Don’t Miss Out – Get Your Promotions
Do you remember when pharmacies were giving out free glasses of soda? Probably not, because you would have to have been in Atlanta, Georgia in 1886. John Pemberton’s iconic launch of Coca-Cola is perhaps the first recorded example of promotional marketing – and forever changed the face of the advertising industry. There were other promotional pioneers. John Wedgewood, the famous potter, used to send free samples of his work to well-known individuals. Little did he know he was paving the way for the tidal wave of merchandise that celebrities receive daily today!
Every year for Christmas, many of us will link arms with friends and family and pull backward on a strange candy-shaped bit of cardboard, hoping for a “bang!” followed by a quintessentially pointless plastic present (miniature sewing kit, anyone?). This little festive routine is all thanks to a marketing attempt by an entrepreneur called Cracker Jack. These are perhaps the oldest examples of this type of marketing. Poppycock – says one historian – the history of promotional marketing can be traced back to Ancient Egypt when merchants used their own brand of hieroglyphics on pottery for sale to encourage familiarity among their consumer bases.
Prop firms are no strangers to the beguiling appeal of promotional efforts to boost their marketing. They may not be able to give out “tasters” in brick-and-mortar stores, nor engrave their initials into items on consumers’ mantelpieces for all to see. Nonetheless, there are plenty of ways that prop firms market themselves to traders – and the latter do very well out of these attempts!
When it comes to proprietary trading, promotional marketing is a mutually beneficial endeavor. When used effectively, prop firms will walk away with a larger and more loyal customer base. From the traders’ perspective, prop firms jostling for their stamp of approval (and crucial first deposit) will mean a growing pool of promo codes, discounts, and bonuses. Bring on the competition!
Promotional Marketing in Prop Trading
Prop trading is a fast-paced industry exploding in popularity. Traders are seeking out quality platforms as revenues of capital, with some prop firms offering to fund clients with up to $5 million and a 90% profit share. It is the gold rush of retail trading and prospectors are piling in thick and fast. Where there is high-profit potential, competition will never be far behind, and prop firms are looking for ever more innovative ways to pitch themselves to new clients.
In this article, we will walk you through the types of promotions offered by prop firms. We will run you through the pros and cons of utilizing certain strategies and suss out the best deals out there. In prop firm discounts, as in life, bigger is not always better. Remember to look under the hood of the prop trading platform in general and evaluate for yourself whether the funding on offer meets your criteria.
First off, let us explore the essential if obvious question, why would prop traders use discounts and promo codes? Why give anything away for free?
Prop Firms’ Incentives for Promotions
- Attraction: Prop firms leverage promotions to attract skilled traders who might be on the fence about joining. By offering appealing incentives, they encourage talented traders to take the leap. If you were debating about a certain platform but holding off on taking the plunge on the entry fee, a 25% discount might just push you over the edge.
- Expansion: Promotions act as magnets for both experienced traders seeking better opportunities and curious beginners new to the industry. Therefore, and especially for prop firms who cater to traders of all backgrounds and abilities, a wide-reaching promotion will serve as a type of “catch-all” fisherman’s net – or trawler’s haul.
- Enhancement: Cleverly marketed promotions are an excellent way to increase the visibility of your brand. When the market is as crowded as the prop trading one is, then an effective marketing campaign that sets you apart from the crowd could be your saving grace. Prop firms use not only the promotional offer but the marketing thereof as a way to attract attention to their brand, and certain styles of communication, tone, and platform culture to traders.
- Encouragement: Trading bonuses or discounts motivate traders to remain active, contributing to the firm's trading volume. Stimulating trading activity is the equivalent of a healthy jog – it keeps that blood pumping to the heart of the prop trading firm.
- Strengthening: Promotions often foster a sense of goodwill between the firm and its traders. This can lead not only to more activity from current traders but also customer loyalty and longevity – the holy grail in any industry.
Sure, it may be obvious how prop firms benefit from marketing themselves – but how about you as the consumer, what is in it for traders?
Trader Benefits of Promotions
- Reduced Entry Barriers: It is crystal clear but let us state it anyway: promotions often come in the form of discounts or waived fees making it cheaper for traders to sign up. The reason many traders would be considered a prop trading firm in the first place is that they lack the funds to invest and need the company's collateral. To an already undercapitalized market, discounts or free giveaways altogether will fall on very captive ears!
- Risk Mitigation: Of course, this benefit extends into another one: the less you spend the less risk you take on. Trading with promotional bonuses or discounts helps mitigate risk, allowing traders to explore strategies without exposing themselves to high entry fees or starting costs.
- Profit Potential: A popular prop trading promotion is increased leverage or trading capital. Therefore, by getting behind the right firm at the right time in their marketing roadmap, traders could capitalize on potentially larger profits.
- Learning Opportunities: By lowering the barriers – either of cost or entry criteria, promotions, therefore, encourage more traders to dip a proverbial toe into wider and more varied waters. Encouraged by a promotion, traders might experiment with new markets or instruments, therefore increasing their knowledge, enhancing their skill set, and diversifying their portfolio.
