Forex brokerages can be a very lucrative venture in this new world. If you have been successfully working as an introducing broker or as a forex trader, then it might just be the right time to start your own brokerage company. Plus, it will be an easy ride for you since you already have the experience and connections in the forex community – you will definitely be starting off from a good foot.
However, when looking to start a forex brokerage company, you have two options available to you. You can either choose to start the company from scratch and build it all up – obtaining a license for a trading platform, building the software for the platform and your clients, setting up a bank account, etc.
On the other hand, you can buy a forex turnkey solution. With this, you will be buying all the services you need from one company, including liquidity, an MT4 platform, payment processing, and many more. It is invariably providing you will all that you need to kick off your forex brokerage company.
And there is this third option that is not often discussed, but that is what we recommend most times. That is building your brokerage company using existing services. Here, you are not buying all that you need from just one company, and you are not building completely from scratch. You simply choose from among the different service providers available to you in each category to get your company started. This is a much reliable yet cost-effective option.
Related Article: How to Start Investing in Cryptocurrency
Step-By-Step Guide to Starting Your Forex Brokerage Company
#1: Get yourself a reliable team
A great team is important for any successful business. So, before you commence on the journey of starting your own brokerage company, make sure you have the right team behind you. The better your team members, the more chances your business stands to be successful.
So, consider hiring qualified individuals to work on your brokerage instead of just choosing your family members and buddies. You will need a professional accountant, a good communicator, economics, managers, etc.
#2: Understand your target market
When it comes to targeting your Forex/CFD business, not all places are ideal for you. You will need to do your homework and narrow down on a particular area of the world you think most of your target audience are located. You will need to target a country or location you think you can find more traders for your brokerage company.
At the same time, research to know if there are any trading restrictions in your chosen country or countries. For instance, not all countries allow the use of cryptocurrency trading as a financial instrument. Determine a specific market to target based on the result of your research, which includes the buying power of the people, restrictions in the area, as well as your ability to market and sell in such an area.
#3: You will need to have enough capital for the business
Forex brokerage firm is one business that requires a lot of capital. Make sure you have enough capital before you venture into it. However, the amount of capital you need will depend on your target market and location. Yet, it will require a lot of money from you. So, make sure you have enough pool of capital to run the business, especially during the year of operations.
#4: Research and plan
Now that you have the right team and enough capital to get started, the next important thing on the list is to do comprehensive research and a lot of planning. Yes, starting a brokerage company requires a lot of planning. Spy on other brokerages out there to see what they are doing and how you can ride on that knowledge too. Talk to people in the industry. Know what traders are looking for and the rates other brokerages offer their services.
Understand what costs you will be footing in the business and what fees will likely be coming to you. Identify a solid marketing strategy to use, and know exactly how you are going to scale the business after surviving a couple of years.
#5: Register your brokerage
Before starting your firm, think of a way to be on the good side of the law – that is, registering your business and obtaining all necessary documents. However, licensing requirements differ from one country to another. So, first, recognize where most of your traders are and then decide where to register the business.
Also, registration fees differ by location. So do your research to know all that is required of you and get your business registered.
#6: Get state-of-the-art tools on your platform
No trader will want to use a brokerage platform with substandard tools. You need to get your brokerage equipped with state-of-the-art platforms and tools to be ahead of the competition. Consider getting a MetaTrader 4 platform for your brokerage. Plus, you no longer have to spend a fortune on getting an MT4 platform, for example. You can now use a white label for MetaTrader 4 for a fraction of the cost of having to get a full license from MetaTrader by yourself.
However, when choosing a white label provider, ask if you can add your own branding to the product so that it matches your website.
#7: Connect with a liquidity provider
Forex liquidity is one of the key factors that determine the success of any Forex brokerage is liquidity. So, you need to pay special attention to that aspect of your business too. Connect with a leading liquidity provider that will help provide your clients with excellent leverage. Look out for a provider that has direct market access to all Tier-1 FX liquidity venues.
#8: Partner with a reliable payment processor
You are entering into a very competitive industry, so you need to equip your arsenal with every tool that will help you compete effectively in the market. One of such tools is partnering with reliable payment service providers. Different countries use different payment choices, so your brokerage company should offer various payment solutions.
At the same time, if you are going to be offering cryptocurrencies on your platform, you may need to consider integrating a cryptocurrency payment solution to enable you to send and receive payments online in crypto.
#9: Choose the right CRM
The next thing to go for is a reliable customer relationship management (CRM) tool. This is your go-to tool for managing interactions with your traders. However, when choosing a CRM, you will want to ensure you go for a reliable one with utmost security. Your CRM should also be easy to use and gives constant report and updates.
#10: Work on branding
Your first impression matters a lot. So you will want to make sure you appear your best to potential customers. So work on your branding. Choose a good and relevant name for your brokerage firm. But the name should be simple and easy to remember.
Play around words to arrive at a suitable name for your business – don’t just rely on name suggestion tools. Remember, you can’t just go for any random name. Any name you will be choosing should represent solidity, honesty, and trust. Consider having a professional develop your website, and don’t downplay social media marketing. In whatsoever you do, make sure you are building a good reputation for your brokerage company online.
#11: Pre-launch before going live
Before you go live with your brokerage platform, make sure you spare enough time to test it out. Test-run every section of the platform – from the trading platform to the payment processing systems, ensure all aspects are tested and confirmed to be working well.
If possible, have professionals do the testing. Allowing time for pre-launch will help you detect and fix any errors before you finally launch. You obviously don’t want your customers to be the ones detecting and reporting errors on your platform. That can cause you to lose them to your competitors.
Once the testing is completed, then you are ready to go live with your brokerage company, and that is the time to hone in on your marketing strategies.
