deposit Bonus is common practice in South Africa, Malaysia, and Indonesia but isn’t available to residents in the Eurozone and United States. It incentivises new traders to switch over to a real forex live account from a demo account without massive financial risk.
This type of forex trading promotion is available to new traders who meet certain requirements to open a real forex account and the free money can only be used under certain trading conditions, as specified by the broker. Forex traders cannot withdraw the free bonus money that’s put into their account by the broker.
10 Best Forex Brokers in South Africa for 2022
10 Best forex no deposit Bonuses in South Africa ( 2022 )
|No Deposit Forex Brokers||FREE Welcome Bonus Amount||Claim Bonus Here|
|Just Forex||100% Sign Up Bonus – WOW!||Claim Bonus Here|
|Tickmill||10% Deposit Reward||Claim Bonus Now|
|FBS||$100 Bonus||Claim Bonus Here|
|XM||$30 Bonus||Claim Bonus Now|
|RoboForex||$30 Bonus||Claim Bonus Now|
|Markets.com||Up to 35% Bonus Deposit||Claim Bonus Now|
|CM Trading||Africa’s Favorite Broker||Claim Bonus Here|
|Exness||Fastest Growing Broker in SA*||Open An Account|
|ForexTime||$10 Bonus||Claim Bonus Now|
|AM Broker||$200 Bonus||Claim Bonus Here|
What does a No Deposit Bonus entail?
👉 The Forex No Deposit Bonus means a new trader does not need to make a deposit to activate a real live account and in effect, gets ‘free money’ to begin trading. The bonus amount is usually small, ranging from $10 to $50.
👉 The ‘welcome bonus’ encourages new traders to open a live account with a broker and place more trades in a short period of time while limiting their risk of losing their own money at the start.
👉 After providing your name and email address to a broker, a real live trading account is opened. Some brokers require documents such as utility bills, ID, or proof of residence to verify a live account. Some open an account with a No Deposit Bonus without verification.
👉 Thereafter, ‘free money in the form of a No Deposit Bonus is deposited into the account. How much you receive depends on the broker’s promotional offering. It can be as high as $50.
Who qualifies for a No Deposit Bonus?
👉 The No Deposit Bonus is only offered to first-time forex traders who sign up and register an account with a broker who offers the promotion. If you’ve been given a No Deposit Bonus before by a broker, you are not entitled to it again.
Trading with a No Deposit Bonus
👉 Once the deposit is in your account, you can start trading live and in real-time on the forex market. Continuing on from trading through a demo account, a new trader can experience real live trading without risk until the bonus period ends. Mistakes made don’t cost the new trader money out of his or her pocket but it is a loss to the broker.
👉 Why do brokers offer a No Deposit Bonus? Well, it’s part of a broker’s long-term relationship to build a client’s confidence and experience live trading on multiple financial instruments while minimising risk in the early days of trading. New traders are more inclined to trade more often with ‘free money’ and gain invaluable experience before making a deposit with their own money.
Why do brokers offer a No Deposit Bonus?
👉 A No Deposit Bonus is also known as a ‘welcome bonus’ and is a popular method used by brokers to attract beginner traders and encourage them to trade multiple financial instruments using a real live account.
👉 Most new traders begin their forex trading journey using a demo account. A No Deposit Bonus is the perfect incentive for beginners who want to practice trading forex with a real live account but are wary of using their own money.
👉 New traders get the opportunity to actively engage in the forex market for a period of time and keep any profits made at the end. The No Deposit Bonus expires after 30 or 60 days, depending on the broker’s bonus conditions. This puts new traders under pressure to make full use of the ‘welcome bonus’ before it ceases to exist.
Restrictions on forex trading with a No Deposit Bonus
👉 Having given you ‘free money’, the brokers are entitled to apply certain restrictions on trading with a live account. They’re no onerous restrictions and are designed as much to protect you as themselves.
1️⃣ Maximum lot size
👉 Brokers offering No Deposit Bonuses to first-time traders restrict their clients from opening orders with a large lot size. Typically, the maximum limit for a lot size is 0.01 lot.
👉 The downside of a limit on the size of a lot is it makes it harder to make a profit.
