You’re probably here because you’re considering opening a white label brokerage and getting forex brokerage software. So what makes this business so appealing after all?
The rise in the number of traders. Yes, the fact that people can make more money sitting at home or traveling around the world rather than clocking in to an office makes this 3 trillion dollars a day industry so attractive!
Therefore, the more traders there are, the more brokers they need. However, the sheer number of forex brokerages available today is astounding. A quick search online throws a result of hundreds of brokers people can choose from.
Unfortunately, this also means, there are plenty of unreliable forex brokers who make several promises they cannot keep and they end up burning the customers’ capital and eventually lose customers.
So, how can brokerages remain reliable, viable and competitive while still being profitable?
Let’s get to the basics of getting started and then we can look at how you can remain competitive in a cut-throat market like foreign exchange.
Step 1: Company Incorporation & Brokerage Licensing
Before you can start running your business, you need to set one up. There are certain legal requirements like deciding the jurisdiction you will be working in, registering your forex brokerage and getting a brokerage license.
You’ll also need to establish institutional relationships with several parties necessary for your business. Some examples are corporate banking solutions, payment gateway services, wire solutions, hosting services, etc.
Sanfrix has initiated several brokerages from various jurisdictions and can help you too making the entire set up hassle-free.
Step 2: Choosing a Technology & Liquidity Provider
Running a business in a dynamic market such as Forex means growing rapidly, consistently and most importantly staying abreast of technological and infrastructural changes.
In order to ensure a smooth journey, partnering with a forex brokerage technology provider who can keep up with the everchanging needs of a start-up is crucial. Sanfrix provides forex liquidity and turnkey forex trading solutions that can be tailored to your unique needs.
Now that we’re done with checking off the basic requirements to get you started, let’s look at some of the intangible yet critical aspects of what will keep your ball rolling.
Hack #1: Don’t Over-do Your Profit Margins or Commissions
It’s just about normal for forex brokers to apply a markup fee on the forex interbank market price.
For eg: if the interbank charges 1 pip on EUR/GBP, some brokers raise it up to 3 or 4 pips on every trade of this currency pair. This means the broker is making a profit of 2 to 3 pips on each trade.
This will make your customers shop around, and there are a diamond dozen brokers who will offer something way cheaper, especially, if these trades fall under the top 6 trading pairs. So greed is not the recipe for long term sustainability.
Hack #2: Implement Forex Risk Management Tools
Get a risk management tool for your forex brokerage. We can’t stress that enough. Everything about running a successful forex brokerage software is about making better decisions and running a trading business without a risk management tool is like gambling.
An effective risk management tool doesn’t just protect your brokerage, but it also makes your business profitable over the long run by helping you make better decisions and avoiding losses.
Sanfrix offers competitive risk management tools that can be used as a part of a package or as a stand-alone tool and is easily compatible with MT4/MT5.
Hack #3: Maintain Transparency and Support
Commissions – a common term among brokers. Many brokers charge a commission fee and are transparent about it. However, some brokers are not honest about this. They allege that trading with them is commission-free, but draw up the spreads, and the customers eventually never receive the actual benefit of trading.
Forex trading is supposed to be as cheap as possible and you must aim at charging low commission fees if you want to and be transparent about it.
Customers don’t want to invest large amounts of money with a dishonest and manipulative broker. Also, keep your support high quality, quick and responsive at all times, especially during withdrawals to avoid giving red signals.
These are just some of the basic hacks that are neglected by most forex brokers in the market. There are several other aspects that help you thrive and grow consistently as a white label brokerage.
At Sanfrix, our team of veterans from banking, trading, risk management & consulting backgrounds along with an excellent technology team, have helped several other Fx brokerages achieve this. By partnering with Sanfrix, you receive continuous strategic support that promotes progressive growth.
Not just that, LaunchFXM can assist you with all your White Label Forex Technology and Liquidity needs and has helped several forex brokerage software double their profits by simply implementing the right tools.
If you want to know more about forex then read this
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