Trading in the forex market has become an immensely popular venture in the past few years. The key reasons behind this growing popularity of forex trading are the enormous profit potential and ease of access. The currency market becomes easily accessible because of online brokerages that connect the traders to the decentralised market by providing a platform and real-time market data for making trading decisions. Every trader needs a broker to enter the forex market; hence, opening a forex brokerage can be a lucrative business idea. Forex white label solutions allow us to implement this idea in easy steps, reducing complexities and costs to a great extent.
Many of us are doubtful about the steps involved in opening a forex brokerage and need some guidance to get started. In that case, this article can be an insightful read as I will be guiding you with the entire process, which can be completed in 6 steps.
1. Deciding Your Target Audience
The first step that you need to complete before starting any business is deciding your target audience. It is similar to how a content creator targets a specific group of people to engage with his/her content and tailor the content to meet their tastes and preferences to maximise its reach. The same thing has to be done by businesses as not all people can be pleased with a specific product or service, but you need to decide which group of people are most likely to buy the product or service that is being sold by the business. This group will be selected as the target audience.
In the context of a forex brokerage business, any person who is interested in becoming a forex trader can be your target audience. It can also be an institution if you plan to cater to the needs of institutional traders as a forex broker. If you want to appeal to beginner traders alone, then you can offer MT4 as a trading platform which is preferred by both novice and seasoned traders. However, integrating the advanced MT5 platform into your website can attract more traders who are looking for advanced features and tools. The trading styles you want to support should also be decided in this phase, as that is important to provide favourable trading conditions.
But you need to be more specific with the nationality and region of the target audience, as the jurisdiction needs to be decided based on these aspects. You may also consider the religion of your potential client base if your target audience consists of people from diverse cultures and groups. Suppose the region you have chosen for defining your target audience includes people following Islam as their religion. In that case, you will have to provide swap-free accounts because swap is a form of interest that goes against Islamic finance rules.
2. Completing the Legal Formalities
The 2nd step involves completing the legal formalities for the establishment of your brokerage business which can be a complex procedure to begin with. The forex market is very transparent, and the regulatory conditions can vary depending on the jurisdiction that you have chosen for running your brokerage. You may not know about the legal intricacies of starting a forex brokerage, and getting some guidance and help from an expert will make the process easier and faster. Thus, choosing a reputed and regulated white-label provider can be ideal for new-age brokers.
They will be responsible for helping you with all the complex legal processes, such as regulatory compliance and licensing. This feasible solution allows you to enter the market faster while minimising expenses. When you choose to operate under a regulated white-label provider, you will be able to match their standards, and thus, you will be able to function as a licensed and regulated broker with their support. This makes the whole process a lot easier for a new broker, and you will be able to save a lot of time, which can be used for focusing on other important aspects of your brokerage business.
3. Selecting Secure Payment Gateways
Handling clients’ funds will be your primary function as a broker, as they will be depositing their trading capital on your platform, and you will be helping them use this money for trading purposes. Traders always expect fast withdrawal processing when they wish to take their profits from trading. Thus, you need to make arrangements for the same by selecting secure payment gateways and payment processing systems for your clients. It would be ideal to give them a bunch of different options to choose from, as different clients have different preferences when it comes to funding and withdrawals.
When you partner up with a white label provider, they will offer assistance in payment processing, too, as you will be purchasing a complete software solution that is needed for functioning as a forex brokerage. You can choose between a full white-label solution and a partial white-label solution. The full white labelling allows you to accept deposits from clients and handle the funds directly. The white label provider will accept the funds on your behalf in partial white labelling. So, you need to choose the one that fits you the most.
4. Platform Development and Launch
The fourth step includes all the technical processes that are necessary for platform development and launch. Setting up the IT infrastructure, coding a software solution, website development, customisation and branding must be done to build a brokerage platform from scratch. For this, you will have to purchase the licence for integrating a popular trading platform like MT4 and MT5 into your brokerage site and developing the site itself is a complex procedure for a new business owner. You will have to team up with expert programmers and developers who specialise in forex brokerage platform setup.
The technology setup can be very expensive and time-consuming as there will be a lot of test runs that need to be done before going live. Remember to add basic to advanced trading tools and powerful yet user-friendly features to make the platform beginner-friendly. Adding customer support systems like live chat support can make your platform more appealing to clients, as they will be able to communicate with your team on the platform itself.
A white label provider can offer you a ready-made technology for all these, minimising the cost and increasing the efficiency while also allowing you to offer the platform under your brand name after some customisations. You will be able to launch your platform within a few weeks.
5. Deciding a Business Model
The next step is deciding on a business model for your brokerage, either an A-book or a B-book model. In the A-book model, the broker teams up with liquidity providers and won’t be directly involved in the trading process. The liquidity provider will be re-directing the trader’s order to an interbank network, and thus, the broker only works as a middleman or intermediary to facilitate trading. They provide No Dealing Desk execution. In the B-book model, the broker will be acting as a counterparty in all the trades. The model you choose for your brokerage business is crucial as it decides how the orders are carried out on your platform.
The trading conditions you can offer your clients greatly depend on the business model. Traders will always choose a broker offering fast execution of orders without much slippage, and when you opt for a white-label solution, the business model of the provider will become your business model by default as you are purchasing the entire technology along with order execution systems. In the A-book model, there is more transparency as the broker is not acting as a counterparty, and the trading conditions can be more favourable when you have a top-tier liquidity provider.
6. Marketing Strategy and Promotion
The last step in the process of launching your forex brokerage is deciding your marketing strategy and promotional activities. This is crucial for establishing your brand name as a new business in the competitive brokerage industry. This includes deciding your brand positioning strategy, voice, messaging, and all relevant aspects that shape your brand’s identity. This brand identity will play a huge role in marketing, and you need to plan promotions in a way that your brand name reaches the potential client base. This ongoing process is crucial for widening your client base and growing your business.
So, these are the 6 simple steps that need to be followed for launching your forex brokerage. The expenses of the initial setup process can be cut down by choosing a cost-effective white-label solution. With a reliable white-label provider, you get the backing of an experienced expert, which helps minimise the business risk.