2️⃣ Maximum active positions
👉 Certain brokers who offer No Deposit Bonuses set a limit on the number of active positions that a new trader is allowed to open. This may include pending orders.
👉 This limit does affect a trader’s trading strategy and can somewhat spoil the trading experience when a new trader cannot open more positions, particularly if he or she is using the trend-following method.
3️⃣ Limit on assets traded
👉 Certain brokers who offer No Deposit Bonuses specify which trading currencies may be traded, particularly in a volatile market situation. Typically, new traders are restricted to the mainstream trading pairs and can’t trade on exotic pairs.
4️⃣ Time limit on No Deposit Bonus
👉 A No Deposit Bonus usually has a time limit and will expire after a certain period of time. It’s important to find out what this time limit is because you need to get in as much trading time as possible with the ‘free money’ before you need to commit your own money.
👉 Typically, the time limit on a No Deposit Bonus is between 30 to 60 days. The longer, the better so shop around for a broker who offers a ‘welcome bonus’ for a 60-day period. This gives you ample time to practices forex trading on a real live account.
5️⃣ Hedging is not allowed
👉 As a general rule, hedging is not allowed when trading on an account with a No Deposit Bonus. Hedging involves having two trades open at the same time but in different directions.
👉 Hedging is used in certain trading strategies and generally provides short-term relief for forex traders. Hedging helps to temporarily eliminate or minimise risk in the forex market.
6️⃣ Scalping is not allowed
👉 As a general rule, scalping is not allowed when trading on an account with a No Deposit Bonus. Scalping is a popular trading strategy that allows traders to potentially earn small amounts of profit many times a day. The profit is usually between 5 to 10 pips.
👉 Scalpers hold an open position for a very short time which is a good strategy to use in volatile market conditions. Many small pips can add up to a comfortable profit. The reason why brokers do not encourage scalping on a No Deposit Bonus account is that it can very quickly deplete the funds in the account.
7️⃣ Leverage is limited
👉 Leverage is usually limited on a real live account with a No Deposit Bonus. Leverage is where a small amount of money is borrowed from the broker to trade a larger forex position. Leverage is key to trading forex.
👉 When leverage is limited, it means a new trader cannot open a large position. It lowers the trading volume and increases the number of trades a new forex broker must make to realise a decent profit if only using the No Deposit Bonus amount in the account.
8️⃣ Expert Advisors are not allowed
👉 Expert Advisors (EAs) may not be used on a real live account that’s been set up with a No Deposit Bonus. EAs can be likened to robot trading, where forex trading is automated.
👉 EAs are very useful for beginner forex traders because they simplify the trading process, which includes opening and closing a trade and analysing forex market conditions using indicators.
What happens to profits made trading with a No Deposit Bonus?
👉 One would think that the brokers would take any profits made on a new account with a No Deposit Bonus, but here’s the good news; you pocket any profit made. Further proof that brokers are committed to supporting new traders on their forex trading journey as they switch from a demo account to a live account.
👉 You are welcome to withdraw the profit you make but the idea is to reinvest it back into your account and continue trading. You’ll have had enough time to decide if you have an appetite for the risk involved in forex trading and can either continue to trade or you can withdraw the money and call it quits.
👉 As a note of warning, some new forex traders find it difficult to withdraw profits from an account set up with a No Deposit Bonus. You may be asked to deposit a certain amount of money into the account before you can withdraw profits. The reason for this is simple; brokers want to encourage you to continue trading, not to give up and cash out.
Top 10 forex brokers in South Africa: who offers a No Deposit Bonus
|AvaTrade||Get a free $50 bonus without making a deposit|
|Exness||Offer a no deposit bonus in 2020|
|FXCM||Get a free $50 bonus without making a deposit|
|Fxpro||Offer a no deposit bonus in 2020|
|FXTM||Get a free $10 (1000¢) bonus without making a deposit|
|HFM/HotForex||Get a free $30 bonus without making a deposit|
|IC Markets||Offer a no deposit bonus in 2020|
|Plus500||Get a $50 (approx R850) bonus with an R 4 000 minimum deposit|
|Tickmill||Get a free $50 bonus without making a deposit|
|XM Trading||Get a free $30 bonus without making a deposit|
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. Forex trading involves a high degree of leverage which increases the risk associated with forex trading.