Everyone knows about the countless opportunities that the forex market offers to traders. Besides the opportunities for making profits as a trader, the largest marketplace in the world also offers a lot of business opportunities. Becoming a forex broker or trading platform provider can generate a lot of revenue with the growing demand for trading services in the currency market. All traders will have to depend on a broker to access the decentralised forex market and execute trades. However, new entrepreneurs are often hesitant about opening a brand new forex brokerage as they lack expertise and cannot afford to meet the large capital requirement.
Starting as a new forex broker is easier than ever, thanks to the forex white label solution which allows you to set up and cost-effectively run your brokerage business. This blog will cover all the relevant information you need to become a successful broker in the dynamic forex market.
Functions of a Forex Broker
A forex broker functions as a connecting link between the traders and the currency market that works as an OTC marketplace. There is no centralised exchange or regulator that oversees the FX market as all the trading activities happen online with a great level of transparency. However, the trading conditions change depending on the broker chosen by the trader. The brokerage helps the trader to access real-time market data and also place trades through a trading platform that is offered by the broker. Popular trading platforms used by forex traders are MT4 and MT5 where the traders open an account.
Talking about trading accounts, brokers also offer different types of trading accounts to meet the requirements of their clients. There are micro accounts for those who want to trade with a smaller capital and a standard account is the most common type of account used by the majority of traders. You should also consider the cost of trading in the form of spreads and commissions while choosing your forex broker and account type. You will also have to check the swap rate or rollover fee if you are planning to keep the trade positions open overnight.
There are also swap-free accounts where you won’t be subject to swap even when the trade runs for an extended duration. This type of account is used by Muslim traders as swap is based on the interest-rate differential of currencies and the Quran forbids all followers of Islam from paying or receiving interest in any type of transaction. If you are a Muslim, then you can check out more about swap-free accounts to determine your eligibility. Trading accounts in which a swap fee is applied are considered haram for Muslims. However, the swap-free account is a sharia compliant account that allows Muslim traders to access the market with halal trading conditions.
In short, a forex broker is responsible for providing all the facilities and services that their clients need for trading with ease. This includes the technological infrastructure, market access, customer support and more.
Benefits Of Becoming A Forex Broker with White Labelling
Becoming a forex broker has a lot of benefits like the profit potential as the potential client base is huge. However, setting up a brokerage from scratch is challenging for a new business due to the complexities and technical processes that require a lot of money. Besides the initial setup cost, the ongoing cost of running the brokerage is also high. But when you choose a white label solution, this cost can be reduced to a great extent as you are using the ready-made technology of another established broker who will be your white label provider.
The white label provider will be in charge of all the complicated processes and the legal formalities will also be easier when you have an expert to give guidance. You will not only be using their platform but will also get to present it with your own brand name and customise it to suit your brand image. Your clients will get a superior trading experience by using a tech-driven platform and better market conditions similar to what a top broker offers. Some brokers also offer assistance in promotion and marketing activities.
The white label provider will help you set up your brokerage within a few weeks with branding. Besides cutting down on the cost and time, you also get the advantage of having an experienced top broker to support you in all steps. They will be providing ongoing support for running the brokerage and for this, you just need to pay platform maintenance fees. Moreover, new brokers who find a reliable white label provider get an edge in the competitive brokerage industry.
Steps to Open a Forex Brokerage
- Devising a business plan
The first step for opening your forex broker is devising a detailed plan for establishing your brokerage. You need to define your target audience and also the jurisdiction in which you want to operate as a forex broker. There are different types of forex broker and you need to choose what operational model will suit you. There are market maker brokers and also STP/ECN brokers and the difference lies in how they offer liquidity to their clients and whether there is dealing desk intervention or not.
Many traders prefer STP/ECN brokers as they charge lower spreads with no dealing desk intervention. So, decide which model will work for your business. The business plan should be goal-oriented and you need to make sure that you have enough funds for getting started. Having a clear and well-defined business plan is essential to make things easier.
- Finding a white label provider
The next step is finding a white label provider to start with the setup process. To find a reliable technology provider, you need to consider their regulatory status and reputation along with reviews. You need to consider the total cost of opening the brokerage with the white label package and also check the scope of their services to ensure that they fit your requirements. You should find a low-cost white label provider after evaluating the quality of their services.
You need to ensure that the forex broker offers all the features and tools that can attract your potential clients. You should also check the security features of payment processing systems and CRM solutions.
- Branding, customisation and promotion
The third and last step for opening your forex brokerage is branding and customisation of the platform that is offered by the white label provider. You need to pay a lot of attention to branding and customisation to make your platform look different from competitors. Your brand should have a unique identity and image to survive in the competitive space.
You should also test the platform before it goes live. After it goes live, you need to fully focus on promotions and marketing activities as all other things will be managed by the white label provider. Because the success of your business is still your responsibility.
Wrap Up
In the end, becoming a forex broker and earning profits will still be a challenging endeavour. But all the steps involved can be simplified when you rely on a white label provider. However, you need to be patient as generating revenue as a new broker will take some time.
