In the past, only big businesses with top-notch technology were able to launch an online brokerage. Entrepreneurs and small businesses Read More
Thus, anyone who wants to generate revenue by providing trading services can seize this opportunity to mark a humble beginning. Through this article, I will share some helpful tips and key steps in starting a forex brokerage.
Take your time to research and come up with a business plan
The first tip I want to give for starting a brand new forex brokerage is to take your time to research and learn about the forex market and the functions of a forex broker. The forex market runs 24 hours a day without any breaks. However, trading activities will not be carried out during the weekend when the market is closed. But for the other 5 days, traders can participate in buying and selling international currency pairs anytime and anywhere.
All they need is a trading platform and a trading account with a forex broker, as they need a brokerage platform to access the currency market. When you start a forex brokerage, you are obliged to grant market access to your clients by executing the orders they place for trading. You will be bridging the gap between an ordinary retail trader and the dynamic forex market with frequent price fluctuations, creating numerous trading opportunities.
Once you understand the role a forex broker plays in the trading process, you need to come up with a business plan to set up the brokerage platform. The planning phase is crucial as you will be defining your target audience and coming up with an action plan that can be executed with ease, leaving no room for confusion. Your business plan is like a blueprint of a building, and you need to focus on making it feasible with all relevant details covered.
You need to calculate the amount of funds required in advance so that there is smooth cash flow once the platform goes live. Otherwise, you will have a hard time without sufficient funds to keep it running, as it is impossible to get significant profits in the initial phase of your business. You need to decide what type of traders you want to cater to and which trading styles can be supported (hedging, EA trading, scalping).
You should also consider offering MAM/PAMM, which are lucrative investment options for everybody, and copy trading via third-party platforms, as such trading solutions have gained a lot of traction in the past few years. Including all these aspects in your plan will help you widen your potential client base and generate more revenue in the long run.
Find a white label provider after considering your requirements
Starting a forex brokerage on your own will be a time-consuming and complex process. The huge amount of capital that you will need to become an independent forex broker will make the process even more challenging. Because you may need more time to accumulate the required funds, including initial setup and ongoing costs, you can solve both the technical and financial problems by depending on a low-cost white label provider.
The white label provider will provide trading platform integration with a customised website under your brand name, along with the necessary tools like forex calculators that your clients will need for making informed trading decisions. Not only do they help you to get started within a few weeks, but they also handle all the complex processes connected to establishing your brokerage on your behalf. You will be able to get started within your budget with a ready-to-use solution and won’t have to worry about developing everything from ground zero.
You just need to consider what platform you want to offer to your clients and which white label provider can help you set up your brokerage while allowing you to offer solid trading conditions like tight spreads, low commission and more. I will suggest you look for a white label provider offering MT4 and MT5, as both are popular platforms demanded by traders. You need to check the platform functionality of the white label provider yourself before signing up since your future clients will be interacting with the same technology while trading on your platform.
In most cases, the white label platforms are highly customisable, and you can work with the team to make it appealing and attractive, but make sure the website still looks professional with intuitive features and an eye-pleasing theme. You should also consider the type of trading accounts that you want to offer while selecting a white label provider. If you are planning to provide swap-free accounts for traders of Islamic faith, then you should find an Islamic broker offering white label solutions.
Focus on brand building and promotions
Once you complete the registration process of your business and sign up with a white label provider, you can start focusing on brand building and promotions. The white label provider will take care of all other processes, including platform setup, licensing, CRM systems, customer support, payment processing (in case of partial white label) and even regular maintenance of the platform. Hence, all the complicated departments of running a brokerage business will be handled by an experienced broker with extensive knowledge and resources, promising a seamless trading experience to your future clients.
Thus, you can shift your entire focus to brand-building and marketing activities. Brand building can be described as the process of making your brand name known to the general public by giving it an identity that distinguishes your business from that of competitors, which are forex brokers in this case. Since you are a new broker, the competition will be tough as you have to stand out among several top-tier brokers and new-age brokers, attracting traders to check out your platform and consider you as their potential broker.
Creating brand awareness is the first step towards success, as clients will not join your platform if they don’t see your brand name popping up while searching for a suitable broker. You can devote all your time and energy to making marketing plans and promotional programs, as the rest of the processes will fall under the purview of your white label provider. Digital marketing is the most impactful form of promotion in this era. Hence, you need to work with those who have expertise in this or even get some help from your white label provider if marketing assistance is offered in their package.
You should always offer a demo trading account, allowing potential clients to test your platform and trading conditions for free. Even though the white label technology is reliable and already tested by the providers, you should test it yourself before the official launch. This way, you can check if there are any issues and fix them in time before the platform goes live.
Keep updating the platform for scalability
The white label provider will manage platform maintenance and fix bugs while handling the back-end processes. However, keep yourself updated about innovative trading tools and try adding them to your website or platform. Make sure that the customer support team is always there to communicate with those who want to enquire about account opening or to resolve any problems they encounter.
You should consider the scalability of the white label solution before signing up. Although the number of clients will be less in the beginning, eventually, your client base will grow, and you may even offer services to institutional traders executing high-volume trades. The platform should be capable of processing these with high speed and zero latency.
Traders should not face any kind of issue or interruption when there is an increase in the number of orders they execute. It would be ideal to choose an ECN broker as your white label provider as ECN execution mode ensures sufficient liquidity with minimal slippage and fast execution with minimal trading cost, which makes your platform a worthy option for all types of traders.
Final Words
To summarise, opening a forex brokerage is challenging, and you should be prepared to face the stiff competition. But your chances of success increase with the support of a reputed broker helping you with technological processes, allowing you to kickstart your business real quick within a few weeks. This is a cost-effective solution for all aspiring brokers who are keen to implement this lucrative business idea.
