Table of contents:
- 1 1. Find a trusted FX technology provider
- 2 2. Register a Forex Company
- 3 3. Choose the best FX trading platform
- 4 4. Converting Forex leads to traders
- 5 5. Payment methods for your FX broker
According to Investopedia, the foreign exchange market (Forex) is the world’s largest asset market in terms of trading volume and liquidity. This is one of the main reasons why its popularity has been growing steadily for several years. In order to be effective in the forex market and make stable profits, one must have a thorough knowledge of the market, good intuition, and be a quick decision-maker.
However, if you already have experience in trading (especially as an Introducing Broker, IB), understand the rules of the forex market, and know the needs of traders, you should consider becoming a broker.
In this text we will introduce selected solutions that will allow you to start your FX brokerage business in the easiest and fastest way without having to make large financial investments.
1. Find a trusted FX technology provider
First of all, time is money and you don’t want to pay too much. Therefore, regardless of your experience in the forex business, you should first find a partner, be it a forex consultant or a technology provider. Look for companies that act like an FX One-Stop store and offer assistance in completing formalities.
They offer technology and IT support, as well as turnkey solutions that can help you attract customers. Remember to look out for future costs as this will have a significant impact on your FX brokerage business.
For example, see GBE Prime:
For technology, you will need also liquidity and access to the markets. For market-access, there are special market maker licenses required. Most brokers do not own such licenses because it is a high effort to get them. So they connect with a provider with a market maker license who is providing forex liquidity.
2. Register a Forex Company
To operate your Forex business in accordance with all legal requirements, you must register a company. There are three types of legal systems for forex services (non-regulated, semi-regulated, and regulated), which differ in license costs and scope.
Countries such as Saint Vincent and the Grenadines or the Marshall Islands have no specific regulations for forex services and registration is only a formality. 9 out of 10 FX brokers use this option because it is hassle-free – the cheapest and easiest to obtain. However, it does not give the right to operate in the largest markets, e.g. Europe, and can cause some difficulties in relations with banks.
These are the countries of the European Union, with the UK and Cyprus being the most popular. Registration of a forex company takes months (minimum 6) and the cost exceeds 100,000 USD. Moreover, the cost of highly qualified personnel and legal services for complex reporting is not included. But with the price come benefits. A regulated broker can easily operate with banks and other financial institutions in the largest markets. Moreover, such a license increases the broker’s reputation and trust. Unfortunately, this is only possible for large companies.
3. Choose the best FX trading platform
There are several trading platforms on the market, the most popular ones like MetaTrader4 and MT5 and cTrader or less known but equally good xStation, Utip, Match-Trader. If you are starting your own forex broker without investing a large budget, you should consider a white label solution, and the most reasonable choice for the client would be the MetaTrader 4/5.
See the MetaTrader 5:
As a white label broker, you can operate under your own company name, although MetaTrader White Label offers limited branding options and a simple, shared mobile app. On the other hand, MT4/5 offers an extensive system of EA (Expert Advisor) trading offers, making it the most frequently chosen platform by traders.
When choosing a trading platform, you need to find a solution that works best for you. In addition to the initial costs, you must also estimate your running costs, as this can significantly reduce your profits. Consider a solution provider with a monthly flat fee that does not charge a turnover fee. Also, look for a provider that offers in-house technology to ensure 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.
In addition to setting up a white label broker, you must of course consider hosting and IT server maintenance. In terms of cost, it is best to refer the support and hosting of your MT4 / MT5 server to your FX technology provider. This guarantees 24-hour monitoring that minimizes the risk of a shutdown, which could damage the broker’s image.
4. Converting Forex leads to traders
Equally important for choosing a trading platform is the creation of a website for your brokerage business and the creation of social media accounts. Marketing activities are required to attract customers, and even basic social media activities can significantly increase traffic on your broker’s website. You can also expand your reach by building a network of people who use the Introducing Brokers (IB) tools.
But traffic is not enough. To make your FX brokerage business successful, you need to convert these leads into traders and ensure that they become loyal customers.
How can you keep your customers active?
Improve their customer flow by automating onboarding and payments. Find a customer office, also known as a Trader’s Room solution, that works seamlessly with the WL you choose. That way your customers can:
- Automatically open a new demo or live account,
- Transfer money between accounts,
- Send deposits or request withdrawals
- Continue with the Know Your Customer (KYC) onboarding process
Solutions such as Multi-Account Management (MAM), Percentage Allocation Money Management (PAMM), or any function that supports social trading can help you grow your FX business.
5. Payment methods for your FX broker
And last but not least, every FX broker must offer its clients convenient and effective payment methods. Standard methods such as card payments, bank transfers or popular e-wallets (e.g. PayPal) do not work for brokers using offshore licenses due to tightened industry regulations.
Dealing with payments from customers after tightening of foreign exchange regulations
The best way to solve this problem is to use the payment aggregator system. Choose a solution with advanced payment options that allows your customers to make deposits and withdrawals instantly. Look for a Client Office / Forex CRM solution that is integrated with a PPS aggregator (e.g. PRAXIS Cashier) It provides access to 300 different PSPs and supports over 1000 different payment methods, including Tier 1 acquiring banks, e-wallets, APMs, and crypto providers. Such a tool will solve all your payment problems.
Conclusion on how to become a Forex Broker:
In this article, we highlighted the steps for creating a Forex Broker. For better understanding, this was just an introduction to this topic. If you want really to create a Forex Broker you need to do deep research into all the presented steps we showed.
Furthermore, you will need more than $100,000 to start because you will have high costs for licenses, advertisement, and market fees. From our experience, you will need more than $1,000,000 for starting a real business. Otherwise, it is not sure if you be successful.
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