So, you have been a Forex trader for a while and now you feel ready to take the next step in the Forex Industry. You want to become a Forex Broker. Well, here are 5 steps to becoming a Forex Broker.
Forex brokerage is gradually on the rise and though more people are entering the Forex industry every year, there is still a lot of potential in the Forex market. You can become an excellent Forex broker and rise above your competition by following the simple steps below:
1. Licensing
Although it is not compulsory to have a license, it greatly improves your chance of building a clientele. Begin by registering your company and get a Forex Brokerage license. The thing is, all licenses are not the same and are definitely not viewed the same way.
However, you can get started as an unregulated broker to start with & then you can proceed to be a regulated broker by getting a license.
Different licenses will give you access to different forex markets and not all markets have the same power.
There is a comprehensive point system in place that allows us to understand the value of each Forex Broker license. For instance, most authoritative brokers will have 100 points. These include licenses obtained from Government agencies. Licenses obtained from financial markets are rated at 50 points and licenses given by market regulators with very little influence are ranked at 10 or below.
The better your license the higher chances you have to be successful in the industry. Clients naturally want to work with the best brokers. However, other factors may also influence your choice of market and licensing.
Conduct thorough research and apply for a license in the jurisdiction that would benefit you the most. Spending time on the licensing process would ensure you are on the right track before you even get started. Since many of your competitors won’t have licenses, starting with a license will make you a better choice among traders
2. Liquidity
Once we have all the instruments we need to get a liquidity service provider in place so that traders can see all the forex commodities that are in the exchange process. Once they place orders it is in our hands to execute orders on time.
Liquidity refers to the amount of money flowing in and out of the market at any given time. Or the number of traders trading in the forex industry as we speak. Traders on your website must be able to track liquidity and currency rates so that they can trade accordingly.
Setting up liquidity is an important process and one that requires a significant amount of research. It enables traders to see prices of different commodities and it also allows you to execute orders as and when you get them.
You must pick a liquidity provider who can efficiently execute orders on time and keep your customers satisfied. The more satisfied they are the more likely to stick to you.
3. Easy - To - Use Trading Platform
In this third step, you get to use your own experience as a trader. Which brokers did you work with in the past and what were they lacking?
Your website must contain your license information, security information, contact forms, easy to access signup forms, account set up methods, payment methods, and a beginner’s guide to Forex Trade.
Though you can hire any designer to build a website, it is ideal to work with a designer who has in-depth knowledge in the forex trade market. A good broker website must provide traders with updated prices. It is impossible to update prices manually hence they should be able to integrate your website with various foreign exchange instruments.
Different brokers provide their traders with different instruments and if you really want to increase your clientele consider including more trading instruments that are not commonly available in your market.
For instance, if your competitors do not provide devices to calculate CFDs, consider being a sole provider. You may have fewer traders using this instrument but since you are the only broker providing it, it gives you a monopoly. Customers that come to you because of your CFD instrument may become your customer for life.
4. Do You Know Your Client (KYC)
We need to make sure your clients can legally become forex traders. It is important to clear up the legal matters for each customer as soon as possible so that they can get started with the trading process and you can benefit from having multiple traders on your platform.
With fewer traders on your website, it is possible to handle the KYC department on your own, but with time, you will need a professional to review legal documents as quickly and as effectively as possible.
Customer Relation Management (CRM) is a very important part of being a Forex Broker because you are ultimately creating a platform to simplify trading for Forex traders. This is why your clients should be able to get in touch with your team, resolve issues, and get back to trading as soon as possible.
You don’t need a physical office when you just start off but it does help to have an authentic workplace and a smooth customer management team once you start getting more customers.
5. Customer Retention
It is true that your highest paying customers will be forex traders for life. You benefit from having them as your customer and it is in your best interest to make sure they remain with you. So the last and perhaps the most important part of becoming a successful Forex Broker is to ensure that your customers remain with you.
If you carefully put in place all the above criteria, it would inadvertently retain customers. Customers understand when you are going out of your way to give them the best service and they would naturally stick to the most trusted broker in the market.
Please provide easy to access phone numbers so that your customers can get in touch with you in case of an emergency. After all, word of mouth is still the most powerful means of marketing. Clients must feel valued for them to stick around and introduce more of their trader friends to your business.
So, here are 5 simple steps to becoming a forex broker. The key here is to make it a fruitful environment for traders to take part in foreign exchange. We wish you all the best to become a forex broker and we hope to hear your success stories very soon.
