In today’s globalized, fast-pacing world, speed is of the essence and time always matters and as they say…it means money. So, if money and more specifically, lucrative business opportunities is what you are after, then starting a forex brokerage may well be your passport for future success and of course profits!
As a foretaste to our much-awaited, comprehensive, all-encompassing and enlightening e-book on the subject matter of launching a forex brokerage, which covers all related matters in great depth and detail, here’s a concise mini-guide which allows you to swiftly get the gist of the whole notion and decide if it is worth your while. It will provide a roadmap to help you start your brokerage business.
Showing no signs of fatigue, the forex industry though not remaining unscathed during world crisis periods has nevertheless proven time and time again its ability to rebound, as well as its resilience, partly aided by authorities across the globe realizing its importance in today’s globalized, interconnected world economy, and taking the necessary measures to restore its normal operations, whenever deemed necessary.
Against this backdrop, the market on online retail forex trading has recorded a huge growth over recent years and this trend is expected to continue for the foreseeable, especially considering that currency trading that may be conducted fully online and even on the go, proves very appealing to increasing numbers of aspiring traders, of all ages and backgrounds, across the globe. In turn, this brings about an increasing demand for online forex brokerages, i.e. those service providers that allow everyday people to gain access to foreign exchange markets and trade them for profit.
The foreign exchange market is the most actively traded market in the world. Trading in foreign exchange (FX) markets averaged $6.6 trillion per day in April 2019 (up from $5.1 trillion three years earlier), according to the 2019 Triennial Central Bank Survey of FX and over-the-counter (OTC) derivatives markets.
Launching a Forex brokerage is an exciting business opportunity, but as with any business, it makes sense in the first instance to do some groundwork on how to become a Forex broker and then compile a forex brokerage business plan, which will include important aspects such as where to register your brokerage and what trading instruments you will offer. You also need to think about whether you should open a brokerage from scratch or opt for a white label solution. The difficulty and complexity of setting up a retail forex brokerage from scratch, has led many key players in the industry to offer white label forex brokerage solutions, which many aspiring new entrants to the market turn to in order to overcome the numerous entry barriers that may inhibit them to enter this lucrative market.
In the world of online retail forex trading, Forex brokers are necessary in order for individual online forex traders to be able to access the market. Forex brokers not only set up and open accounts for traders to trade through, but they also offer full guidance in the process from registering the account, to activating it, funding it and starting to trade live. All the funding and withdrawal options are adequately explained and traders are set to go and ready to place their trades.
Some forex brokers include a Managed Account in their offering, this being a trading account which the broker trades and manages on behalf of the trader allowing the trader to access the market by proxy or via a representative, i.e. indirectly. Access to funding, liquidity and leverage are essential components of forex trading and individual traders cannot have access to these without a broker in the equation. Forex brokers therefore, partner up with various other providers, such as big banks and other financial institutions to be able to offer their trader-clients full access to liquidity, leverage and multiple payment processing options.
As revealed by its name, in online Forex trading, all trading related actions can be carried out online through online trading software, while brokers provide customer support through live chat, email or over the phone.
The services offered by forex brokers to their forex trader clients are wide and varied and cover the entire spectrum of trading activity, including technical assistance, as well as substantial education and training and everything else that could improve the overall trading experience of customers, best meet their needs and requirements and encourage them to trade more. Also, in order to retain their existing clients or to attract new ones, forex brokers often offer various promotions such as bonus schemes and rebates on trades.
In return for their services online forex brokers charge their clients with commission or spreads on their trades.
Are you attracted by the highly lucrative potential of the forex market and think that launching your own brokerage is the perfect business idea, but you are not quite sure what your next step should be?
If you want to become a retail online forex broker, you basically have two alternative routes that you could follow. The first would be to treat this as any other business and undertake the process all on your own, i.e. starting a forex brokerage entirely from scratch and build it from the bottom up. The other option would be to resort to a white label forex brokerage solution, either partial or full, or even a forex brokerage turnkey solution. All options in the second alternative entail the purchase of ready-made solutions, technology and packages, developed by third party solution providers, which make the entire process easier and less time consuming, though at the expense of full independence.
Due to its highly lucrative as well as competitive nature, the forex market is also increasingly firmly regulated, all of which mean that entry barriers for new entrants are getting higher. Building a brokerage from scratch requires the willingness and ability to overcome and supersede such barriers, while opting for a white label forex brokerage solution significantly lowers or diminishes such barriers by default. To help you decide which option suits you best, this mini-guide as well as our comprehensive e-book discuss all relevant topics to allow you to discern what best serves your needs, capacities, capabilities, requirements and vision.
There is more to starting any business than just registering it with the pertinent authorities. And this applies to the case of setting up a forex brokerage as well.
Following the steps showcased in this comprehensive, yet simple, guide on starting your forex or crypto exchange online firm will ensure that your new business is well planned out, registered properly and legally compliant. It was with this in mind that this guide was compiled and it aspires to prove a useful tool for every prospective new broker.
Setting up a Forex brokerage from scratch requires a large amount of startup capital as well as time and effort to set up the business. It is often possible to execute the aforementioned tasks simultaneously, while if done correctly and efficiently, the whole process can take just 2-3 months if you choose the white labeling option. More time will be needed if you choose to build all your brokerage components from scratch, but let us explore each step of the process in greater detail.
To be able to devise your business plan effectively prior to actually opening your forex brokerage, you need to know what your target market is, where you will set up shop, what will be initial and recurrent costs and any other factors that need to be considered. To do so, you need to gather the relevant information through research to ensure your decisions are based on hard facts rather than guesswork and estimates, as this may lead to wrong decisions and jeopardize the long term viability of the endeavor.
A clear plan is essential for success as an entrepreneur, as without a plan it would be impossible to map out the specifics of the business venture at hand and to uncover and bring to the fore any unknown or unexpected factors.
In our effort to help you with all your brokerage needs and to help you take the most wise and suitable decisions, we have done an extensive research on the topics above on your behalf, so here’s what we’ve got to share:
The definition and recognition of your target market is an essential step that many aspiring new forex and crypto brokers often omit because it is both time consuming and painstaking. However, it is imperative to engage into this process to avoid gaps and pitfalls, since identifying your ideal customers is one of the most critical aspects of sales.
