Establishing a new forex brokerage business can be profitable when you have resources and market knowledge. White label forex is a feasible solution for everyone who wants to venture into the forex brokerage industry. But those who plan to open a fully independent forex brokerage will point out the shortcomings of the white label solution. So today, we will be doing a comprehensive review of full ownership forex brokerage and white label forex brokerage to find out which is the best business plan for a beginner in the forex industry.
What is a Forex Broker?
Before moving forward, we need to understand the true definition of a forex broker and its functioning. A forex broker is a company that functions as a link between the forex market and traders. They partner with top-tier liquidity providers to provide solid trading conditions to their clients. They are in charge of providing a seamless trading experience to traders by meeting their requirements. The brokers are the middleman through which traders get to access the international currency market and place trades.
The forex brokerage will be integrating one or more trading softwares into their platform so that new traders can easily open a new trading account and go live. They will also provide demo trading account services for traders who want to understand trading before risking real money. Many brokers also offer trading calculators, which allow traders to enter the trade fully prepared, which means they would have precise information about the lot size, position size, margin, leverage and other aspects. Moreover, a broker should also have responsive customer support that can quickly answer all the doubts and queries of the traders and offer them the required assistance.
In short, a forex broker is responsible for providing everything and anything needed for carrying out the trading process. This covers all steps from funding the account to keeping the funds secure and providing all the tools or features that the trader needs to execute trades perfectly. Execution of trades without any delays and processing the withdrawal of funds initiated by clients are also key functions performed by the broker.
Steps to Become a Forex Broker
- Study the Market and Make a Plan
Before starting any new business, the first step is conducting a study about the market segment you want to target. Find more information about your business potential and prospects. You need to make a solid plan for finding potential clients and bringing them to your brand-new brokerage platform.
- Start Your Brokerage From Scratch or Find a Forex White Label Provider
For the next step, you get two options: you can either try building your brokerage platform from scratch or find a white label solution by reaching out to a leading broker. For the first option, there are a lot of requirements, as developing and testing a brand-new website requires a lot of capital investment and resources. Integrating a popular trading platform like MT4 and MT5 will also add more to the expenses with the licence fee. But, you have only one option to provide these platforms to traders to ensure a seamless trading experience. If you want to add just one trading platform, MT5 seems a better option, thanks to its initiative interface and better trading tools.
You will need enough manpower to carry out the back office process and provide customer support. Obtaining regulation and making the platform secure for users is another challenge you will encounter while starting out as an independent broker. All of this makes the process of opening a full ownership brokerage very hard for a beginner, as it will be a time-consuming and complex process, to say the least.
But for the second option (white label forex), you don’t need huge capital as you will be using the platform set up by another top broker with your own branding. The initial setup cost is greatly reduced, and you will get valuable guidance and assistance from an experienced broker.
They will be responsible for the entire technical setup and platform maintenance. You just need to pay attention to building the brand image with customisation and promotions. This saves a lot of time, and you can launch your brokerage brand within a few weeks after finding a trusted primary broker to rely on.
- Marketing and Promotions
The challenge starts after the platform launch, whether a full ownership brokerage or a white label partnership. In this phase, you will promote your new brokerage to catch the attention of traders who may become your clients in future. You need to make a promotional plan and establish your brokerage brand by presenting it as a reliable trading platform. You need to make the platform appealing to all types of traders, irrespective of their experience and skill level.
This is a tough task as many traders prefer reputed and well-known brokers over new ones. They may be hesitant to try a new platform and are more likely to go for an older platform which has been there for a long time. But you surely have a chance to build a client base if you are able to meet the requirements of new and seasoned traders by offering competitive pricing and quality services.
So, being a new broker in the forex world, you must come up with unique selling propositions and promotional strategies that can attract traders to your website. Then, you should take all steps in order to meet the expectations of your clients. That way, you will be able to build a loyal client base and grow your business horizons in the future.
How Does White Label Service Help in Becoming a Forex Broker?
As we mentioned before, white label forex is more like hiring a forex broker to help you with the complex technological aspects that are there when you set up a new brokerage. In fact, the broker will be functioning as a technology provider for you and your clients. You will not get such guidance and assistance when you enter the market as an independent broker, which adds to the burden and risk for a newcomer.
The quality of your services will greatly depend on the technology you have chosen for launching the brokerage platform. A completely new platform runs the risk of encountering tech failures and other issues that can have a negative effect on the trading process and execution. But when you opt for a white label solution, such risk can be eliminated as the white label platform is already functional and capable of offering a seamless trading experience to all users alike.
You don’t have to worry about the complexities and technicalities of running a forex brokerage. You will be able to focus more on brand building and expanding your client base with promotions. So, a white label forex solution can surely help you in speeding up the process of starting your own brokerage, as you can save a lot of time and effort that will be required for doing everything on your own.
In conclusion, we can’t really give a one-word answer to the question that we were trying to answer in the beginning. Both full-ownership brokerage white label brokerage can be a good starting point for new brokers if they have adequate funds and resources to move forward with the option that they have chosen. But the easier alternative for a beginner is definitely the white label solution, as it allows you to enter the brokerage industry with greater ease and more future growth opportunities.