Brokerage businesses working according to the A-Book model are divided into STP and ECN types. An STP broker gets the right to choose liquidity providers from a pool, while ECN (Electronic Communication Network) serves as a liquidity hub itself, limiting your opportunities. While looking for liquidity providers, Prime-of-Prime ones unlock access to the deepest pools no matter what instruments you need. Most new brokers choose to get a white label because getting a full license from MetaTrader is often too expensive for small forex brokers.

If you’ve been successfully trading forex or working as an introducing broker for a while, you may be interested in starting your own forex trading business. Forex brokerages can be lucrative, and if you have experience with forex and connections in the community, you’re already off to a good start. If you've decided to take a stab at forex trading, the good news is that access to the currency markets has never been easier. A wide range of online brokerage platforms offer everything from spot trading to futures and CFDs.

How to Choose a Forex Broker

An affiliate manager can connect your company with prospective clients that are looking for exactly what you have to offer. With good traffic flow and proper targeting, your sales team won’t need to grind the phones. If you are considering tackling this project on your own, you may find yourself running in place.

It’s affordable and fast, but you must establish a physical presence in the country with an office and appoint a local manager and director. If you want to open a forex company fast and operate under your brand, you can opt for a white-label solution. Choosing a forex broker requires you first to figure out what type of investor you are and your goals in investing in currencies. It is advisable to start the staffing process even before the office is ready, as you would want to get as large a pool of quality candidates as possible. A clear plan is essential for success as an entrepreneur, as without a plan it would be impossible to map out the specifics of the business venture at hand and to uncover and bring to the fore any unknown or unexpected factors. In Figure 2, above, we can see that a multitude of indicators are pointing in the same direction.

How to Start a Forex Brokerage in 2023 Step by Step

For instance, before the 2008 financial crisis, shorting the Japanese yen (JPY) and buying British pounds (GBP) was common because the interest rate differential was substantial. It is a bilateral transaction in which one party delivers an agreed-upon currency amount to the counterparty and receives a specified amount of another currency at the agreed-upon exchange rate value. If you want to provide leverage, you will also need to negotiate with a bank for a line of credit. Banks often have lengthy verification and approval processes; thus, plan ahead and give sufficient time for this process. But we’ve created a checklist to make your life easier when launching your FX brokerage business. Then, we’ll review the business structure and staffing, estimate expenses, and go over the required software and technologies.

However, it is imperative to engage into this process to avoid gaps and pitfalls, since identifying your ideal customers is one of the most critical aspects of sales. Starting out in the forex market can often result in a life cycle that involves diving in head first, giving up or taking a step back to do more research and open a demo account to practice. From there, new traders might feel more confident to open another live account, experience more success, and break-even or turn a profit. That is why it's important to build a framework for trading in the forex markets, which we outline below.

Selecting a Trading Program

If you buy a turnkey forex brokerage, you purchase all the services you need from one company, including an MT4 platform, liquidity, payment processing, etc. If you start a brokerage from scratch you obtain a license for a trading platform, build software for your clients, obtain regulatory licensing on your own, set up a bank account, etc. You will need to partner with reliable payment service providers to allow you to compete effectively in the market, as well as having different deposit and withdrawal options to make it as convenient as possible for your clients. Furthermore, if you are going to offer cryptocurrencies, you may wish to consider integrating a cryptocurrency payment gateway such as B2BinPay to enable you to send and receive payments online in crypto. After you’ve experimented with the broker’s trading platforms using a paper trading/demo account (see more on that below), you can open that live account and start trading with real money.

Brokers will also provide technical and fundamental information, economic calendars, and other extensive research. Unlike equity brokers, forex brokers are usually tied to large banks or lending institutions because of the large amounts of capital required (leverage that they need to provide). A Forex turnkey solution is an ideal opportunity to start a brokerage business quickly, without significant costs and to on-board the latest technologies in response to client demand.

Business Flexibility: Your Business, Your Rules

Evaluate factors such as execution speed, order routing options, depth of liquidity, and access to various financial instruments. Maintain multiple liquidity sources to mitigate risks and ensure smooth order execution. Regularly assess the quality of the liquidity provided and be prepared to switch providers if necessary.

When you get comfortable with your starting package, you can start expanding your offering with new trading instruments. It’s also worth checking out whether a trading platform is already integrated or allows quick and easy integration with various third-party service providers – liquidity hubs, market data providers, payment services, financial news feeds, etc. Your “big brother” will provide you with the entire infrastructure and a trading platform. He’ll also monitor and execute all your clients’ trades, take the better half of your profit, and claim all your traders in case of any issues. So, as an introducing broker, you’re not exposed to many risks, but you’ll receive a more slender income.

Forex Broker Actions to Avoid

Forex trading is complicated; acquiring a deep understanding of the forex market takes time. In Dubai, Forex Trading licenses are exclusively issued by the DMCC and DIFC. These licenses are tailored for companies primarily engaged in trading Forex, Over the Counter (OTC) derivatives, and Exchange-Traded Derivatives (ETDs) on regulated exchanges. Before you embark on the journey of obtaining a Forex trading license in Dubai, it’s essential to evaluate your experience in the Forex trading sector.