Stock Trading and Other Things

Why do forex brokers give away money when opening an account?

Hi Guys,

I just opened a micro account with an online forex broker, and they give away 100% of your initial deposit when opening a micro account. I just found this suspicious and wanted to know if this is normal, and why brokers would do this?

Thanks in advance!
Would this mean that i have to pay back these US$300, or are they "mine" and i pay them back through the spreads by trading?

Public Comments

1. Because they know they're going to get it back. Same reason why casinos give away free hotel rooms, flights, etc.

When I say get it back, I don't necessarily mean you're going to lose all your money. Forex is high frequency trading, and even if you're successful in your trading they'll make their money back on the spreads.

2. Why don't you close your account and keep the $100 and then open a new account and you keep going until you are a millionaire?

3. What Hops Aficionado said is correct...

But some of them do have a catch, read the conditions for that money.

I had one that you had to pay it back. Needless to say, I did not signup with them.

4. Clients are Gold for them ;)