Finding your most profitable customer and most lucrative target market entails knowing exactly why you choose to offer a particular product or service and exactly what it is that you are offering. This will help you understand who are the people who are likely to benefit and who are also willing and able to pay to become your customers. Another aspect you should have a good picture of is knowing your competitors, what they offer and how they market it in order to be able to effectively differentiate yourself. In the case of launching a forex brokerage this parameter is particularly important since the landscape is fiercely competitive and most brokers have a very similar offering, rendering it harder to effectively differentiate and compete.
Moreover, having an accurate picture of the key demographics and psychographics of your ideal customers and target market will enable you to better tailor both your offering and the content and method of your marketing efforts, thus greatly increasing your chances for success. Obviously to be valid, your answers to all these questions and the research you will conduct should be based on solid data, either gathered by your or other credible survey agencies and business intelligence experts.
The effective recognition and identification of your ideal customer and target market will in turn help you take another important decision, which is where you should open your forex brokerage and where to register it.
What follows is the break down of the process of defining your target audience so that those already aware of how it is done to be reminded of it and those who don’t to be able to undertake it effectively.
How to Find Your Most Profitable Customer & Target Market
Identifying your ideal customers is one of the most critical aspects of sales.
Simon Sinek, author of “Start with Why”, highlighted that the values of a company and the core reason behind creating a product or service is the basis of the entire marketing and management activities. If you know why you created a said product that means that you have vaguely defined your target market already. What this means is that any product or service you seek to sell should be based on an underlying rationale and when you are fully aware of this, then you are already half way in knowing who this product or service is for, who will find it useful and why and who will be willing to pay to have it and why.
Building on the first point, it is fair to argue that your exact offering is in fact the single most determining factor indicating who the people are that are most likely to benefit from the solution you are proposing, i.e. who would be willing to pay to have it, as well as who are those who actually possess the paying capacity to do so. In short, your core product is the key identifier of your intended target market.
Competitors are a headache when starting any business, but in the case of the online retail forex landscape be aware that this is truly fiercely competitive. It thus goes without saying that you need to know of and have studied well your competitors, their offering and the marketing tactics they employ. This is essential to enable you to differentiate from them and promote your brand as offering something different and unique, otherwise you will stand little chance to effectively compete with and outrank competitors that are long established and enjoy a good reputation and authoritative position in the market, also having at their disposal bigger and better resources than you. When you don’t study your competition well you may take very wrong decisions, for example attempting to become a successful, mainstream search engine, which is almost impossible to even think about when Google is in the game.
Having just a rough idea of your customer only gives you half the picture and hinders your effort to effectively plan your sales and marketing strategy as well as product development. The next two steps focus on drilling down on your target market so that you can obtain more specific and useful information on your target audience. First, you need to identify the key demographics of your target market which include their age, location, gender, income level, education level, family status, occupation etc. Having a clear demographic of your target audience will help you be more effective and efficient when approaching them and more successful in converting them as clients.
It is not just the demographics but also the psychographics of your market that will influence your marketing decisions, sales pitch, communication etc. Therefore, besides getting the information on the demographic profile of your target audience, it is equally important to obtain insights on the following attributes as well:
By having a clear and full picture your efforts will be better designed, more well thought-off and more effectively targeted, rather than generic and one size fits all which is usually a less effective approach to take.
Though finding reliable, undisputable data about many of the attributes described above may be hard or even impossible, remember that is generally not wise to base your business decisions on a hunch or a guess, even an educated guess. In fact, since the initial decisions you take at the planning phase are most likely to influence the entire lifecycle of your offering and venture, it is much better and much wiser, and definitely less risky when you back your intuition and the decisions you take on proper, solid data. To find such data you can refer to credible surveys already conducted or even conduct your own statistical studies if a subject matter is crucial for your own venture and relevant information is not readily available from existing sources. Today, another useful source of information and data are social media networks thanks to their popularity and penetration into the lives of their users.
When you have amassed enough credible information then you can discern and construct an accurate picture of the exact demographic and psychographic profile of the target market that best matches your offering, products and services. If you can afford to spread out your effort and reach and in order to remain flexible for every eventuality, it is advisable not to have just one target market profile but rather concentrate on a couple of combinations of characteristics and focus and tailor your efforts towards them.
Following this identification and setting of the target audience(s), you then need to start customizing your offering, messages, image and marketing exactly in order to be more appealing to that specific set of people. An important part in this process is customizing and tailoring your content as well, and streamline all your communications and messages. Following this, you can and should of course assess and evaluate the effectiveness of your strategies and according to the obtained results make the necessary changes towards full optimization.
Once you become a trusted, credible, authoritative presence in your field, having gained the preference of customers in your target audience, it will then become easier to expand your reach and attract new customers, while retaining the existing ones by keeping them happy.
As we have seen, in order to effectively attract clients, you will need to have a pretty accurate idea of who your target market is and what characteristics they share. As forex trading is a business governed by different regulatory obligations in each jurisdiction, it is important to be able to define the location of your target customers, in order to decide which is the best jurisdiction for you to register your forex brokerage in. Make sure you identify the several jurisdictions available and compare their requirements and overall approach towards brokers under their authority in order to be able to determine which licensing requirements you can fulfil and which setting best serves your own goals and aspirations as an aspiring market participant.
The boom of online retail forex trading and its encompassing traders from all over the world has led many regulatory authorities across the globe to tighten their grip and implement very strict sets of rules and regulations that often lead regulated brokers to their limits and are stifling their efforts for survival in the competitive landscape of online forex trading. This reality has given extra impetus and has attracted a renewed interest to the issue of offshore licensing of a forex brokerage. Below we will highlight the relevant issues and discuss what would be the best offshore jurisdictions for setting up a Forex brokerage.
The modern globalized era where the use of the internet has penetrated most human activity across the entire globe, provides a fertile backdrop which greatly facilitates the emergence of online businesses that are aiming at a global audience. The field of online forex brokerages that allows traders from all over the world to trade the foreign exchange market from the comfort of their office or home or even on the go via their smart mobile device, has greatly benefited from technological advancements and developments, and it is a field that is recording exponential growth.
With a daily turnover of more than $6.6 trillion it is no wonder that forex trading attracts an ever-growing number of retail forex traders around the world, wishing to grab a piece of the pie and attempt to benefit from the remarkable opportunities and profitability prospects offered by the largest financial market in the world.
