The forex market takes the first spot when it comes to trading volume, daily turnover and the number of active traders. No other market can come close to the trading volume that is generated in the currency market. Another industry that has been growing alongside the forex trading industry is the forex brokerage industry. Because each and every trader needs a broker platform to access the forex market online, since the forex market already has more than 10 million active traders, starting an online forex brokerage can be a lucrative business idea for ambitious entrepreneurs.
If you are wondering how to explore this space, go through this comprehensive guide on becoming a forex broker in 5 steps. You will also get valuable insights into the Forex white label, which will help you start your own business on the right note.
Business Scope for an Online Forex Brokerage Company
Before we get into the 5 step guide to becoming a forex broker, here are some facts about the forex market that you need to know to understand the business scope of an online forex brokerage company.
- The fact that international currency pairs are the most demanded and liquid trading instruments ever to exist makes forex instruments the most appealing asset class for global traders. So, by starting a forex brokerage, you will be providing a service that is always in great demand on a global level.
- Newbie traders keep entering the forex market and always seek the most affordable and cost-effective forex brokerage services. As a forex broker, your business prospects are huge; every new trader is a potential client.
- The forex market has been there for a long time now. The currency market will always continue to exist as long as people are interested in trading. That means your forex brokerage firm can continue to exist for a long period of time once you establish a solid client base.
- The initial cost of setting up a forex brokerage can be huge, but the turnover and profits you can eventually earn as a successful forex broker are even bigger.
What is a White Label in Forex?
White-label solutions are widely practised in various business industries, including the forex brokerage industry. In simple words, a white-label solution is a business idea by which the producer of an end product sells the product in a white-label package with no attached brand name, allowing another company to sell the product under their brand name. This concept is becoming very popular in the forex industry as many established and reputed tier-1 brokers provide white-label forex solutions to help new-age brokers who want to access the forex market as a new platform.
The primary broker you choose for the white label in forex functions as the technology provider by letting you use their platform and user interface for your clients. This business model is very feasible, and many of the tier-1 forex brokers that we see today were beneficiaries of white-label forex solutions in the past. They started out as a white-label forex broker and managed to build their own brand name and client base over the years.
5 Simple Steps for Launching Your White Label Forex Trading Platform
Building and launching an independent forex brokerage with an integrated forex trading platform will take a whole lot of time and a huge amount of capital, to begin with. The steps are much more complex, with continuous testing and legal formalities. You will also have to reach out to liquidity providers like top-tier banks and other institutions, which requires a lot of paperwork. In short, this can make the first phase an almost impossible task for an average beginner. But launching a white-label forex trading platform is simplified and faster. Let’s look at the 5 simple steps you can take for starting your own white-label forex brokerage.
Step 1: Choose a Reputed Broker for White Label Forex Solution
There are quite a few popular forex brokers who can function as your technology provider. You just have to choose the best one out of the available options after carefully comparing different brokers based on the services offered, initial cost, future costs and ease of the sign-up process. Some brokers extend their support to promotional activities to build your brand name and may also help you with some training programs. You can look for such full-fledged white-label solutions as they will be ideal if you need much more than just a technology solution.
Step 2: Register Your White Label Forex Brokerage Firm
You need to register your forex brokerage to operate within legal boundaries. You can choose to be an unregulated broker with a regular registration or a regulated white-label forex broker by obtaining a licence from top authorities like CySEC. But regulations are challenging to obtain as you will have to meet all the requirements specified by the authority. It takes more than 6 months and comes with a cost which can exceed 100k besides the cost of hiring high-qualified staff and complex reporting.
But as you may already know, becoming a regulator broker always opens up great opportunities and will help build a trust factor in your clients. So, you can keep this one in your future plans even if you are unable to start out as a regulated platform at the moment.
Step 3: Choose Your Trading Software and Customise It With Your Brand Name
The next step is choosing the best trading software available to you and adding your brand name to it with customisations. The most popular trading software is still the MT4 and MT5 platforms. Both these platforms are good for new and experienced traders. Usually, your primary broker will help you with the customisation process.
Step 4: Choose Funding and Payment Methods for Your Clients
Transparency in funding and payment methods is something that every trader looks for when choosing a broker platform. So, make sure you give them convenient, smooth and secure payment options. You can go for a full white-label solution if you want to take responsibility for the client’s deposits and funds. But if you are unsure about this aspect, it would be better to opt for a partial white-label solution, where the primary broker will be in charge of keeping and processing the funds from clients.
Step 5: Give All of Your Attention to Promotion and Marketing
The last and final step is a never-ending process for every forex brokerage. Promotion and marketing activities are inseparable parts of modern business. Make sure your platform is known to the traders’ community, as that is the only way to capture clients as a new broker. Some primary brokers may help you in this step, but you will have to make maximum effort to build your brand name as a white-label forex brokerage.
Benefits of Setting Up a White Label Forex Trading Platform
- You can save a lot on the initial setup cost, which, otherwise, you’d bear if you choose to start your own forex trading platform from scratch.
- The process of setting up a forex brokerage on your own is very time-consuming and complex, whereas establishing a white-label forex brokerage takes very less time, with some primary brokers allowing you to get started within weeks.
- The risk of starting as a new forex trading platform will be significantly lesser when you team up with an experienced broker. As a white-label forex brokerage, you benefit from their expertise, which is a plus.
- After establishing a white-label brokerage, you won’t have to worry about platform maintenance, customer support, security of funds and many other complex aspects, as the primary broker will take care of all these areas on your behalf.
- You can give your clients a superior and seamless trading experience as they will use a fully-functional and trusted trading platform from another well-known broker.
- You get many options for platform customisations, and clients will be accessing the service under your brand name. You can provide them with different trading tools and calculators to deliver quick and efficient results while trading. This will help you establish yourself as a reliable broker in a shorter period.
Drawbacks of White Label Forex Solutions
- As traders prefer well-known forex brokers, it will take time to capture the client base as a new forex brokerage.
- Customisation can add up to the cost depending upon the pricing of the primary broker you choose for white-label forex.
The final verdict is that the benefits of white-label forex surely outnumber the drawbacks. This 5-step guide will help you in the process of starting a forex brokerage. If you have any doubts regarding any step, let us know about them in the comment section.