To-Do List for Launching Your Own Forex Brokerage Business
Having a concise and well-defined To-Do List makes any task easier, and this also applies to business plans. Starting your own Forex brokerage is a lucrative business idea, as the dynamic Forex market is full of traders who can become your future clients. Thus, the revenue potential is high for a forex broker. Forex white label solutions can give you a perfect entry to the brokerage industry with a lower capital requirement and superior technology to simplify the initial setup process.
Now, how can you implement this business idea and proceed with the process of establishing a brand-new brokerage platform? How can you prepare, and what should be your first step? Our To-Do List for the Forex brokerage launch will answer all your questions about the topic.
- Market Research and Business Plan
The success of any business depends on how it can capture the market by offering quality products or services, which are trading services in the case of a forex brokerage. You need to do extensive research about the market where you will be operating and develop a clearly defined business plan that serves as a blueprint for building your business empire. Market research is done to collect all the relevant information about the market that you need for devising a sound business plan. Those who know the ins and outs of the market will be able to run their business by implementing their business plan with ease.
- Studying the Forex Brokerage Industry
The forex brokerage industry was not this big in the past, but nowadays, there is cut-throat competition due to a significant rise in the number of brokerage firms. Forex brokers are not confining their services to currency trading; they also offer other CFD instruments, allowing traders to explore multiple markets and easily diversify their portfolios. They offer top trading platforms to their clients, including MT4, which is perfect for new traders or those interested in trading just Forex pairs, and MT5, which is for advanced traders and those looking to trade multiple assets. In order to survive and withstand the stiff competition in the forex brokerage industry, you will have to study how other brokers are functioning and offer similar or better services.
- Defining Your Target Market
The 3rd item in your To-Do list for launching a new forex brokerage is defining the target market. Your target market can be small retail traders interested in scalping or day trading, and you can attract them by providing tight spreads and fast execution. But you can also think about widening your client base by serving institutional traders executing high-volume trades, as this increases your revenue potential. So, based on that, you need to decide the group of people towards whom the trading services are targeted for planning your marketing and promotions.
- Conducting Competitor Analysis
Another important thing to do during the planning phase is to conduct a competitor analysis. You need to check how other top brokers have presented themselves and what strategies they follow for building and retaining a loyal client base. For instance, you will see some top brokers offering Islamic accounts to Muslim traders, which can be their USP and a competitive edge when other brokers are not offering swap-free accounts. Such specific account types are set up to widen the potential client base by satisfying the requirements of all clients alike. You should also come up with such unique ideas after observing and analysing your competitors.
- Developing a Detailed Business Plan
I did mention a business plan in the first point about market research. Still, here I want to talk about the importance of detailing and specifications in your plan to make it more clear and well-defined without any confusion. Your business plan should be goal-oriented, and the means of achieving the set goals should be included in the plan itself. You need to have a long-term outlook and plan ahead for the future as you won’t be making huge profits in the initial phase, and how you grow your business in future is a crucial consideration for your success as a brand new forex broker.
- Regulatory Considerations and Legal Formalities
Regulations are not mandatory for a forex broker; running your business as an offshore broker is possible. But being regulated gives you an advantage as many traders have a preference for brokers holding a licence from top tier regulatory bodies. The legal formalities for setting up your brokerage platform can be a complex and time-consuming procedure. But you can simplify the process by choosing a reputed broker as your white label provider who will handle all these complicated activities on your behalf, allowing you to launch the platform within a few weeks.
- Choosing a Jurisdiction
The forex market is truly global in nature, and people from all parts of the world can access it and engage in trading by signing up with a forex broker. But, you need to decide the jurisdictions or regions where you want to operate as a broker and comply with the regulations or formalities that are specific to those jurisdictions. Only then can you function as a forex broker within the legal boundaries? Offshore jurisdictions are easier to enter, but you should stick with the top jurisdictions, which add to your reputation. You can also choose a reputed white label provider operating in the same regions/jurisdictions that you prefer to make things easier.
- Estimating the capital requirements
The next thing to do for functioning as a forex broker is assessing your capital requirements, which include both initial setup costs and ongoing costs, which come in the form of operational expenses. Starting out as an independent forex broker by going through the traditional route results in a lot of expenses, and you need a huge amount of capital to get started. Additional funds will be needed from time to time to keep things going without much revenue in the infancy of your business.
But you can cut down the expenses to a great extent by choosing a low-cost white label package with a low initial setup cost and regular payments for platform maintenance. You will still need sufficient funds for promotions and marketing, but the total capital requirement will be much less than what would be needed to build everything from scratch by yourself.
- Choosing Technology, Infrastructure, and more
All traders will choose a technology-driven and stable platform to carry out the trading process with ease. Hence, you must ensure that your brokerage platform can offer top-notch technology solutions and IT infrastructure to your future clients. Everything ranging from market connectivity, Back-end processes, payment processing and CRM solutions has to be set up with a lot of consideration to provide a seamless trading experience to your clients.
If you can find a white label provider who can be trusted in all these aspects, you won’t have to worry about anything, as all the tech-related concerns will be addressed and solved by an experienced broker on your behalf.
- Risk Management
We always hear about the risks associated with trading, and brokers have to help traders manage their risks by providing various risk management tools. But you should also plan to manage the business risk along with this. The security of client funds, privacy protection, leverage control, margin and stop-out levels, monitoring and compliance with regulatory standards, along with a plan to deal with emergency situations like tech failures or other unforeseen events affecting the market, is important for mitigating the risk for not only the clients but also for yourself as the owner of a brokerage business.
- Selecting a Trading Platform
The choice of the trading platform will depend on the white label provider you choose, as you can only stick to the ones they offer. This is a cost-effective method as you will be getting a turnkey solution without having to pay computer programmers or developers to build a website from ground zero. Even platform integration is quite expensive for a new broker. You can eliminate all such expenses by signing up for a partner program with the right white label provider. They will charge a lot less and let you operate as a broker using their existing technology.
- Branding and customisations
Once you select a white label provider and complete all formalities starting from registration to contract signing, you can start working on branding and customisations of the brokerage website or trading platform. The white label provider will help you rebrand, and customisations are important for establishing your brand name and identity, distinguishing your business from competitors.
The quality of your services also matters, but the white label provider is in charge of all such processes. At the same time, you get to give undivided attention to branding and promotions, which are vital for building your client base as a new broker.
Bottom Line
To summarise, the To-Do List of an aspiring forex broker may look long and complex at first glance. But all of these steps will be easy to go through when you have a top broker to provide guidance and support while getting started as a new broker. You get to cut down on the costs and time for setting up and running your brokerage business while also giving an attractive trading environment to your future clients with high-end technology.