According to Investopedia, the foreign exchange (Forex) market is the world’s largest asset marketplace by trading volume and liquidity. This is one of the main reasons its popularity has been steadily increasing for several years. To be effective and make steady profits on the forex market, you need to have in-depth knowledge of the market, good intuition and be a fast decision-maker. But if you already have experience in trading (especially as Introducing Broker, IB), understand the rules of the forex market and know the needs of traders, you should consider becoming a Forex broker.
In this text, we will present selected solutions that will allow you to start your FX brokerage business the easiest and the fastest possible way without having to incur substantial financial outlays.
Find a trusted FX technology provider
First, time is money, and you don’t want to overpay. That’s why, regardless of your experience in the forex business, you should start by finding a partner, be it a forex consultant or technology provider. Look for companies operating as FX one-stop-shop offering assistance in completing formalities, providing technology and IT support and turnkey solutions to help you acquire customers. Remember to pay attention to future costs as they will have a big impact on your FX brokerage business.
Find out more about services essential to starting and developing a viable FX or Crypto company.
Register a company to become Forex broker
To conduct your forex business according to all legal requirements, you must register a company. There are three types of legal jurisdictions for forex services (unregulated, semi-regulated and regulated), varying in license cost and scope.
Unregulated jurisdictions to become Forex Broker
Unregulated jurisdictions – countries like Saint Vincent and the Grenadines or the Marshall Islands don’t have special regulations for forex services, and registration is just a formality. 9 out of 10 FX brokers use this option since it’s hustle-free – the cheapest and easiest to obtain. But it doesn’t give the right to operate in the biggest markets, e.g. European, and can cause some difficulties in relations with banks.
Jurisdictions supervised by regulatory agencies
Regulated jurisdictions are the European Union countries, with the UK and Cyprus being the most popular. Registration of a forex company takes months (at least 6), and its cost exceeds $100k. Furthermore, it doesn’t include the cost of high-qualified staff and legal services to proceed with complicated reporting. But with price comes benefits. A regulated broker can operate in the largest markets without problems with banks and other financial institutions. Besides, such a license raises reputation and broker’s trust. Unfortunately, it’s only achievable for large businesses.
Choose the best FX trading platform
There are several trading platforms on the market, the most popular like MetaTrader4, MT5, and cTrader or less known but equally good, such as xStation, Utip or Match-Trader. When starting your forex broker without a big budget to invest, you should consider a White Label solution. As a White Label Broker, you can operate under your company name, taking advantage of branding possibilities some technology providers offer. When choosing the best trading platform for your business, consider all-inclusive, scalable solutions that will expand in line with your needs. Built-in Client Office for Traders, Social Trading apps, or Data Feeds are necessary. Moreover, by choosing a ready-made solution, you are guaranteed to have every aspect of your brokerage covered by one provider, which is time and cost-effective.
Apart from startup costs, you also need to estimate your ongoing costs, which can significantly decrease your profits. Consider a solution provider with a flat monthly fee who doesn’t charge a turnover fee. Also, look for a provider who offers in-house technology as it will guarantee flexibility. That’s why it’s so important to have a trusted advisor or technology provider to help you set up a solution tailored to your needs.
Of course, besides setting up a white label brokerage, you also need to consider hosting and IT server maintenance. Cost-wise it is best to pass the support and hosting of your server to your FX technology provider. That guarantees 24/7 monitoring minimising the risk of a shutdown which could harm the broker’s image.
If you want to learn more about choosing the optimal solution for your needs, read the article: How to select the optimal White Label solution for brokers.
Convert Forex leads to traders
Equally important to choosing a trading platform is creating a website for your brokerage and establishing social media accounts. Marketing activities are necessary to acquire customers; even basic social media activities can significantly increase your broker’s website traffic. You can also expand your reach by building a network of collaborators using Introducing Brokers (IBs) tools.
Traffic isn’t enough, however. To make your FX brokerage successful, you need to convert leads to traders and make sure they‘ll become loyal customers. How to keep your customers active? Improve their flow by automating onboarding and payments. Find a Client Office, also known as Trader’s Room solution, that will work seamlessly with your chosen WL. This, in turn, will allow your customers to:
- open a new demo or live account automatically,
- transfer money between accounts,
- send deposits or request withdrawals,
- proceed with the KYC onboarding procedure.
As mentioned above, solutions like Multi-Account Management (MAM), Percentage Allocation Money Management (PAMM) or any feature supporting Social trading can help you expand your FX business.
Payment methods for your FX brokerage
Lastly, every FX Broker must provide their customers with convenient and effective payment methods. Standard ones like card payments, bank transfers or popular e-wallets (e.g. PayPal) won’t work for brokers using offshore licenses due to industry regulations tightening.
Read on to learn: How to handle clients’ payments after FX industry regulations tightening.
The best way to solve this problem is to use the payment aggregator system. Choose a solution with extended payment options allowing your customers proceeding instant deposits and withdrawals. Find a Client Office/Forex CRM solution integrated with a PPS aggregator (e.g. PRAXIS Cashier). It will enable access to 300 different PSPs, and it supports over 1000 various payment methods, including tier-1 acquiring banks, e-wallets, APMs, and crypto providers. A tool like this will solve all of your problems with payments.
If you want to know how to become a forex broker or looking for an optimal forex white label, don’t hesitate to contact us. We will help you choose smart solutions tailored to your needs and your budget.
How To Become Forex Broker: FAQs
How to start forex broker fast?
The fastest way to become forex broker is to choose a technology provider that will:
- advise you on how to become a forex broker in the most optimal way possible,
- support you with the formalities,
- provide you with an all-inclusive solution necessary for an FX business,
- offer IT, forex, and WL support 24/7.
If you want to start a brokerage business within one week, contact our experts.
How to open forex broker company?
As mentioned above, depending on the location you choose for your FX business, there is a different amount of formalities to complete. In both cases, however, the right technology provider can support you through the entire process. If you choose Match-Trade, we provide our clients with the support necessary to complete all formalities.
How much does it cost to open a forex brokerage firm?
Our experts created a detailed overview of forex broker costs; you can find it here.
How do I set up a Forex brokerage website?
The easiest and fastest way to set up a brokerage website is to do it with the support of your chosen WL/technology provider. Our Instant Broker Solution provides you with a ready-made branded website and IT support to operate it. Have a look at some of the additional services our clients have found to be helpful in the growth of their business.
