Some forex promotions add credit to your trading account that you cannot withdraw. On screen, that credit can make your account look stronger than it really is. This guide explains how bonus credit affects your margin level, why your bonus credit stop-out level may not be where you think, and what can happen to open positions when the credit is removed. It sticks strictly to margin mechanics, so you can judge any offer with clear eyes.
Disclosure: FX Bonus Offers may receive compensation from some brokers or partners mentioned on this site. This does not change our editorial assessments.
Risk warning: Trading forex and CFDs on margin carries a high risk of losing money quickly due to leverage. Only trade with money you can afford to lose, and make sure you understand how these products work.
A quick refresher on margin terms
Before looking at bonus credit, it helps to recap the numbers on a trading platform:
- Balance: your deposits and closed-trade results, minus withdrawals.
- Credit: promotional funds the broker adds, often shown on a separate line.
- Equity: the account’s current value including floating profit or loss.
- Used margin: the money locked to keep positions open.
- Margin level: equity divided by used margin, times 100.
Your broker sets a stop-out level. When margin level falls to that point, the platform starts closing positions automatically. The CFTC’s Learn and Protect resources are a useful starting point if you want more background on leveraged forex risk.
How bonus credit enters the equity calculation
Brokers treat promotional credit in different ways. On many platforms that display a credit line, equity is calculated roughly as:
Equity = Balance + Credit + Floating profit or loss
If credit counts toward equity, it also counts toward your margin level. As a result, the account can sustain larger losses before reaching the stop-out threshold. On paper, that looks like extra protection.
However, other brokers exclude credit from equity for stop-out purposes, or treat it differently depending on account type. Therefore, the first step is always to read the terms and find out exactly how your broker counts it.
Why credit can flatter your margin level
The crucial point is that bonus credit is not your money. You usually cannot withdraw it, and the broker may remove it under conditions set out in the terms. Even so, while it sits in your account, it can push the margin level up.
That has two effects worth understanding.
It can let losses run further
Because credit raises equity, a losing position can stay open longer before a stop-out. That may feel helpful. In practice, it often means more of your own deposit is lost before the platform steps in.
It can encourage larger positions
Higher free margin can make bigger trades look affordable. Yet the position size is still exposed to the full market move, while part of the cushion supporting it can disappear.
A hypothetical worked example
The numbers below are invented to illustrate the mechanics. They do not describe any real offer, and the thresholds are examples only.
Assume the broker counts credit toward equity and sets a stop-out level of 50%.
- Your deposit: 1,000 units of your account currency.
- Promotional credit: 500 units (non-withdrawable).
- Position: 30,000 units at 1:30 leverage, so used margin is 1,000.
| Scenario | Equity at start | Starting margin level | Loss needed to hit 50% stop-out |
|---|---|---|---|
| Without credit | 1,000 | 100% | 500 |
| With credit counted | 1,500 | 150% | 1,000 |
With credit counted, the position survives a larger loss. However, look at what that loss consists of. At the stop-out point with credit, your balance has fallen from 1,000 to zero, and only the credit remains. Depending on the terms, the broker may then remove that credit, leaving nothing.
Without credit, the stop-out would have triggered earlier, with about half of your deposit still in the account. In other words, the credit did not reduce your risk. It changed where the stop-out happened, and in this example more of your own money was lost before it did.
What happens when credit is removed
Promotional credit is often removed when certain events happen. Common triggers in broker terms include a withdrawal request, the end of a promotion period, or a failure to meet trading conditions. The exact triggers vary, so check your own terms carefully.
If the credit disappears while positions are open, equity drops immediately by the credit amount. Consequently, the margin level can fall sharply with no change in market price.
A second hypothetical example
Using the same invented account, suppose the position is showing a floating loss of 600.
- Equity with credit: 1,000 + 500 − 600 = 900. Margin level: 90%.
- Credit is removed. Equity becomes 1,000 − 600 = 400. Margin level: 40%.
- That is below the 50% stop-out level, so the platform begins closing the position.
Nothing happened in the market. The stop-out came purely from the change in how much credit sat in the account. This is why understanding your bonus credit stop-out level matters before you trade, not after.
How to check your bonus credit stop-out level
Use this checklist before accepting any promotion:
- Does credit count toward equity? Find the exact wording in the terms.
- Does it count toward the stop-out calculation? Some brokers treat these separately.
- What triggers removal? List every event that can remove the credit, including withdrawals.
- Can credit be removed while positions are open? If so, calculate your margin level without it.
- What happens to credit at stop-out? Find out whether it stays, shrinks or disappears.
- Is the offer available to you at all? In some jurisdictions, regulators restrict trading incentives for retail clients. For UK accounts, check the Financial Conduct Authority (FCA) for the current rules.
A simple habit helps here. Whenever you check your margin level, mentally subtract the credit and recalculate. That figure is the one that reflects your real position.
Practical ways to manage the risk
- Size positions as if the credit did not exist.
- Avoid requesting withdrawals while positions are open if that would remove credit, unless you have already calculated the effect.
- Keep stop-losses on trades so a broker stop-out is not your only exit.
- Track the promotion’s end date and any conditions that could remove the credit.
For a wider look at how to evaluate offers, see our guides on bonus strategies.
Frequently asked questions
Does bonus credit protect me from losses?
No. It may delay a stop-out, but it does not reduce market risk, and the losses that occur still come from your own balance first.
Why did my positions close when I asked for a withdrawal?
If the withdrawal removed the credit, equity fell and your margin level may have dropped below the stop-out level.
Is the bonus credit stop-out level shown on the platform?
Usually the platform shows one stop-out level. How credit affects it is set out in the terms, so you may need to calculate the impact yourself.
The bottom line
Bonus credit can make margin level look healthier than your own money justifies. Your real bonus credit stop-out level depends on whether credit counts toward equity and when it can be removed. Calculate your margin level without the credit, size positions accordingly and read the terms before you accept any offer.
This article is for educational purposes only and is not financial, investment or legal advice. Rules differ by country and change over time — check the current rules with the relevant regulator and consider speaking to a licensed financial adviser.