There are already thousands of online forex brokers around and there also new entrants to the market on a daily basis, lured by the field’s lucrative nature. What it also true however, is that not all brokers are equally successful and many fail to find an edge over the fierce competition, thus leading to their demise and ousting from the market. If you feel that you are ready to jump on this bandwagon and would like to get your own offshore forex brokerage, then act fast and do not miss the opportunity.
Deciding where to base the brokerage is a decision of huge significance, especially since this decision is accompanied by a fair deal of paperwork and legal framework concerns and hassles. Choosing the right jurisdiction from the onset is crucial for your future success and it also determines what sort of requirements, legal, financial and other you will need to meet before you actually starting marketing your offering and acquiring clients.
Many new brokers opt for established jurisdictions such as the UK or Cyprus, while many others are convinced by the lower cost and greater ease in the process and opt to establish their brokerage as an offshore corporation in several offshore locations that offer this service. The offshore registration option has gained much traction and popularity as more established jurisdictions have adopted much stricter regulatory frameworks, while offshore registration usually means much lower tax rates for brokerages and very low or non-existent restrictions on the leverage they can offer. In short, offshore licensing is faster, simpler, more affordable and less demanding, allowing you to quickly set up shop.
Jurisdictions are classified in five broad categories, with those in the A list being those with the strictest regulatory framework and highest reputation, moving down to list E which includes most offshore jurisdictions where a forex brokerage license is neither required nor granted. What is useful to remember regarding the different levels of jurisdictions available is that a great number of brokerages do start out as unlicensed and registered in level E jurisdictions, and climb up the ladder as they go along. In short, your preferred country of jurisdiction should be chosen based on how much money you can devote as start-up capital, what type of brokerage you wish to open and which valid reasons you may have for going offshore.
The option of setting up an offshore forex brokerage is gaining in traction and popularity because such an arrangement has two distinct advantages:
Most of these countries where you can register your offshore brokerage are what are known as tax havens and impose tax rates that are practically at zero, with all the benefits that this may mean for your bank account. Provided that the jurisdiction is not any black or grey list by international organizations and watchdogs, such as the OECD, then you are pretty safe to set up shop there and enjoy the favorable tax regime.
The leverage offered to your clients during the trading of foreign exchange directly impacts your profitability and chances for customer attraction and overall success. By being established in any offshore venue, forex brokerages do not have a leverage restriction on their services. By being able to offer any leverage you want to your clients you have more room to maneuver, while not having to worry about following strict financial regulations allows you to concentrate on offering your customers the best possible user experience.
Before attempting to decide under which jurisdiction you will open your forex brokerage, answering the questions below will help you obtain a guideline to help your decision.
Once you have the answers to these questions, then you should examine the different categories of jurisdictions available, to find the best match between what they require, what you can meet and which set up would be most suited for your own case. Read our dedicated blog post and brief outline of the main categories of jurisdictions, starting from those with the highest reputation and stricter regulatory framework that highlight the relevant issues and discuss what would be the consideration points regarding how obtaining forex broker license and the egulatory requirements.
But simply picking one from the list provided will not do the trick! What is needed is a thorough and in-depth analysis of each jurisdiction’s characteristics and how they fit with what you have, what you need, what you want and what you are aiming at. Whatever you do, remember to never base your decision solely on which jurisdiction is cheaper to get to, as cheap is almost never the best solution, in forex as much as everywhere else.
Before attempting to open a forex brokerage it is essential that you ensure that you have access to sufficient not only to meet the capital requirements of your chosen jurisdiction, but also to cover the initial set up and running expenses, including technology expenses, salaries, equipment etc. Moreover, it would be wise to have enough money at your disposal to back the running of the brokerage at least for a year, allowing you enough time to launch properly and build a solid customer base through establishing your presence on the market.Other issues that merit your consideration at the initial stage, pertain to the actual establishment of your company, including not only the obligations set out by regulators, but also other practical matters such as setting up the proper access to corporate bank accounts, human resources matters including the proper staffing of the brokerage and properly equipping the brokerage’s physical location. Of paramount importance is also the choice you will make between the four available brokerage models under which your brokerage will operate. The four models, namely the market maker model, the agency or STP model, the ECN model or the hybrid model, all come with different characteristics and their distinct advantages and disadvantages, especially since some of them also entail a conflict of interest, when a broker trades against its customers and profits from their losses. The model you choose determines how transactions are executed and how your fees are determined, be they commissions or spreads. Whichever Forex broker model you decide to go with, you also need to find a counter-party/ technology partner who is flexible and has a strong structure in place that can be adapted to any business model that your retail brokerage would implement, allowing you the liberty to choose the most suitable amongst all the available options. Moreover, you need to ensure that your brokerage setup also supports Introducing Broker (IB) and Money Manager (MM) infrastructures, as these are some of the most effective methods to increase your trading volume and also have the added benefit of not incurring ongoing costs. Finally, there are some notions that are very significant in encouraging customer loyalty and trust and in order to ensure that your endeavour will have high success chances, you need to take these into account right from the onset. These pertain to achieving the maximum possible transparency in your operation as a forex brokerage, through partnerships with robust, credible and reliable banks, liquidity, payment processing and technology providers as they can ensure the real time execution of traders and accurate and transparent trade reporting tools. Moreover, you need to ensure the safe, secure and confidential handling of all customer data, ensuring they don’t fall into the wrong hands, while at the same time ensuring and effectively securing all client funds, through keeping them in segregated accounts as many watchdogs stipulate or through any other available means.
Most aspiring new forex brokers face the bigger challenges during the initial work and formalities required for the first time establishment of their company. The reason for this is that this initial phase entails the clarification of the legal framework under which the business will be governed, the establishment of corporate relationships with banks, prime brokers and other necessary service providers, as well as the very crucial step of mapping out and deciding on the brokerage’s own workflows and processes. Below are a few of the most important steps you should follow at the initial stage of setting up your own brokerage:
Register and get a license for your Forex brokerage company in an onshore or offshore jurisdiction, whose set of governing rules is compatible with your budget, the target market you have decided to focus on, as well as your own business’ specific requirements, goals and aspirations.
Open your corporate or business bank account, through which you will be servicing client deposits, as well as executing the financial aspect of company operations, though many jurisdictions demand that client funds are fully segregated. In any case due to the nature of the specific business, it is impossible to have a forex brokerage without access to a corporate bank account from a reputable banking institution.
