Useful Guide On How To Start Your Own Forex Brokerage
With millions of traders trying to explore the forex market, the business potential of an online forex brokerage is huge. Traders can only access or trade in the currency market if they sign up for a trading account, and forex brokers function as providers of these accounts to facilitate online trading. Hence, you can generate substantial revenue by owning a forex brokerage and offering a wide range of services.
However, implementing this business idea can be challenging due to the high costs and complex processes involved. But you don’t need to shelve your business plan as there is a cost-effective and feasible solution to establish your forex brokerage without going through all the troubles you face while taking the traditional route.
The solution I am talking about here is forex white labelling, which has allowed many business owners to build their brokerage platforms easily. This useful guide will tell you everything about starting your forex brokerage as easily as possible.
How Does Forex Trading Work?
Forex brokers play a pivotal role in the process of forex trading. Hence, it is important to understand how forex trading works before taking your very first step towards launching a forex brokerage of your own. Trading, in general, can be described as the act of buying and selling an asset or instrument with the anticipation of the price changing in our favour and making a profit in the end. This asset or instrument will be a currency pair in the context of the forex market. Just as the name suggests, a currency pair will have 2 different currencies, and traders will be trying to predict whether the first currency (base currency) will increase or decrease in value against the 2nd currency (quoted currency).
They will open buy and sell positions based on their analysis of the market situation. The buy position is referred to as going long, and shorting is the term used for a sell position. But to open any kind of position, traders will have to depend on a broker and place the order, which the broker will execute as they partner with liquidity providers or act as market makers themselves. Besides this, traders will have to use software called a trading platform where they get access to the real-time price data of various instruments or currency pairs being traded in the live market.
MetaTrader 4 is one of the very first names that come to our mind while talking about forex trading platforms. A vast majority of traders are using this platform, and almost every other forex broker offers MT4 to their clients. However, its successor, MetaTrader 5, is just as good or, should I say, better with the advanced tools, additional features, added time frames and more order types. Those who want to diversify by trading multiple markets are turning towards MT5.
Why should you launch your forex brokerage?
Some of you may be in a dilemma about launching a brand new forex brokerage when there are a lot of forex brokers in the market already. Then why should you launch your forex brokerage, and will you get enough clients to make profits as a new broker? The answer to this question is the introduction itself. The forex market is much bigger than you think, with the trading volume crossing $7 Trillion as of 2022. New traders keep entering the forex market on a daily basis, and all of them are looking for a broker to trade with, and they may end up joining your platform. Even experienced traders often think about switching their broker if they come across a better option.
Thus, there is no doubt in the fact that forex brokers providing competitive trading conditions and quality services will be able to build a loyal client base over time. The competition is tough, and there is some risk involved when you are a brand-new broker. Still, once you crack the code and start capturing clients, the revenue you earn in the form of spreads, commission and rollover fees will be enough to recover your invested capital. In fact, the revenue potential can grow beyond your expectations.
What is FTS, and how to implement it?
FTS is an abbreviation for the term Forex Turnkey Solution, which is basically a Forex white label solution. The turnkey solution allows you to open your online brokerage without building the technological infrastructure from scratch. The white label provider will let you run your brokerage using their pre-built platform technology under your brand name. The white label provider will be a well-established forex broker willing to support new brokers in starting their business without spending a huge amount on developing the technological and software solutions themselves.
You just have to register your business entity under the jurisdiction in which you want to operate as a forex broker and then enter into a partnership with a white label provider of your choice. They will complete all the complex processes related to website development, platform integration, back-end processes, payment gateways, CRM solutions, customer support and even branding. You can work with them to customise the platform and build your brand identity to make your brokerage platform attractive and appealing.
While choosing a white label provider, you need to consider the initial setup and ongoing costs in terms of platform maintenance fees and the scope of the services offered. If you are planning to expand your potential client base by being inclusive, you should consider adding swap-free accounts for Muslim traders. In that case, you should find a white label platform provider offering Islamic accounts with halal trading conditions. Offering specific types of accounts is important for growing your client base.
What are the benefits of forex white labelling?
Reduces Financial Burden
Building and launching a brokerage platform on your own and functioning as an independent forex broker requires huge capital investment. But when you choose an FTS or White label solution, the financial burden is significantly reduced, and you can utilise the saved funds for other aspects of business, such as marketing or promotions. You can easily find affordable white label packages, sign up with them and kickstart your business within your budget.
This is an excellent opportunity for small entrepreneurs and budding businesses as they get a chance to enter the market with a lower investment. Otherwise, you will be left with no funds for promotions and platform maintenance, as it will surely take some time for you to generate revenue as a new broker. Hence, you should be able to cover the costs and keep going until you start making profits.
Quick Setup Process saving your time
If you decide to start a brand new forex brokerage all by yourself, it will take a good amount of time to complete all the processes, and there will be several test runs, which again delays the final launch. This can take months or even years, as building top-notch technological infrastructure and integrating various elements is a time-consuming process to begin with. However, attaining perfection will still be difficult after all this hustle.
There can be issues when you are creating a website or platform, even when a team of experts are involved and fixing these issues can be a headache after the platform goes live. However, white label solutions offer a quick setup process that can be completed within weeks, and they will also be in charge of platform maintenance, saving you time.
Customisation and flexibility
You won’t have to compromise with platform design or other aspects of branding even though you are using a ready-made technology. The white label provider will allow you to customise the platform, giving it a unique look and focus on branding to build your brand identity. Hence, there is a lot of flexibility as you can make crucial decisions about pricing, trading conditions, account types being offered and more.
Expert Advice and Guidance
The white label provider will be an experienced broker, and they can help you a lot by giving valuable advice and guidance on how to run your brokerage and build a loyal client base. You will be getting ongoing support in all aspects, and some white label providers even offer training programs and marketing assistance to new brokers, which is very beneficial to grow your business by learning business tactics from an expert in the industry.
Minimise Your Risk
You should be willing to take some risk while venturing into a new business, especially in the competitive brokerage industry. However, the level of risk will be greatly reduced when you are operating under a reputed and regulated white label provider. You can depend on the white label provider for all major processes, and the amount of capital you risk in the business will be very low compared to an independent broker. Hence, those who want to minimise the business risk should find a reliable white label provider for opening their forex brokerage.
Wrapping Up
In a nutshell, forex white label solutions or Forex Turnkey solutions have opened up a gateway for new businesses who were unable to enter the market in the earlier days. The very purpose of a white label solution is to build your brand name by solely focusing on branding and promotions. However, it is important to research and devise a solid business plan before becoming a forex broker. Owning and running a forex brokerage is a huge responsibility, and you need to ensure the security of your client’s funds by choosing a reliable and trusted white label provider with positive reviews and feedback from clients.
