Slippage within binary options tradesRecently I was taking another look at Redwood Options and the account tiers they offer.  Redwood Options offers some of the largest bonuses I have seen.  If you deposit $5,000-$10,000, they state on their account tiers page that you have the option of claiming a 100% match bonus.  That is a lot of “free” money.  As you probably know, though, match bonuses come with something of a catch.  And that is that the money is not truly yours until you achieve a certain trading turnover in your account.  You can use the money to trade (as leverage), but you cannot cash it out until you achieve the turnover.  Not everybody likes to trade on leverage. So do you take the bonus?

What interested me about Redwood’s account tiers is that they have made a change to their bonus offer.  You now have the option of rejecting their bonuses and instead claiming some risk-free trades in their place.  The page does not state how many risk-free trades, but this is an intriguing offer.  There are brokers that will not even give you a chance to reject their “free” bonus because they want to hassle you when you try to withdraw your money (we recommend avoiding those brokers of course).  And then there are brokers that will let you skip out of the bonus, but they do not offer anything in its place.  This offer for risk-free trades by Redwood Options is quite unique.

Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
90% $10 $1
 
200% $50 $10
 
85% $200 $20
 
85% $100 $5
 
85% $10 $1
 
95% $250 $1
 
80% $5 $1
 
80% - 90% $250 $5
 
85% $250 $5  
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
95% $250 $1
 
80% $10 $0.10
 
160% - 180% $50 $2
 
95% $250 $1
 
90% $250 $1
 
80% - 90% $250 $5
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
200% $50 $10
 
95% $250 $1
 
90% $50 $1
 
80% $5 $1
 
80% - 90% $250 $5
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
  90% $10 $1
 
  200% $50 $10
 
  85% $200 $20
 
  85% $100 $5
 
  95% $250 $1
 
  85% $10 $1
 
  80% - 90% $250 $5
 
  85% $250 $5  
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
90% $10 $1
 
200% $50 $10
 
85% $50 $1
 
85% $200 $20
 
85% $100 $5
 
95% $250 $1
 
85% $10 $1
 
80% $5 $1
 
80% - 90% $250 $5
 
80% $250 $25
 
85% $250 $5  
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
90% $10 $1
 
90% $50 $1
 
85% $100 $5
 
85% $10 $1
 
85% $50 $1
 
85% $200 $20
 
95% $250 $1
 
80% $250 $25
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
  85% $50 $1
 
  200% $50 $10
 
  95% $250 $1
 
  85% $200 $20
 
  85% $10 $1
 
  85% $100 $5
 
  80% $250 $25
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
  90% $10 $1
 
  85% $50 $1
 
  95% $250 $1
 
  85% $10 $1
 
  80% - 90% $250 $5
 
  80% $250 $25
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
  90% $10 $1
 
  85% $50 $1
 
  85% $100 $5
 
  95% $250 $1
 
  85% $10 $1
 
  80% - 90% $250 $5
 
  80% $250 $25
 
  85% $250 $5  
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
  90% $10 $1
 
  85% $250 $10
 
  85% $50 $1
 
  85% $100 $5
 
  85% $10 $1
 
  95% $250 $1
 
  80% - 90% $250 $5
 
  80% $250 $25
 
  85% $250 $5  
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
  90% $10 $1
 
  85% $50 $1
 
  85% $100 $5
 
  85% $10 $1
 
  95% $250 $1
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
  90% $10 $1
 
  85% $50 $1
 
  85% $100 $5
 
  85% $10 $1
 
  95% $250 $1
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
  90% $10 $1
 
  85% $50 $1
 
  85% $10 $1
 
  95% $250 $1
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
  90% $10 $1
 
  85% $50 $1
 
  90% $50 $1
 
  85% $10 $1
 
  95% $250 $1
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
  90% $10 $1
 
  85% $10 $1
 
  85% $50 $1
 
  95% $250 $1
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
90% $10 $1
 
85% $200 $20
 
85% $100 $5
 
95% $250 $1
 
80% - 90% $250 $5
 
85% $250 $5  
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
  90% $10 $1
 
  85% $100 $5
 
  85% $50 $1
 
  85% $10 $1
 
  95% $250 $1
 
  80% $250 $25
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
  90% $10 $1
 
  200% $50 $10
 
  85% $250 $10
 
  85% $50 $1
 
  85% $100 $5
 
  95% $250 $1
 
  85% $10 $1
 
  80% - 90% $250 $5
 
  80% $250 $25
 
  85% $250 $5  
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
200% $50 $10
 
95% $250 $1
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
  200% $50 $10
 
  85% $250 $10
 
  85% $200 $20
 
  95% $250 $1
 
  85% $10 $1
 
  80% - 90% $250 $5
 
  85% $250 $5  
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
  85% $50 $1
 
  200% $50 $10
 
  85% $200 $20
 
  95% $250 $1
 
  85% $100 $5
 
  85% $10 $1
 
  80% - 90% $250 $5
 
  80% $250 $25
 
Broker reviews Blacklist rating Trade now Early expiry Avg returns Min deposits Min trade Ratings Trade now
95% $250 $1
 
