Top Rebate Bonus for Binary Options Traders
We have become great lovers of cash-back deals these days. We see them in the supermarket, on TV, in magazines, and in almost every consumer market imaginable. The great news is that they have now been introduced into the world of binary options trading.
Binary options rebate bonuses are different to ordinary bonus schemes as they are unrelated to any deposit a trader makes. Instead, they are a type of financial compensation on trading contracts lost by traders. They are a way to recover some of the money that was lost; they can actually form an effective part of a solid binary options strategy and increase long-term profit margins. Many expert binary options traders recommend their use wherever possible. If you want to know more, then keep reading, and we will tell you need to know.
Binary options rebate bonus – What does it mean?
A rebate bonus in binary options trading is a special cash-back deal offered by brokers to traders on losing contracts. Generally, it is around 10 to 15% of monies lost, and is offered back to traders on unsuccessful options-trading contracts. As already mentioned, a rebate bonus is in no way connected to any deposits made, but still allows traders to recoup some of their losses on unsuccessful contracts. Normally, a trader will expect to lose all the money invested when a trade goes wrong, and this is pretty much how it works for all binary contracts offered by ‘binary options’ brokers. However, brokers clearly do not want to lose their customers and an increasing number are now offering this sort of cash-back deal.
Do brokers have caring hearts, or is there some underlying reason for rebate deals?
Brokers may seem to be considerate and generous in offering rebate deals, but there is a clear reason behind the sudden rise in those offering a binary options rebate bonus. As with all types of bonus, they are designed to keep customers in the market, as their survival helps maintain volume and liquidity in the market through ongoing trade. It can be defined as a loyalty or fidelity programme, rewarding customers for their continued business and indeed, encouraging them to continue trading. More customers, more business – simple.
Binary options deposit bonuses are designed to get new customers to register, sign up and start trading; whereas binary options cash-back bonuses are aimed at keeping customers who have already registered on their books. This is aimed at encouraging traders to remain in the market, as these setbacks and ‘lost’ contracts can be discouraging for traders.
Can binary options rebate bonuses be used to a trader’s advantage?
Rebate bonuses are still a relatively undiscovered jewel in the binary options trading crown. However, a rebate of 10 to 15% can be quite lucrative, because most online binary options brokers or service providers offer payout rates that are lower than 100%. Many offer payout rates of 90% or lower. So imagine the following:
- You regularly invest $100 on every contract.
- The payout rate of your broker is 90%.
- 50% of your trades you win, and 50% you lose.
In the above example, even though your success is 50/50, taking into account the relevant percentages overall, there will be a net loss on the account. You might think that a 50/50 win/lose rate would mean that your trades would even out, but in the above scenario, the payout rates are only 90%. Given a loss is effectively 100%, there is a net loss of 10% on the account. Now consider what happens when a 15% rebate bonus is added into the mix.
In this instance, a net profit of 5% can be generated if you only manage to succeed on half the trades entered. Consequently, if you believe you can achieve a 50% win rate, then a cash-back bonus will be advantageous to you. That said, given the limit nature of wins – ie, a set payoff on a successful trade, some may consider a 5% profit as scant reward for their efforts.
So in basic terms, binary options rebate bonuses seem to offers a good deal, much like many of the other types of bonuses available. When you consider, the risk-reward profile of a net cash position, are they then as good as they appear?
Rebate deals should be added into the overall mix of profit potential when considering their effectiveness. Sticking with the above example, a 50%/50% win/lose rate is something which can still be profitable if ones risk reward ratio is better than 1:1. In binary options, your losses and profits are preset. If you were to adopt the same strategies and decision making process into a basic spot position, where your risk reward ratio is defined by the stop loss and profit expectations, then 50%/50% can earn you more than 5% on the account.
If a trader adopts a 2:1 risk-reward ratio, one can see that 50% of the trades will give back double what the losing trades will suffer. It is hard to quantify in exact terms due to the variety of currencies and asset classes traded, but assuming you trade the same contract each time, getting your trades correct 50% of the time allows straight forward FX trading to give you higher profit potential if you stick to a disciplined strategy using stop losses and allowing your predictions to run in their desired direction. Remember, binary options only offer a set payout if you get the direction right, so when considering this, the rebates offered suddenly seem less attractive!
When should you accept a broker’s binary options bonus?
There is no denying that binary options bonuses are a great marketing tool for brokers. They are used to great advantage to encourage new traders to sign up and deposit money into a new trading account. What is in essence free money, is often the reason many traders choose a particular broker, though you should consider how they make investing in binary options more attractive than straight-forward spot FX.
In some cases, when markets are very tight (ie, ranging), binary options and associated deals, may seem like a good deal – and on occasion may well be. However, when you consider that these bonus offers – designed to make binary options attractive – come with trading-volume requirements set within the broker’s terms and conditions – their restrictions on how and how often you trade, can be net negative for the performance of the account overall. Ultimately, the freedom to trade in your desired style is what is more likely to add to your success. Established risk management techniques on the underlying assets can and will offer the same protection against losses, whilst offering greater profit potential when prices really break out in your desired direction.
It is always advisable to read all the small print when considering bonus offers of any kind by your chosen broker.
Other types of binary bonuses
A trading requirement could read as follows: In order to be permitted to make a withdrawal, you are required to invest your deposit and bonus amount 30 times. This means that if you deposit $200 and get a $200 bonus, your trading volume will have to reach $12,000 in order for a withdrawal to be permitted. When you look at it like that, this seems a very high figure, particularly if you’re relatively new to the world of binary options trading. The terms and conditions can inadvertently trap beginners and traders who make a minimum deposit, resulting in them being unable to withdraw their funds if they decide that binary options isn’t for them.
You should now have enough information, both the good and bad, to make more informed decisions on binary options rebate bonuses related to your binary options trading. Stay tuned, because we’ve lots more to share.