Types of Overseas FX Bonuses: Welcome, Deposit and Cushion Differences
Are you unsure which of the many types of overseas FX bonuses suits you?
In short, remember that a bonus is margin you use for trading, which is different from cashback returned as cash.
This article covers bonus types, the cushion feature, withdrawal and expiry conditions, common mistakes and how they differ from cashback.
In short: a bonus is "margin," cashback is "cash"
- A bonus is margin you can trade with, and the bonus itself generally cannot be withdrawn
- Cashback is a return based on trading volume, and is different in nature from a bonus
- Whether there is a cushion feature changes how a bonus is treated when you take a loss
- Amounts and conditions differ by broker and period, so check the official terms
Overseas FX bonuses fall into 4 broad types
Overseas FX perks fall broadly into four groups by how you receive and use them. Names differ by broker, so the key is to tell them apart by what they do. The first three are perks the broker provides, and the last is a return based on trading volume.
| Type | Conditions to receive | General nature | Main notes |
|---|---|---|---|
| Welcome bonus | Account opening and identity verification | You receive trading margin without a deposit | Withdrawal conditions can be strict, and there may be a cap on profit you can receive |
| Deposit bonus | Granted according to the deposit amount | A set percentage is added on top of your deposit | Percentage, cap and number of times differ by broker |
| Volume-based points | Lots traded | You exchange accumulated points for margin or cash | Check the exchange rate and exchange conditions |
| Cashback | Lots traded | Cash is returned based on trading volume | Return amounts are not yet confirmed, and we will post them on each broker's page at launch |
Differences between welcome and deposit bonuses
The appeal of a welcome bonus is that you can receive it without depositing. However, the amount is on the small side, and withdrawal conditions tend to be strict. A deposit bonus is generally added on top of your own funds.
| Comparison | Welcome bonus | Deposit bonus |
|---|---|---|
| Conditions to receive | Account opening, identity verification and similar | Granted according to the deposit amount |
| Own funds | Not required | Required |
| How the amount is set | Often a fixed amount | Set by a percentage of the deposit and a cap |
| Period available | Often has a deadline | Both permanent and limited-time |
| Who it suits | People who want to try trading first | People who want to add room to their own funds |
- Percentage: the ratio granted against the deposit amount. Differs by broker
- Cap: the upper limit on the total granted. Sometimes set cumulatively
- Number of times: sometimes first deposit only, sometimes you can receive it several times
- Eligible accounts: depending on the account type, you may be excluded
What the cushion feature is
The cushion feature is a system where, when you take a loss, the bonus covers it and limits the drop in your own funds. Because the bonus works as margin, you get a little more room before stop-out.
A bonus without a cushion feature does not cover losses, and in some cases simply disappears when conditions are met. Even with the same name, a bonus is worth different amounts depending on whether it has the feature.
- Whether the bonus is included in your effective margin
- When you take a loss, whether your own funds or the bonus decrease first
- When your balance reaches zero, whether the bonus disappears too
- How the bonus is treated when you withdraw or transfer funds
A cushion is not a "guarantee against losses"
Even if a bonus covers a loss, your funds are still decreasing. Do not think of it as safe just because there is a cushion.
How bonuses differ from cashback
The biggest difference is whether what you receive is margin or cash. A bonus is a quota you use for trading, and cashback is a return based on trading volume.
| Item | Bonus | Cashback |
|---|---|---|
| Nature | Margin used for trading | Cash return based on trading volume |
| Conditions to receive | Account opening, deposit and similar | Lots traded |
| Withdrawal | The bonus itself generally cannot be withdrawn | Check the provider's terms |
| Expiry | May disappear if conditions are not met | Check the provider's terms |
| When you take a loss | Changes with whether there is a cushion | Calculated by trading volume, separately from profit and loss |
Cashback is generally a system that returns part of the reward the referrer receives from the broker. This arrangement is called an IB rebate. Volume-based points take on a nature between the two, depending on what you exchange them for.