Even though, as implied in its name, an online forex brokerage conducts its operations online, a physical location would still be needed to at least house your core staff. Consequently, you will need to buy the necessary fittings and office equipment in order to be up and running and be prepared to cover the associated cost of buying desks, chairs, computers, telephones etc. If your budget allows it and your business model prescribes it you could even rent a bigger space to allow for face to face meetings with important clients, or even training rooms to offer traders real life training on trading techniques and secrets.
Though at first you may assume multiple roles within the brokerage yourself, provided you have the skillset needed, your brokerage will fare better if you hire the right people for the right jobs from the beginning. This will allow you to run the necessary background checks to ensure you are indeed hiring the best and most suitable people, and will also allow for the proper training of the staff on your specific brokerage systems while, at the same time, allowing them to build a close-knit team amongst them and share the same values and goals from the beginning. The initial positions you should cover should at least include marketing, sales and customer support officers.
Under current market conditions, there are four business models that Forex brokers can adopt with each of these having its own unique characteristics and all of them having distinct advantages and disadvantages. Let us have a brief overview to help you decide which suits you best:
Market Maker or Principle Model: These brokerages use the B-book method (i.e. assuming the risks derived from clients’ trading activities on the broker’s own books). There are many brokers who adopt this particular model since it comes with higher profitability, however it may be seen as a double edged sword, since when traders find out how it works they may decide to leave due to the conflict of interest that emerges. This conflict of interests between you and your clients if you choose to operate under this model, results from the fact that that you directly profit from their own failures, while you can also use the available technology to turn the odds against them and in your favour, for example by using plugins that delay their timely market entry or exit, or even use software to automatically hedge against your traders, taking into account that 95% of traders end up failing.
Agency or STP Model: STP short for Straight Through Process, is a model where all trading activity is processed through a reputable counterparty. This is also referred to as the A-book model. The reputable counterparty could for example be a prime broker or an established liquidity provider. The STP is a dealing desk model that works on automated order flows. Under this model a conflict of interest may also arise, in the cases where brokerages that claim to be a “non-dealing desk” or “direct market access” broker and market their services under this assumption, use bots instead of actual liquidity. This Forex model requires a higher spread cost in order for adequate profits to be realized, which is another turnoff for potential traders, as the cost for them rises.
Hybrid Model: This refers to the cases of brokerages which operate under a combination of both the market maker and agency-based models, based on certain risk criteria. This combo, hybrid model allows many successful brokers to capitalize on the advantages of both the A-Book and the B-Book trading models. Some traders are wary of the conflict of interest present with market making brokerages, while others are only looking for the lowest possible spread. By combining the two you are able to provide an even mix and the best of both worlds for you as well as for your trader-clients.
Electronic Communications Network or ECN Model: Although both the STP and the ECN models are technically A-Book methods, the difference between STP and ECN Forex brokers is that the former send your order to a third-party, while the latter match the trader’s order with another recipient in the market, (i.e. buyers with sellers and vice versa). That recipient could be a bank, or any other market participant. After being introduced just over 10 years ago into the equities market, ECN brokers have gained significant popularity and traction for being a more natural trading environment. The network makes it to where no one dealer in control of the quotes could ever go, as it is widely and highly accessible. The spread is usually around half a pip, but the trader is paying a commission, which can be a disadvantage to any clients who are scalping the markets.
Whichever Forex broker model you decide to go with, you also need to find a counter-party/ technology partner who is flexible and has a strong structure in place that can be adapted to any business model that your retail brokerage would implement, allowing you the liberty to choose the most suitable amongst all the available options. Moreover, you need to ensure that your brokerage setup also supports Introducing Broker (IB) and Money Manager (MM) infrastructures, as these are some of the most effective methods to increase your trading volume and also have the added benefit of not incurring ongoing costs.
Transparency is an important notion and a factor that encourages customer loyalty and trust, thus quality brokerages should aim to operate under full transparency. To be able to achieve this however they have to partner up with the right banks, liquidity, and technology providers as it is through them that all important information passes through to ensure that trades are executed on a real-time basis, while trade reporting data is accurate and complete.
Ensuring that the data of clients, including their personal information and account details remains safe and confidential is of extreme importance and having truly reliable and transparent partners enables you to maintain full ownership of such client data. This data is thus not in danger of being shared with or sold to any third party, especially your competitors.
On the down side, in the case you are using a forex white label solution, especially if you choose not to accept customer deposits directly, then attaining such transparency is problematic since your customer data is not directly in your control, but their data and transactions are being processed by the white label solution provider.
Though it is still possible to operate as an unregulated broker, it is highly recommended that you do proceed with regulation in a reputable jurisdiction as this will mean that you will have to abide by a set of rigorous rules, regulations and obligations, compliance with which will bring more safety and security for your clients. One example of such an obligation is to keep customer funds completely segregated and thus completely secure. Each jurisdiction and watchdog has different regulatory requirements and to know what is expected in each one you can access all the relevant information on the website of each watchdog.
Even when opening your forex brokerage from scratch and not resorting to ready-made solutions in the form of a white label or a turn-key brokerage service, the endeavour is by no-means an one-man show, thus you need to choose several partners to pull it all through and these partners need to be chosen carefully and wisely and following a thorough research process to ensure you end up partnering up with those that best suit your needs and requirements and are more likely to lead you towards success.
From the bank that you will chose to open your accounts, to the people designing your forex website or the providers that process your broker payments and those offering you the much needed liquidity, there is an abundance of partners to choose from and many comparisons to be made so that you take the correct decisions. In the following sections, you can find a brief overview of the various types of such partners you will need to seek and points to consider when making your choices.
The health of your forex brokerage is closely tied to the effort and good work that will go in the design and development of your forex website, since being the cornerstone of your presence online as a brokerage, your website is as important as the shopping window in any brick and mortar establishment. As such then, you should give it the attention and importance it merits and not settle for a solution of inferior quality as a poorly designed and developed forex website will have a direct negative impact on your brand image and reputation. There are certain features which are essential for any good forex website and these include simplicity and clearness that will help customers make their decisions in an inviting environment, a catchy and memorable visual identity that will make a lasting impression and help with brand recognition and visibility, being fully search engine optimized that will boost rankings on SERPs and translate as signs of reliability and trustworthiness in the eyes of traders, as well as ample opportunities for customer feedback which enhances both transparency and user-engagement.
