No business is easy for a beginner, and one must be taking the right steps to ensure success in the long run. The same applies to a forex brokerage business, too, and an aspiring broker should do a lot of research before commencing with the lucrative business idea. Many entrepreneurs are reluctant to enter the brokerage industry due to the complex nature of this business and the stiff competition. The potential client base of a forex broker is wide and diverse, with different types of traders having different requirements. For instance, a standard trading account is suitable for the majority of traders, but Muslim traders will demand a swap-free account. They prefer to trade with brokers adhering to Sharia law over regular brokers.
Identifying the needs and requirements of your target audience is the first step towards success, as how well you can serve your clients determines the destiny of your business in the future. Now, what steps should one take to launch a new forex brokerage platform with ease? How forex white label solutions can help you with the process? You will get to know it all by the end of this blog.
- Devise a solid business strategy
The first step for launching your forex brokerage business is devising a solid business strategy. The strategy is what guides us about which path to take to reach our business goals, and as an aspiring forex broker, you should set definite goals for your business along with the means for achieving them. Your business potential and the number of opportunities you get as a new broker will greatly depend on your business plan or strategy. A vague plan will leave you confused about everything as there are no specifications.
Hence, you need to go beyond the bigger picture and describe everything in detail. Your vision as a budding business owner needs to be realistic and attainable. We often talk about how forex traders fail to find their footing in the absence of a well-defined trading plan, and a broker may also fail to capture the market when the business strategy is not good enough. So, make sure you leave no stones unturned to make it as clear as possible.
- Understanding the regulatory environment
The regulatory environment in which you will be operating as a forex broker can make the business endeavour challenging for a newcomer. However, you cannot move forward without complying with the industry standards. Obtaining a valid licence from a top-tier regulatory body will give you a competitive edge as a new broker. But the task is going to be tough, and taking the help of a regulated white label provider can simplify the process to a great extent.
Many authorities are in charge of overseeing the operations of forex brokers and ensuring that they are functioning as per the rules and regulations set to protect clients’ interests. The jurisdiction you select for business operations will decide the authority responsible for regulatory oversight. For instance, if you choose to operate in the EU, being regulated by CySEC is expected, and when you have clients from the African region, they will look for an FSCA-regulated broker.
- Calculate the financing requirements
Funding is the most important aspect to consider while devising a business plan, as no business can start or run without sufficient funds. Running a forex broker as an independent broker costs a lot in terms of technological setup, platform maintenance and software solutions. But when you decide to let a white label provider handle all of that on your behalf, you can cut down on the costs and time, which makes things easier during the infancy of your brokerage business.
You can make a faster entry to the brokerage industry with a turnkey solution that only requires re-branding and customisations. The purpose of opting for a white label package is to give undivided attention to branding, marketing and promotions while leaving all the complex processes under the control of an experienced forex broker acting as your white label provider. This solution is cost-effective and lowers the risk for a new broker without adequate resources.
- Selecting a sophisticated trading platform
The next step in the process of launching your forex brokerage is selecting a suitable trading platform to offer. In fact, it would be ideal to offer different platforms as options to satisfy all types of clients. For example, some clients may prefer the simplicity of MT4 while the new-age traders look for sophisticated features and tools that are available on MT5. Now, offering such options will be expensive when you do everything independently.
However, introducing white label solutions was nothing less than a revolution. It helped new businesses enter the brokerage industry and offer their clients the most popular and sophisticated trading platforms without the heavy licensing fees or platform development costs. Another thing to think about is platform maintenance, which your white label provider will also do for a monthly fee. This way, you can ensure a seamless trading experience for your future clients.
- A good broker-dealer relationship
As a broker, you will be responsible for connecting your clients to the decentralised forex market by partnering up with liquidity providers or by becoming a market maker broker. The first option is ideal for creating a deep liquidity pool with transparency in pricing and fast order execution. This is an STP or ECN processing without any dealing desk intervention, and this type of order execution often results in better price quotes and lower trading costs. This allows you to offer solid trading conditions to your clients, and most traders choose their brokers based on this aspect.
A good broker-dealer relationship is essential for the smooth functioning of your brokerage business, and planning these things can be complex for a beginner. When you rely on a white label provider, they will also share their liquidity arrangements with their white label partners, making market access easier for you and your clients. Liquidity is essential for offering favourable trading conditions, and you need to work with your dealer or white label provider to create a favourable trading environment and grow your business.
Now that we have covered all the steps required for launching your forex brokerage let’s have a look at some important things to know about as a new forex broker.
- The Power of Forex in Today’s World
The forex market keeps on getting bigger and better, with an unmatched surge in the number of traders due to the growing popularity and ease of access. The forex market holds a lot of power just like any other financial market and even more as it is not confined to a specific country or region and runs 24/5 with 4 major trading sessions. The trading volume is in trillions, which is enough to prove that the forex market is here to stay and flourish, providing a promising future for all market participants and competent brokers to earn through their services in any market situation.
- Building Trust in the Forex World
Becoming a reliable broker is not going to be a piece of cake for a brand-new brokerage platform, as traders are a bit sceptical about new brands, and it takes time to establish your brand and win their trust. Building trust in the forex world has much to do with your services and whether the clients feel safe using your platform. So, make sure you choose a white-label provider that can guarantee a secure trading experience that enables you to emerge as a dependable broker.
- The Journey of a Forex Entrepreneur
The journey of a forex entrepreneur can be exciting and challenging at the same time, and one should be prepared to deal with the challenges before joining the race. You will be competing with a number of top brokers along with emerging brokers like you, and how well you can market your services decides your success. I will advise you to find a white-label provider to assist you in this aspect, as an expert broker knows the marketing tactics that can build your client base.
- Embracing Technology
Being a forex broker, you need to be aware of the importance of technology in this business, as a brokerage cannot exist without robust technological solutions and IT infrastructure. You need to keep yourself updated with the latest technological updates as you don’t want to be left behind in the fast-moving forex world.
The Future of a Forex Brokerage
As I said earlier, the forex market will continue to grow, and millions of traders are already exploring the lucrative currency market. All types of traders, including beginners and professionals, need a supportive broker to make their trading journey easier. If you are confident about providing them with what they are looking for, then you can surely enter the brokerage industry with a white label solution and start working for a bright future.
