Many traders with different levels of expertise sometimes wonder if they would be better off becoming a broker themselves. It is a reasonable question as pretty much anything is possible nowadays with the growth of technology and globalization. But possible does not necessarily mean easy. Specifically when it comes to becoming a broker, this process can take up a lot of time and resources before bringing any results. Here we are going to talk about how to be a Forex broker and what do you need to understand before thinking of becoming one.
First things first, it is important to realize that you will not be able to figure out how to become a Forex broker overnight. More often than not, brokers come from being very successful traders or top tier financial specialists. All the previous experience and knowledge is going to play a crucial role in starting your very own broker company. Additionally, if you have never traded yourself you might have a wrong impression about Forex altogether. So, begin by perfecting your trading skills and learning as much as possible about various aspects of currency exchange. Spoiler alert: it will get overwhelming, therefore you need to make sure to prepare for gifting a good portion of your time to this process.
The next step would be to figure out the legal side of the matter. Depending on where you are located and what are the local laws that regulate currency trading, you might need to get licensed accordingly and pay certain fees. In other words, legal steps of how to become a Forex broker in Canada are going to be almost completely different from the ones on how to become a Forex broker in South Africa. This can add up into a pretty solid pile of required paperwork. The best solution in this case is to approach the issue with a team of reliable lawyers who will be able to guide you through the process.
On top of the previous two obstacles there is also the financial part. Becoming a broker is not going to be cheap. Just as with any other successful business model you need to be ready to keep investing before you start to make any visible profit. First major expense to keep in mind is a purchase of a licenced copy of the trading platform. The price varies depending on the developer, but you can easily count on something over $100k. Needless to say, this is not the type of money everyone just has laying around. That is why deciding to become a broker can be considered as a giant step in terms of preparation and investments.
After you have gone through all the necessary steps and feel ready to start working and getting clients, focus on what is going to make you better than all the other existing brokers. The traders should want to come to you specifically and that can be accomplished only by dedicating yourself to the idea. Here are some of the tips on how to be a good Forex broker:
- Stay updated. All your software and resources have to constantly stay up to date. This will guarantee your clients that you take the matter seriously and doing your best in providing the most effective tools and information.
- Be open and clear. Starting with the terms and conditions in your agreement with every new trader and continuing with all the specific fees and charges, ensure to provide a clear picture of what exactly is going on. Skipping over this tends to create a certain level of suspicion. Most brokers who hide the fees and confuse their customers with falls information are scammers.
- Keep learning and teaching. The Forex market is always changing. There are major events and changes happening nearly every day that affect the currency chart. But as long as you make sure to stay on top of the game and see the whole picture of the market you should be able to undertake the necessary actions. Plus, allowing your tarders to a source of fresh and reliable information, such as daily fundamental analysis report, for example, builds up trust and increases the success rate among the clients.
- Do not be greedy. Of course, it is not a secret that you want to be a broker to make a profit. And as long as you have a constant flow of new traders and ensure that your loyal old ones have the right support, the income will not make you wait long. This means you should avoid the temptation to charge for every little thing even when it is not required. For instance, refrain from charging your tarders on things like using a demo account or an automated trading software.
Have a professional customer support team. No matter how much information you provide on your website and how fool proof your trading tools are going to be, the clients will always find a reason to contact someone at support. They have a right to do that and your job is to ensure that the customer service agents are skilled in all of the necessary aspects. You also might want to consider having someone specifically for technical support to provide assistance with any digital issues.
To sum up, it is not entirely impossible to become a successful broker, but it is definitely challenging and time consuming. Luckily, there are always other ways to make money on Forex without being a broker or a trader. Such as affiliate programs with existing brokers and various freelance positions opened to support big broker companies. No matter which one you pick, with the right state of mind you can accomplish anything you want and make Forex your primary source of income.
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