Though many aspiring forex brokers may be tempted to build their website on their own or in-house, it is perhaps better that this is outsourced to experts or at least that experts be hired in-house to handle this task. This is because a forex website is not just another website and properly designing and building it entails relevant experience as well as a solid background in and understanding of the retail forex market, how it works and what it requires. By assigned the development of your forex website to a reliable partner, you will have a better site through which to operate from and more time on your hands to address other aspects, such as developing and differentiating your brand and properly marketing it.
Read our dedicated blog post and find out How to Build a Winning Forex Trading System and Website and the difficulties that may arise.
Having an efficient CRM plays a pivotal role towards the success or failure of any forex brokerage venture, since Customer Relationship Management (CRM) is a technological solution that enables the efficient and effective management of the entire spectrum of relationships with clients, from one single point. Having the right CRM in place can do wonders in terms of boosting both sales as well as overall staff productivity, since it caters for the easy and efficient organization of all contacts, leads and customers as well as providing invaluable intelligence and understanding as to their activities, preferences and behaviors. The nature of the forex trading market itself and the fact that it purely runs and solely depends on data, and this data differs for each individual and for each transaction at every different level, renders the management of such data extremely complex, thus creating the need for more intricate and elaborate forms of CRM for forex brokerages.
Another characteristic of the forex brokerage business that enhances the importance of a CRM is the fact that most forex brokers essentially use the same or very similar trading platforms and the range of services they offer is almost identical. This makes it difficult for them to differentiate themselves adequately from their competitors and stand out from the crowd in the eyes of potential customers. Their CRM is thus one of the few areas where they can actually achieve this needed differentiation and effective and efficient CRM practices can have a hugely positive impact on the overall success of any forex brokerage endeavor. The quality of a forex CRM solution will depend on the expertise of its provider. Therefore, before choosing the CRM solution for your own forex brokerage, make sure the people developing it have a solid background in and in-depth understanding of the forex market as a whole. They should know all about the forex trading platforms and how they work, as well as knowing all about the roles and behaviors of all parties and partners involved in the trading process. This knowledge and understanding is what enables a forex CRM solution provider to come up with solutions that only cater to the core needs of a brokerage, but also take into consideration the overall needs of the venture and offer a solution that is easily compatible, scalable and adaptive to future needs as well as easily integrable with other aspects of the business.
Obtaining the best and most well-suited CRM for your forex brokerage will equip you with a much better understanding of the needs, expectations, demands and requirements for your clients and put you in a much better position to be able to cater for them and meet them. In turn, this will lead to improved brand loyalty. Moreover, the CRM will make client acquisition more efficient, while marketing efforts will be more effective and better targeted, focusing on more accurately identified targets that bring better prospects and eventually lead to greater revenue growth.
Read our dedicated blog post and find out Why is Forex CRM so important and How to choose the best Forex CRM.
Choosing the right trading software and platform through which your forex brokerage will operate is indeed a crucial decision and making the wrong choice could seriously hinder your chance for forex brokerage success. The trading platform is also directly linked to the kind of experience your customer/traders will have when performing trades, so your choice of platform should be made not only according to your preferences, requirements or rationale as a broker, but also keeping in mind the needs and wants of customers as well and how best to serve and accommodate them.
Putting aside the option of building an entire forex trading platform from scratch on your own, which would mean a lot of time, money, effort and technical expertise, there is already a huge variety of trading platforms around that you can chose from, developed either proprietarily by other forex brokerages or by third parties. Below is a brief overview of the most popular forex trading platforms, their advantages, disadvantages and key features.
Although every user has his or her personal preferences and requirements on how the ideal trading platform should look like, there are still some universal criteria to be taken into account when choosing a trading platform and software for forex trading purposes:
Intuitive and convenient interface, various settings and visual parameters – all these affect the perception of information and make the trader’s trading experience and customer journey more comfortable. This is why a good quality, highly responsive interface is a must.
Functionality refers to the various features and functions of a trading platform, which include but are not limited to: the number of trading instruments, available timeframes, technical indicators and charts, access to analytical tools for fundamental analysis, economic calendar, newsletter and mailing services, as well as automated trading software (trading robots/expert advisors). Having as many such functionalities as possible which enhance the trading experience is also critical for a good trading platform.
All the available trading platforms ensure security and privacy, but these two parameters also largely depend on the brokerage that offers the software up for trading. In addition to the industry standard 128-bit encryption, the MetaTrader 4 platform for example, also uses supplementary security measures to protect the transmission of data when performing trading operations in the form of the RSA electronic digital signature encryption algorithm.
This is perhaps the most vital of the key parameters to consider when choosing a trading platform. Order execution speed and uninterrupted flow of quotes in a trading terminal are essential for any trader irrespective if they trade in the Forex market, or other types of financial markets. Time is one of the most critical resources for a trader and it could play a critical role in the outcome of a trade. The trading software should respond instantaneously, while if there is a delay or the terminal is slow, this may affect the update of quotes and trading charts, which, in turn, can lead to wrong trading decisions and heavy losses.
Most trading platforms are compatible with all modern operating systems (Windows 7 and higher). Not all of them, however, run on Mac OS or Linux. Compatibility with and availability on smartphones and tablets is of key importance for traders, especially with the widespread use of mobile internet that means that more and more people go online and trade while on the go. The mobile version of the trading platform also allows users to keep track of the latest market events and make timely trading decisions, something which most traders will highly value.
Most traders often choose their preferred trading platform based on the trading experience they have had on one and also on their level of experience as traders and knowledge of trading as a whole. This means that novice traders find it more difficult to make up their mind about which platform they prefer. As mentioned already as a broker you need to keep your clients’ needs in mind when selecting your trading platform, so here’s a brief presentation of the most popular trading platforms to help you compare accurately and choose wisely.
Ninja Trader is one of the most well-known trading platforms and its used by many brokers and their traders globally. Via this particular platform one can trade not only Forex and CFD but also stocks, futures and options. The Ninja Trader provides its users with a user-friendly environment where they can test trading strategies and indicators, since it offers extensive historical trade data with access to tick-by-tick, minute and daily charts.
The main advantages of this platform are stability and high performance, thanks to its comprehensive market analytics tools, while its main disadvantage is that is does not offer an iOS or Android version. The basic version of the platform is free and though it has a limited set of functionality, it is adequate for independent trading and includes the basic features of the platform. Traders may also buy or lease the version with extended functionality (such as OCO orders, order modification, custom indicators, trading strategies and much more), with leasing prices starting from $50 a month.
