Though is fact is not known to many, it is true that many of today’s top notch online forex trading brokers originally started out their operations as white labels. The reason behind this is very simple and lies within the fact that starting a forex brokerage from scratch is a very complex venture that entails a lot of financial, technical and legal complications and creates many questions that need to addressed such as setting up and configuring the trading platform, connecting payment systems and many more.
It therefore comes as no surprise why many resort to the much easier solution of starting a white label forex brokerage instead. 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.
But what exactly is a white label? Simply put when you become a white label you get access on the server and platform of an existing, established company, which owns its own platform and has the relevant technical capacity to configure it as well as provide you with a client terminal that you can brand and all the necessary permissions.
In this way you avoid the high initial set-up costs and can get access to a platform and start attracting traders without having to buy your own platform or set up one from scratch. Instead, you only incur a monthly fee for your white label service provision and a small set –up fee for the initial installation and configuration, which in some cases of certain white label brokerage solution providers is actually down to zero.
As with almost everything in life, there are two sides to the coin called white label brokerage solution, as there are both associated advantages as well as disadvantages. Let us see what the main ones are:
The first, most obvious and most significant pro of the white label model is that allows you to obliterate the entry barriers to the online forex market. If you had to bear all the associated costs, challenges and risks that come hand in hand with this endeavor you would most probably deem it unsustainable, especially if you do not have an excellent knowledge of all market and business specifics and complexities and a very solid and viable business plan that would allow you to go all out from the offset and buy your own platform. The white label model allows you to offer your client-traders the same value and quality as the original server owner but at a mere fraction of the cost.
The associated disadvantage here is that the model rarely allows for the achievement of economies of scale and therefore as your client base will grow so will the fee that you will have to pay to your white label brokerage service provider. So, in the long term and provided you achieve enough growth it would make more sense to buy your own trading platform.
Returning to the advantages of the white label solution, we should also highlight how simple and easy it makes all matters technical, from the ease of the system maintenance, to the rental of servers, configurations and trading and dealing specifics. Since all these are undertaken and taken care of by your white label service provider.
On the other hand, the associated disadvantage is that you create a dependence on your platform owner and provider. When renting part of their server you are not able to fully configure and customize all the platform settings to your liking, nor be allowed to install plug-ins, add-ons and extra tools that are developed by third parties, as this may jeopardize the security and smooth functionality and operation of the entire server that you are sharing with other companies.
To partly offset this con, you could resort to technological solutions that do not require actual installation and can operate through just managerial access to the platform that the white label service provider will grant you. Moreover, as white label solution providers are getting more popular you actually have more available options to choose from and many white label providers out there are offering “bundled” solutions that already incorporate many technological advancements and tools that the enhance the operation of the trading platform, such as for example an asset management system. In fact, if you are willing to pay a bit more you can get very high quality services that would cover most of your needs.
In summation, 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.
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