03 Jan Forex Broker – Route to success
While Forex broker seems like a complicated entity with a lot of moving parts. It is very lucrative and highly profitable business if done correctly. To be successful in this business the firm needs to create a plan and implement general business rules; Customer first, always provide high end technologies, advertise wisely, etc. and strictly follow them. Providing that Boris and myself, we have more than 20 years of experience the forex broker has very high chances to be successful.
Why we think that our business will be successful?
Our business is not just another start up. The strong team of co-owners are bringing necessary expertise, technology and Sales leads to the table to make it successful. At the beginning all co-owners will participate in daily operation to lower the cost of operation.
Forex broker has a few components that need to be puzzled together to make it running as well-oiled machine and to make offering appealing enough for the clients to be interested to open an account. Here is the overview of main components.
- MT4 White Label
- MT4 bridge with dealing capabilities
- FIX API Splitter
- Price Aggregator
- Connectors to LPs
- Social Trading
- Client’s Portal
- Online application
- IB portal
- Bonus plugin
- SWAP Plug-in
- Customer support
- Regulator’s requirements
- Customer Relationships Management
- List of Leads
Taking into consideration our experience we can cover all of the above areas.
Based on the fact the FxMars has all the technologies 80% of the time will be spent setting up and tuning the tech part to accept a new client.
- Build Company’s Online presence.
- Online Application
- Demo form
- Setting up CRM.
- Connect CRM with MT4 and Online forms.
- Set up auto responses
- Purchasing MT4 WL and open a clearing account.
- Set up groups and symbols.
- Connecting Clearing account (LP).
- Connect Clearing account via bridge to MT4
- Start accepting clients.
- Send first batch of emails to the existing leads.
- Start online banner advertising based on available funding.
- After first 300 clients are accepted, build Arbitrage branch of the business that will blend into the flow of regular customers.
First 300 clients can be on-boarded without spending for advertising in a period of 4 months.
300 active clients = $900,000 in Equity (industry average is $3000 per client)
Average trading is 3000 lots a month
Average Commission = $20k-$30k
Average B-Book operation = $20k – $100k
Total profit based on 300 live clients ~ $40-$130k
The timeframe for onboarding 300 live clients is 3-6 months.
The action plan can be divided into a few milestones based on the amount of clients as more clients requires more attention from technology and more operational expenses.
- 0-100 live Clients
During this stage the Company needs to adjust all the internal processes paying more attention to internal automations. All payment systems should be activated. The accounts above $5000 would need to be placed on B-Book and no active dealing will be conducted.
No further investments are necessary.
- 101- 300 live clients
Automations should be finalized and company can start hiring support staff based on the profit.
All Sales leads should be generated using existing sources and no marketing funds should be spent. Company can start moving towards creating a qualified news team that will be producing market news, highly appreciated by the traders. Company can start promotional bonuses for account opening. The Demo contest can start shaping up creating a path for a big Live contest in the next stage. I
The company should re-invest. Some injections may be required to speed up the process. Mainly into salaries.
- Above 300 live clients
All marketing plans should be developed. At this stage the company should be fully staffed with 5-6 support people covering 24 hours around the world with verity of language knowledge, 4 dealers covering 24 hrs, marketing specialist, 2-5 market analysts, 2-3 Product owners, 2-3 business analysts running different parts of the business.
At this point the amount of trades will allow the Company to start a new line of the business – arbitrage.
Based on industry average and our experience first 300 clients can be on-boarded in the period of 3-6 months after the first client is accepted. Taking in to consideration that Boris has more than 1,600,000 forex traders leads and more than 600 money managers the company can save significant amount of money on advertising. Majority of leads are the prospects that were generated by Boris and his existing business.
With on-boarding rate of 300 clients a month the company in 2 years can make around $1mil a month. When Company achieves this kind of results the new go-to-market should be developed and company can go into other markets or start expending new products like spread betting.