The sheer volume of new brokerages hitting the market right now is impressive. A Google search will return thousands of results from all over the world. Unfortunately for traders but fortunately for you, many of these firms are bogus, poorly run, and unreliable. That provides you with an opportunity to succeed.
To be in with a chance of success, you must start your brokerage correctly. Proper planning beforehand can help you to avoid many pitfalls and unnecessary pain later on.
- Who will you serve? Which location or jurisdiction?
- Seek legal advice and ensure you know where you stand and know your legal requirements within a highly nuanced industry.
- Incorporate your company
- Build relationships with financial institutions and connect with third party businesses like payment service providers. Seek guidance and source the best deals for you and your future customers.
- Theorise and refine your business model.
Once the administration and set up of your company has been done, you will need to focus on the technology that your brokerage will leverage every day to do business.
- Seek guidance from an established technology provider, someone who can offer genuine insight and advice.
- Provide your future customers with a market-leading platform like MT4.
- Provide industry tools and features to empower your customers to trade.
- Build a website.
- Provide essential features to your clients by building a system around your platform. That should include a CRM, a traders room, and a back office.
- API integration for third-party apps and services.
- Provide market-leading customer service.
- Develop an affiliate program.
- Market your business via paid social media.
Step two can all be taken care of by a reputable specialist who truly has your brokerages future in their thoughts. Take Popcorn Technology a London based Fintech firm who provide expert white label services like the MT4 trading platform and a CRM for forex brokers that is specifically designed to integrate with the rest of the brokerage. They also have a dedicated start-up team on hand to talk you through the journey and what you should expect.
Hacks for success
Do not charge too much
It is easy to get excited and see your new brokerage as a cash cow. The potential for massive returns is all too alluring. However, the industry is hyper-competitive, and if you mark up the interbank rate too high, your traders will feel it, and it will be enough to send them fleeing elsewhere. Be fair with your prices. Research the competition and compete with them.
Employ risk management tools that can identify Bots and protect your brokerage from huge losses.
Be honest and transparent
Always be clear about your business processes. Be upfront about the commission. Be attentive and communicate clearly with your clients, mostly when transfers are being made. A speedy resolution to customer queries and complaints is essential to building trust among your customer base. The word about lousy service will spread quickly online and will earmark your business as one of the unreliable firms mentioned earlier.
Trustworthiness is paramount in the forex business, and you must work hard to prove your brokerage is honest.