NinjaTrader’s workspace is conveniently customizable, allowing users to freely arrange all charts and data on their screen however they like. Unlike other platforms that only allow the testing of automated strategies, NinjaTrader comes with a built-in Strategy Analyzer, which allows the analysis of your strategy and trade data using Sharpe Ratio, Profit factor and other tools. Thus, it is most suitable for seasoned, experienced traders with advanced trading skills.
The cTrader platform developed by Spotware Systems offers both automated and manual trading for Forex and CFD and it is accessible via both desktops as well as mobile devices. In fact, the cTrader Web version is configured to be compatible across all mobile devices, such as smartphones and tablets, through all popular web browsers. The platform provides custom indicators and strategies, while its users are also able to download and use free user submitted indicators and cBots from Spotware’s cTrader Developer Network. By allowing simultaneous order processing, ultra-fast execution speeds are ensured, which is especially appreciated by those traders preferring scalping and day trading.
The cTrader’s trading suite offers 70 technical indicators, adjustable to any time zone. Moreover, the fact that it supports the popular C# programming language, renders it more versatile than platforms based on other languages, such as MetaQuotes’ MQL. Flexible, efficient and packed with built-in features that improve both the trading experience and risk management, this platform may also be integrated with many other services, such as those distributing analytical reviews, trading statements and trading signals. Switching to cTrader is smooth for any trader, since the software can be easily and swiftly downloaded and comes with a detailed user guide.
cTrader is also completely customizable in terms of look and feel allowing traders to choose between optional color themes, including more relaxed light themes and stylish darker skins.
ZuluTrade Considered an auto trading platform, ZuluTrade is in fact a social trading platform, made up of a community of traders who trade on live accounts, through different brokers. Such traders are essentially signa providers, since they are prepared to share their trading strategies and be copied. The other side of participants in ZuluTrade are the followers of these traders, usually inexperienced traders who seek to copy the trades of experienced traders in the forex and financial markets. The Zulutrade Alchemy service, is a new feature that displays Traders’ portfolio combinations and overall performance, to help one assess and evaluate the effectiveness of copy trading as offered via this platform.
The hordes of signal providers on ZuluTrade may be sorted based on profit percentage, maximum drawdown, ROI, the range of traded instruments and may other factors, such as who provides videos that describe their trading strategy. The copying of trades can be done either via live accounts or even via demo accounts.
Every signal provider’s profile displays their performance results, including how much profit they have made, as well as a detailed analysis of all trades they performed both in all currency pairs and in each pair separately. Being a social trading, community trading platform ZuluTrade users are able to exchange opinions and offer comments and feedback on trading strategies directly on a signal provider’s profile page.
Despite efforts by brokers and other third parties to develop top notch trading platforms and software, the MetaTrader 4 by MetaQuotes remains one the most popular trading platforms today, the closest there is to an industry standard in the field. Allowing Forex, CFD on futures and stocks trading, it also offers its users a wide range of tools for technical analysis and real-time financial news and indicators. The MT4 is fully compatible with all web browsers and all operating systems (such as Windows, Mac OS, Linux), whilst also being available on iOS and Android. Besides trading, users can test their strategies on historical data, create and modify indicators or scripts for automated trading, look for chart patterns and figures using various analytical tools, and much more.
The MetaTrader4 Mobile version comes with all analytical and trading functions of the desktop version, though it is not possible to download and test expert advisors and signals and view the corresponding quotes’ archive from one’s mobile device. Thanks to its simple and intuitive interface, as well as the fact that it perfectly and seamlessly combines convenience with functionality as well as superb quality services for both algorithmic and independent trading, the MT4 rightfully enjoys the top position in the preference of brokers and beginner as well as seasoned traders alike.
The MetaTrader 5 is a revised, state-of-the-art multi-asset platform, popular among traders much like its predecessor, the MetaTrader 4. The upgraded MT5 platform comes with advanced trading functions and superior tools for comprehensive price analysis and algorithmic trading, trading signals for copy trading, a wide range of indicators, real-time news feed, as well as a separate accounting of orders and trades, a distinct feature that requires two accounting systems; netting and hedging.
What this feature means in essence is that through the netting system all orders on the same instrument are compiled in one position, while through the hedging system it is possible to have having multiple positions per symbol, including the ones opened in opposite directions, and each position is being recognized as separate. Traders get advanced monitoring options, such as monitoring the Stop Loss and Take Profit levels, as well as profit for each position. Instant notifications of important events are given through an alert system, while the MT5 also comes with an extended set of trading timeframes, as well as a built-in economic calendar.
The interface of the MT5 is similar to that of the MT4 and spotting their differences is not that easy at least at first sight, though the MT5 is significantly upgraded and offers more advantages. Such improvements between the two include changes to the Strategy Tester by allowing Expert Advisors on multiple currencies and identifying the correlation between them, as well as much clearer and more detailed graphical display of test trading results.
Despite these and other advantages however, many traders are still cautious about using the MT5 and it has not managed to surpass its predecessor the MT4. This can be partly explained perhaps by the fact that the additional features are attractive and useful mostly for seasoned traders who can make better use of them, while less experienced, novice traders, as well as occasional traders, all feel safer and more comfortable to trade in the familiar environment of the MT4, the platform that they have come to know and trust.
In a nutshell, choosing the right trading software and platform through which your forex brokerage will operate is a crucial decision, especially given that the trading platform is also directly linked to the kind of experience your customer/traders will have when performing trades, so your choice of platform should be made not only according to your preferences, requirements or rationale as a broker, but also keeping in mind the needs and wants of customers as well and how best to serve and accommodate them.
Putting aside the option of building an entire forex trading platform from scratch on your own, which would mean a lot of time, money, effort and technical expertise, there is already a huge variety of trading platforms around that you can chose from, developed either proprietarily by other forex brokerages or by third parties. Each of these comes with their own set of advantages, disadvantages and key features, which you will need to explore in order to make the wiser and most appropriate choice.
When looking for the right trading platform, make sure you choose one with a high quality interface, a rich functionality, a high degree of reliability and security, a robust and proven performance and an across the board compatibility.
As you can see, there's a lot to consider when choosing the best Forex Trading platform - but MetaTrader 4 and MetaTrader 5 frequently top the list for the best FX software. They are time tested, and have been proven to work over and over again.