85% $10 $1
 
80% - 90% $250 $5
 
85% $50 $1
 

 

So which should you choose?  A free match bonus to use as leverage for trading, or some risk-free trades?  First, let’s look at the pros and cons of accepting a bonus:

Pros of Accepting a Bonus

  • You have more money to trade with, and can control larger amounts of capital than you actually have in your account.  This enables you to potentially win more money more quickly than you could without the bonus.  Assuming you trade well, the bonus money and the money you generate with it will all eventually be yours.
  • Bonuses are exciting.  If you are playing for fun and you are not all that concerned with profitability, you may want to accept a match bonus because it increases the stakes and makes trading more exhilarating.

Cons of Accepting a Bonus

  • Since you are controlling more money than you actually have, you are trading on leverage, and that means that you can potentially start stacking up huge losses, and not just huge wins.  The faster you lose money, the more quickly you may find yourself with none.
  • It is easy to miscalculate your risk management plan.  You might be tempted to accept a bonus but then simply not use it.  You could decide to simply keep trading with the same small percentage of your account you intended to trade before you took the bonus.  But if you miscalculate and forget that the bonus money in your account is not a part of your original investment, you could mistakenly trade more money than you mean to, and that could mess up your money management plan.
  • Withdrawals can become problematic.  Since you cannot withdraw your bonus money until you have achieved a certain turnover volume, you may encounter hassles when you go to withdraw, even if you are only attempting to withdraw your portion of the money.  Anything that slows down a withdrawal process by adding complications can be an irritation.

Now, assuming that you are being given a reasonable number of risk-free trades, here are the pros and cons of accepting them.

Pros of Risk-Free Trades:

  • Get some practice without losing any money in your account.  You should not replace the demo testing process with a few risk-free trades, but there is no reason to say no to more practice.

Cons of Risk-Free Trades:

  • The obvious drawback of a risk-free trade is that you cannot make money with it.  You cannot simply invest all your money on a risk-free trade without putting up some kind of risk.  It simply makes no sense for the broker to assume all the risk, and you none, on a trade where you can actually make money.

Which is Better?

Whether you should accept a bonus or risk-free trades instead essentially depends on what your goals are as a binary options trader.  While both have advantages and disadvantages, bonuses definitely create more complications for your account.  They give you a chance to win more money, but also to lose more.  Risk-free trades obviously do nothing to increase your risk exposure, but they do not contribute immediately or direct to your winnings, either.

If you are trading for fun, whether you accept a bonus or not should depend on how you manage your gambling money.  If you want to be able to make a large number of trades before you potentially run out of money, you probably should refuse to bonus and take the additional risk-free trades instead.  If however you are more excited by the idea of risking a large amount of money and having the chance to possibly win or lose a huge amount all at once, then a bonus would be perfect.

What about if you are trading for profit and you hope to be a serious long-term trader?  The best option in this case depends once again on your money management plan.  What percentage of your account do you plan to invest on each of your trades?  If you have not yet figured that out, you should before you proceed any further.  If you accept a bonus, what would you do with it?  Would you use it to trade?  Would you ignore it and try to only trade the same amount you planned to before until you reach the turnover volume?  Would there be any actual point in accepting the bonus?

If you are a serious trader, it probably makes more sense to accept additional risk-free trades in this situation.  You can only benefit from the additional practice, even if you have already done some demo testing.  The risk-free trades will not complicate your trading or withdrawals, and they will give you a chance to get used to the platform.  You can always save some for later if you want to test a new strategy.

While this discussion concerns a fairly specific offer from one particular broker, it makes sense to think about questions like this, even if you have no interest in trading with Redwood Options.  Thinking about the nature of risk and how you want to deal with risk in your trading is important, whether you are trading seriously or for fun.  Money management is an essential skill for gamblers as well as serious investors.

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