The basics of withdrawal and expiry conditions
The bonus itself generally cannot be withdrawn, and withdrawing profit can also come with conditions. Detailed definitions differ by broker, so checking the terms is essential. We explain withdrawal rules in detail in the related column.
- The bonus itself cannot be withdrawn, and only profit can be withdrawn under conditions
- When you withdraw, the bonus is reduced according to the amount, or disappears entirely
- Transferring funds between accounts or changing account type makes the bonus disappear
- If you do not trade for a certain period, the bonus expires
- Reaching a trading volume is a condition for withdrawing profit
- 1
Read the grant conditions
First check the eligible accounts, the conditions for being granted it and the expiry date.
- 2
Check the withdrawal conditions
Check how withdrawal is handled for the bonus itself and for profit separately.
- 3
Check the expiry conditions
Check how withdrawals, fund transfers, periods without trading and a zero balance are handled.
- 4
Ask about unclear points before depositing
Ask support about anything vague, and keep a record of the reply.
Common mistakes when chasing bonuses
When growing your bonus becomes the goal, your judgment tends to drift. Many mistakes come from accepting a bonus without reading the terms.
- Choosing a broker by bonus amount alone, without looking at spreads or execution quality
- Trading larger lots than usual to use up the bonus
- Only noticing when withdrawing that the bonus disappears
- Not reading the withdrawal conditions, and being unable to withdraw even with a profit
- Moving accounts and finding the bonus no longer applied
Do not raise your lot size because of a bonus
Avoid raising your lot size just because your bonus grew. Decide the loss you can accept based on your own funds.
Steps to choose a bonus that suits you
A bonus is hard to choose without a purpose. Sorting it out in the following steps reduces the chance of missing a condition.
- 1
Decide your purpose
First decide whether you want to try trading, build up your funds or lower your costs.
- 2
Tell the types apart
Distinguish a margin bonus from a return based on trading volume.
- 3
Check the details of the conditions
Check in the terms whether there is a cushion, the withdrawal conditions, expiry conditions and the period.
- 4
Compare by total cost
Compare including spreads and commissions, not just the bonus.
| Purpose | Type that tends to fit | Points to check |
|---|---|---|
| Want to try trading first | Welcome bonus | Withdrawal conditions and the cap on profit |
| Want to add to your own funds | Deposit bonus | Percentage, cap and whether there is a cushion |
| Want to trade long term and lower costs | Cashback | Return amount and conditions to receive it |
Combining with cashback differs by broker
Whether you can combine a bonus with cashback differs by broker. Cashback return amounts are not yet confirmed, and we will post them on each broker's page at launch.
- Check whether combining is allowed and whether the terms say so
- Receiving a bonus may make you ineligible for cashback
- Trades made with the bonus may be excluded from the return calculation
- We also sort out how to think about combining in a related column
Enter your trading volume and other inputs to check a guide to the return. Use it as a reference when comparing the difference from bonuses in numbers.
Estimate your cashbackFAQ
Q.What types of overseas FX bonuses are there?
Mainly welcome bonuses, deposit bonuses and points based on trading volume. Whether there is a cushion feature also changes their nature. Names and conditions differ by broker, so check the official terms.
Q.What is the cushion feature?
It is a system where, when you take a loss, the bonus works as margin and limits the drop in your own funds. Conditions such as disappearing at a zero balance differ by broker. Note that it does not cancel out your losses.
Q.What is the difference between a bonus and cashback?
A bonus is margin used for trading, and the bonus itself generally cannot be withdrawn. Cashback is a return based on trading volume. Return amounts are not yet confirmed, and we will post them on each broker's page at launch.
Q.Can I withdraw a bonus?
The bonus itself generally cannot be withdrawn, and withdrawing profit can also come with conditions. A bonus can also disappear on withdrawal or fund transfer, so check the terms before you accept it.
This article is for information purposes only and is not investment advice. Conditions may change, so please check each broker's official page for the latest information. Offshore FX and CFD trading carries a risk of losses exceeding your principal.
