When one thinks of the world of Forex, the first thing that comes to mind is the possibility of making money through investments. But what if I told you that there is another option that could generate a significant return on investment and that very few people know about? The business we are talking about is the creation of a broker startup, a business model that allows you to be in charge of participating as an intermediary in this global market.
Your main function is to be the mediator between buyers and sellers, which allows you to charge a commission for the transactions that are carried out on a daily basis. In the specific case of Forex, your job is to offer an attractive trading platform with the mission of attracting the greatest number of companies and clients who exchange securities in the market.
It is important to mention that like any other enterprise, certain skills and monetary resources are required in order to create and position your brand in the Forex market. These elements are established by the Forex industry itself and to be part of the market, you must consider them during your planning.
If you want to know in detail the aspects to open a broker startup, we invite you to continue reading this article until the end.
Steps to consider to open your broker startup
Step 1: options for getting started
Before going deeper into the subject, it is necessary to consider the alternatives you have to start as a
- The first of these (and the “easiest”) is as an employee of a firm in the sector to gain experience alongside other traders, obviously, you will be on a salary and not sharing the profits of the business.
- The second option you have at your disposal is to start your own business. As we summarized above, starting a business from scratch implies dedication and investment, which not everyone can afford. If even with the precautions you decide that this business is for you, you have two options to do so:
- You can start from scratch, which allows you to create the company in your own style and conditions. It is always advisable that no matter which option you choose, you approach an expert in the field to get advice during the development of your startup.
- The second option you have at your disposal is to start with a White Label Solution, a proven software ready to be put on the market, freeing you from the technical part and allowing you to focus all your efforts on marketing and customer service.
Step 2. Business plan
Once the business model has been identified, the next step on the list is the planning of the project, with numbers and strategies, through the well-known business plan. At this point you have to detail the following:
- Initial investment: This amount can vary depending on many factors, but experts in the field recommend that apart from the initial amount, monthly expenses are also covered for a period of 3-6 months, as well as a provision for other external expenses, including marketing campaigns.
- Business costs: This amount will also vary depending on elements such as: your target market (it can be local or international), the services you will offer to your clients, the number of employees, the cost of tools, etc. It is important to make a budget that helps you know your present and future income, expenses and profitability.
- Market niche: At this point, the next step in building your broker startup is to identify the type of client you will serve. For example, you can classify them demographically by trading experience, trading style, amounts to be invested, etc.
- Name of the business: Having written the previous points, a key point to consider is the name of your company. This name will be your letter of introduction to the sector. Some ideas to build the name of your startup can include: your market niche, the sector you belong to or original ideas that help you position yourself in the minds of your clients.
Step 3. Obtaining licenses and regulations needed to operate
One of the most important steps for your startup is the issue of regulations. Each region has different legislation regarding the opening of a company, specifically for a broker. For example, if you register your startup broker in the European Union, you have a license to operate in much of the Euro zone. It should be remembered that regulations in these countries tend to be stricter on issues such as leverage and the operation of retail investors.
This rigidity in the system causes new brokerage firms to decide to register in a jurisdiction of countries such as Cyprus, Malta or Estonia, which have more lax regulations and allow higher leverage amounts.
To select one or the other option, you have to make an assessment of your budget, market niche and the needs of your investors. Remember that a segment in which traders can trade a high volume and leverage to small investors is not the same as a segment in which the amount of investment and leverage is more limited.
Since the investment of money, time and resources are large to obtain a license, Smart Broker Solutions has created a structure for startup brokers startup , more favourable in time and money investment.
Step 4. Open a bank account and get a credit card
Since you have a first approach to the market, in this step you need to consider opening a bank account to handle the transactions. You have to select a bank that fits the needs of your activity, such as: the ease with which clients can send their funds, the speed with which they can withdraw them and the fact that there are no setbacks in the transactions.
In order to have more control over the Broker start up, it is necessary to open an account that is solely and exclusively for this activity and keep it away from your personal accounts.
Unfortunately, this is one of the most difficult tasks to achieve, as the brokerage industry is rated as “high risk” and banks literally do not want to know anything, no matter how much money you give them.
On the other hand, knowing this problem and always looking for the best solutions for brokers, Smart Broker Solutions has sought a banking solution, to solve this problem.
Step 5. Having a technology provider
Technology is one of the pillars of any company, but in the case of a startup broker it is vital. You must take care of aspects such as the website, the hosting you use, the trading platform you provide to your clients, currently, the platform used by 90% of traders is the Metaquotes MT4.
The provider must guarantee you a good service 24 hours a day, 7 days a week and respond efficiently in case of any inconvenience. To have total control, you can approach expert technology consultants who will help you solve problems as soon as possible.
Remember that a failure in the technological system could represent a loss of money for many investors
Step 6. Hiring a liquidity provider
Hiring a liquidity provider will allow us to enter the Forex market. We have the option of being a Market Maker (taking part in the operations, which will incur greater benefit/risk) or simply passing the operations to the liquidity provider and obtaining the spread or commission.
Step 7. Acquiring a CRM (Customer Relationship Management) system
A CRM system is essential for the proper functioning of your startup. A CRM allows you to manage your customer information, intelligently capture customer emails, customer service, expand and customize your broker’s growth and manage all the functions of the broker. This type of system is usually very expensive and there are not many CRMs exclusively for brokers, and if there are, they are at an exorbitant price. It is for these reasons and to support the Broker startup, that Smart Broker Solutions has developed a CRM exclusively thought for Brokers at a very affordable price.
Step 8. Other expenses
Other expenses relating to your business are accounting, currency management and human resources.
These expenses are an important part of the correct functioning of the company and must be budgeted for.
What else do I have to do to become a broker startup?
In conclusion, in this article, we present you with another alternative to trade the Forex market. On this occasion, it is a business model that allows you to be a broker startup (intermediary) between clients and companies, to obtain benefits through commissions and educational training.
In order to achieve success in this activity, we recommend that you follow the steps presented here so that you can be prepared to start your business.
If you are really interested in the subject, it is important that you continue with your training so that you can deepen each aspect and get the most out of it for your company.