- Encouragement: Entering the prop trading arena with hefty discounts and promotions under your trading belt is a fantastic way to instill confidence and get your best foot forward. With the knowledge that they have a buffer from a promotion, traders may be more confident in taking calculated risks. Prop firms need to generate that trust in traders before the latter will make the crucial first deposit. Spending less at the outset is more than a little encouraging.
As we can see, promotional marketing benefits both prop firms and funded traders. Fortunately for both parties, the end goal – while on the same horizon – is different and therefore they are not reaching for the same pot. Prop firms want a growing customer base of loyal and high-earning traders. Traders, on the other hand, want a trading platform that is trustworthy and transparent and gives them the best possible chances of success.
How exactly they go about marketing themselves to would-be traders will vary from prop firm to prop firm. Some platforms will use one-off discounts, slashing the entry fees by as much as 50%. Others may waive them altogether and encourage traders to try their platforms for free and get a feel for the features and software on offer = hoping this will be enough of a hook. In the next section, we will do an overview of the various strategies deployed by prop firms when they are looking to expand their trader base.
Prop Trading Promotion Strategies
Here are some of the most popular methods used by proprietary trading platforms to increase their pool of clientele:
- Deposit Bonuses: Prop firms may offer traders a bonus when they first deposit funds. From the trader’s perspective, this is an attractive offer, it both boosts their starting capital and provides a cushion against losses.
- Volume-Based Discounts: Another tried-and-tested venture by prop sites is to reward traders for high-volume trading. In other words, traders who reach a certain trading volume within a specified period may qualify for fee discounts or trading incentives. This obviously encourages traders to trade more and harder and increases the trading volume of the prop firm in question by so doing.
- Fee Waivers: Prop firms may temporarily waive certain trading fees. This will clearly lower costs for traders and may draw the line between trading and not trading for interested potentials veering on the starting line over the sign-up fees.
- Referral Rewards: Affiliate Programs are a win-win arrangement for traders and firms. Affiliates get rewarded with commissions and other perks from firms, that benefit from a growing network of referrals signing up to their platform.
- Limited-Time Offers: We have all fallen prey to the urgency of a time-sensitive marketing deal – quickly, get it now before it is too late! Time-sensitive promotions create urgency. Traders hurried into signing up to grab a deal before it expires and often, therefore, choose risk over regret.
- Trading Competitions and Giveaways: Prop trading firms organize regular forex competitions that not only test your trading skills and knowledge but also give you the opportunity to earn. From virtual trading challenges to live trading tournaments, a trader can join a variety of prop trading competitions that cater to the trader's specific style and preferences. As the scope of this article is not to break down forex demo completions, how they work, and how do you optimize your chances of success for more details you can also read our guide on Forex Demo Trading Competitions
Pros and Cons of Prop Trading Marketing
Surely – cheaper is better and the more promotions, discounts, and giveaways attached to a prop firm the easier the decision to register for an account. While saving money is clearly a sensible endeavor, and the satisfaction of cutting costs as a starting trader is not to be discounted, remember that when the promotion ends you will still be trading with that firm. Ideally, you want to be as discerning as possible in your selection. Choose a prop firm that is attractive not just now – for its temporary marketing – but in the long term, for the trading technology and platform features that will boost your chances of success in the markets.
That said, here are some of the general pros and cons of prop trading marketing promotions:
Advantages of Promotions
- Trader diversity: promotions attract beginners and experts alike
- Brand awareness: this marketing will Increase the firm's visibility and create a buzz
- Loyalty: Generous discounts can be seen as a sign of goodwill, harvesting loyalty among traders.
- Volume: Money-saving promotional periods encourage active trading and therefore increase the volume
- Low Barriers: Promotional marketing lowers the financial barriers to traders and reduces risk
Disadvantages of Promotions
- Financial Strain: Excessive promotions could be hard for the prop firm to sustain from a financial perspective (in the short term at least)
- Limited: There is a danger that traders will prioritize short-term gains over long-term growth.
- Opportunism: In some cases, enticing promotions and giveaway periods will attract opportunistic or short-term traders.
- Expensive: High-frequency trading could result in higher costs for the prop firm.
Conclusion
Cracker John and John Pemberton may have carved their faces into the Mount Rushmore of marketing, but not all prop firms will add their features to the hill. Correctly implemented and well-timed marketing strategies can be highly effective for prop firms. An increased client base – but a more loyal one to boot –could make the difference between failure or success for a newcomer prop firm making a name for itself in a crowded industry.
From the traders’ perspective, promotional marketing can be a goldmine – literally in some cases! That said, it pays in more ways than one to be selective. Consider not just the short-term financial gains of a promotional offer but the long-term viability of a future partnership with the prop firm in question. The landscape of promotional marketing continues to shape the prop firm industry with new mountaintops and valleys every day. Whether you end up in a peak of profit or dip of loss remains to be seen. Be discerning in your choice but do take advantage of the generous array of growing discounts on offer!