A comparison of the Metatrader 4 and Metatrader 5 trading platforms. Discover the key differences between Metatrader 4 and Metatrader 5. Read our dedicated blog post and learn how to decide which forex trading platform should you choose.
Ensuring adequate access to liquidity through a reliable liquidity provider is another vital consideration for any new forex brokerage and the importance of the liquidity provider for any forex brokerage cannot be stressed enough, since market liquidity is such a key, critical, integral factor for the forex market’s existence. Without a liquid market, the forex market would not be able to enable profitable transactions to occur, while greater liquidity is also crucial in ensuring that the flow of transactions is smooth and the pricing offered to traders is more competitive.
The liquidity provider acts as a middleman in the securities markets. The liquidity provider's role is to act as a professional market maker who makes exchange rate quotations to others ensuring that buyers and sellers have on-demand access to the securities they represent. To achieve that, the provider may simultaneously buy and sell shares of the security, keeping it "liquid" or available. This being said, it should also be noted that are in fact several participants in the forex market who directly contribute to the provision of liquidity by increasing the recorded transaction volumes. Such participants are central banks, big commercial and investment banks, hedge funds, multi-national corporations, retail forex brokers, high net worth persons, even individual retail traders, without the list being exhaustive.
Read our dedicated blog post regarding The crucial role of a liquidity provider in the forex market and learn about Things to consider when choosing a Liquidity Provider .
Serving as an intermediary between a consumer and a supplier and, in the case of forex trading, the channel through which a brokerage can pay to and receive from clients, electronic payments, payment service providers are another essential component of your endeavor to set up a forex brokerage at it is through their own services that you will be able to execute all payments and offer different deposit and withdrawal methods for your clients to choose from. This is an aspect to which potential customers pay particular attention, so you need to ensure that your payments solution provider is honest and reliable, allowing you to effectively compete in the market. Another point to keep in mind is that if you are going to include cryptocurrencies in your offering of tradable assets, then it would also make sense to integrate a cryptocurrency payment gateway that will enable you to send and receive crypto payments online.
The implementation of a robust payments system is a task of immense importance for the smooth functioning of any new business, but in the case of a forex brokerage it becomes even more vital, since no brokerage could properly function or survive without having in place such a payments system and the backing of a reliable payments system provider, which ensures good fluidity, conversion and cost efficiency. As the forex landscape is varied and diverse, habited by vendors with differing needs, so is the PSP spectrum, including several providers who offer different types of services. Thus, finding the perfect match is a decision that needs careful consideration and ultimately depends on the requirements of each brokerage business.
Read our dedicated blog post regarding The crucial role of a payment solution provider in the forex market and learn about things to Consider When Choosing a payment solution provider.
After selecting the right technological and other partners essential to allow you to launch a brokerage, you will need to proceed with the remaining steps pertaining to the actual setting up and launching of your forex or crypto-exchange brokerage. This definitely includes hiring your team and setting up the physical location of your office, though, especially at the initial stages, this can be replaced with a virtual office.
As a minimum, a brokerage needs IT-personnel, financial personnel, customer support team, marketing and sales teams, as well as compliance officers. At the beginning when there is low trading volume some of these roles may be executed by managing partners and one employee may combine several roles, given that he or she has enough qualifications. Most likely you will need to set up a physical office location, although in the startup culture this step can be replaced with a virtual office.
Managing a brokerage requires a number of roles. You will need to have at least a compliance officer, client support, sales, accounting and marketing departments. Staffing is also essential as it will pretty much determine your success in the long run. The salary levels in the FX industry tend to be quite similar to those in banking.
Ideally you should start with employing a few sales people that will be responsible for converting your leads into actual clients. Then, you should make sure that your operations are running smoothly, hence focus on proper support officers, compliance officers and financial managers.
Last but not least, get some high end marketing specialists. Even one is enough at the beginning, focus on quality rather than quantity.
It is advisable to start the staffing process even before the office is ready, as you would want to get as large a pool of quality candidates as possible.
Once your team is ready and all chosen technological partners have done their part, you will be ready to enter the crucial pre-launch phase where all systems will need to tested to ensure all processes will run smoothly and seamlessly and most importantly in a secure manner. At this stage your brokerage will be ready to go live and begin with full scale marketing efforts and client acquisition.
Allow enough time to test everything before your brokerage goes live. The platform, payment processing systems, the terminal, the app (if you have one) – everything needs to be tested several times, preferably by professional testers as well as by focus group of your potential customers. During this time, you may also choose to train your personnel, especially the customer service department.
You can launch your initial marketing campaigns and start trading with a small group of clients as a test.
Once you are confident enough in your systems and your staff it’s time to move forward and fully scale your marketing efforts to acquire clients. As you transition into a full-scale marketing campaign and the client acquisition process begin, assess the development of your lead generation, conversion and retention efforts, monitor your profitability, and look for potential opportunities for growth, including a new mix of financial products and services.
The forex landscape is fiercely competitive and could well be characterised as a maze that you will need to effectively navigate yourself through in order to reach the exit and meet with success. To achieve adequate differentiation in the field of online forex brokerages, to ensure client conversion and retainment and to maximise the chances for the long-term health and growth of your business, your best bet would be to make use of forex tailored and forex specific digital marketing services, which incorporate the latest digital marketing tools and strategies, as well as SEO services, designed specifically with the specificities of the forex industry in mind.
The deployment of effective digital marketing strategies and methods for the promotion of your forex related endeavor, through the help of experts in forex digital marketing will allow you to achieve increased efficiency and savings in both time and money, enable you to cover and target the market of your choice, provide you with marketing options that can be measured, analysed and corrected accordingly and greatly aid in the effective conversion of leads.
Forex digital marketing also includes Forex SEO, Forex PPC, Forex Social Media Marketing, Forex Email Marketing, Forex Reputation Management, all of which are designed with the specific needs of a forex business in mind and combine to increase visibility, exposure, traffic, engagement and ultimately dealing to increased Conversion Rate Optimization. Every forex, cfd and cryptocurrency brokerage stands to benefit greatly from purposely and successfully designed and executed digital marketing and SEO strategies and efforts that are delivered in the form of forex content marketing, dedicated forex search engine optimization and other available methods such as promotion through affiliates.
Our dedicated blog post regarding Forex Digital Marketing Strategies for a New FX Brokerage is your definitive go-to guide to help you find your way around the maze that is the world of Forex digital marketing.
Because the setting up of a Forex brokerage from scratch involves a series of processes that are both complex as they are time consuming, many aspiring brokers choose the forex brokerage for sale approach instead. Using the correct terminology, this is known as a white label solution, based on forex brokerage software, developed by another party, which has already been thoroughly tested and proven to work. A big advantage of using a white label solution is that it saves brokers the trouble of dealing with technical requirements, implementation difficulties and ongoing maintenance worries.
Another obvious plus of Forex white label solutions are the significantly lower operating expenses on the whole. Paying for a usage license costs much less than developing a solution on your own, while in the case where you do not directly process the trading operations and this is done by your white label provider, you also forgo the trouble and cost of complying with capital requirements.
Through a partnership with an expert in white label forex solutions, such as Start-Business-Online, you can benefit from the implementation of a professional, ready-made solution, meaning you can start your own brokerage in a matter of a few weeks, while at the same time avoiding the several pitfalls associated with setting up a brokerage from scratch.
The increased popularity and growth recorded in the online financial trading environment, provides aspiring brokers with two equally attractive and potentially lucrative options:
A Forex turnkey solution emerges as the ideal opportunity for those seeking to start a forex brokerage business, as it allows them to do so quickly, with significantly lower costs and still be able to on-board the latest technologies in order to effectively meet client demands. It is much more cost-effective and efficient to buy a white label solution, rather than to develop new software from scratch, and this solution is equally effective in persuading existing clients to remain with the broker, as it is for attracting new clients.
Moreover, choosing a Forex Broker Turnkey solution enables brokerages to avoid the hurdles of entering the forex market derived by constant changes in the market conditions and stricter regulations and rules by watchdogs and allows them to smoothly enter the forex market in way that makes both logical and financial sense.
Current market conditions are extremely favourable for starting a brokerage business in the field of cryptocurrency exchange because the profitability prospects for such ventures far exceed those that can be had through the trading of traditional financial instruments. The smartest and easiest method to start a cryptocurrency brokerage is through a cryptocurrency brokerage turnkey solution, which facilitates the trading and exchange of cryptocurrencies for fiat currencies and vice versa, while also providing an online platform for clients to store their cryptocurrencies.
A good White Label brokerage solution provider is one that can provide a turnkey cryptocurrency brokerage solution based on its technology and liquidity, thus enabling white label brokerages to offer their own clients a full spectrum of services for the trading of cryptocurrencies through advanced trading platforms, which would render their venture both viable and attractive to customers.
If you are seeking to adopt the white label approach for your brokerage then look out for a solution provider that can offer you advice and solutions on the entire spectrum of your related needs, covering the legal aspects of the venture, ensuring the connection to a reliable fiat payment service provider, access to a corporate bank account, tips on effective marketing and promotion strategies, as well as support and education on all technical issues.
With a solid reputation for successfully building brokerage businesses from the ground up, you could have your own brokerage up and running in just 3 weeks!
Prior proceeding to choose a forex white label or forex turnkey solution, it would be useful to also consider matters from the perspective of such providers, to see what challenges they face and how best they can meet them in order to offer brokerages the best possible service packages and the best possible deals.
For an illuminating account of this aspect, you may consult our dedicated posts regarding Redefining the rules of starting your own brokerage and Setting Up Your Own Forex Brokerage: The need to differentiate Your Brand
A strategic provider is one whose offering encompasses all possible aspects, chief among which will be the aspect of effective rebranding and digital marketing of a forex brokerage leading to mutually beneficial results in terms of long term viability and sustainability for providers and brokers alike. Chief among the provisions of a truly strategic white label forex brokerage solution provider would be the offer of complete marketing solutions that the white labelers can rely on in order to stand out and gain visibility and customers.
Moreover, a strategic white label forex brokerage provider would stand out from its competitors because it will be able to consistently create time and time again proven results for itself and its white labelers, based on methods that are more effective and efficient and through a relationship that is built on clear and solid communication lines.
In short, white label forex brokerages that are backed by a strategic white label provider will be able to outperform their competitors and achieve growth and increased leads and sales, since a strategic white label provider brings into the equation a vast experience on an entire suite of services, including, but not limited to, the full menu of available digital marketing services and it is thus able to provide to each broker assistance and expertise in every aspect of their promotional campaigns. Moreover, and being much more than mere single-product solution providers, strategic white label forex solution providers do offer a complete and comprehensive solution for their white labelers and their clients.
With such a strategic provider on their side, new forex brokerages will be able to be much more effective in their overall marketing plans and efforts, be they digital or traditional ways of advertising. Each and every marketing and promotion effort that a white label brokerage undertakes can be done better and more effectively and efficiently if the white labeler has partnered up with a strategic forex white label provider, rather than a mere white service provider. Such a strategic partner will not only help in achieving higher conversion rates, but will also be in the unique position to enable the brokerage to expand and enhance their offering, since they are the creators of the original “product/service” to begin with.
For more details on how white label forex brokerages can tangibly benefit from their partnership with a strategic white label solution see our relevant post on what people who want to Start their Own Forex Brokerage should consider
Starting a forex brokerage through a white label solution emerges as a much easier way to access the market than setting up and launching from scratch. In fact, many established primary brokers started out as white labels and gradually moved towards full independence. By renting out part of the server of a white label forex brokerage provider you can avoid all initial headaches and complications and put your foot in the online forex trading market as a start-up in a manner that is really easy and really fast.
Forex brokerage white label and forex turnkey solutions have both advantages and disadvantages and whether the latter or the former weigh more depends on each aspiring forex broker’s specific needs, expectations, plan and vision. In a nutshell, a white label solution is cheaper, faster and simpler than setting up a brokerage from scratch, while its main downside is the dependence it creates between the brokerage and its solution provider.
However, one could argue that the main disadvantages of resorting to a white label solution to start up your forex brokerage, namely the lack of control and dependence it creates between you and your provider can be overcome to a lesser or greater extent. Which only leaves the obvious advantages to consider, especially if what you are looking at is making your initial steps in the world of online forex trading without having to bear the initial enormous set up costs and burdensome processes. Thus, the smart way to start out would be via a white label program. When in time you meet with success and your business grows adequately you can always switch your operations to your own privately owned server and platform.
Our FX Broker Bible, which aspires to be the ultimate guide for starting a forex brokerage business is now available for download here and it can serve as an initial port of call for all aspiring brokers. Alternatively, our resident team of experts is always available for consultation and guidance.