The things you need to open your own forex company
Overly simplified, for your launch you would need to consider:
- Cash you are willing to invest or where to get it?
- Jurisdiction for your legal entity and what kind of forex license you need
- Technologies and tools you would need
- What’s your risk model?
- Who is your customer and how are you going to acquire them?
Recently the tech for forex industry has become much cheaper and a lot of tasks/roles got automated, it is still fairly expensive to open a forex brokerage. Your money would most likely go to:
- lawyer fees
- technologies(e.g. trading platform, CRM, dashboards)
- advertising(ever since ban on CFD advertising was enforced on most affiliate networks and platforms this has changed slightly)
Unfortunately, we would not give you any legal advice here, but most likely as any other business you would need to hire a lawyer to assist you with all the legal issues. There are companies that specialize to incorporating and licensing forex brokerages, their fees vary depending on a lot of things like jurisdictions where they operate, how often and what kind of services you would be needing, etc. You can find such companies on Google or ask your tech provider whether they have a partner law firm.
Luckily this has improved a lot in the recent years. A while ago, brokers had to purchase huge prepackaged deals with a lot of extra tools that were expensive and in the end never used anyway. Nowadays, you can a pretty good deal on technologies. The major ones you would most likely need
- Trading platform
That would most likely depend on what functionality you require for your forex brokerage business to run smoothly and what platform is preferred by your clients. Popular options would be – MetaTrader4, xStation, cTrader
- Website with CMS and forms connected to your CRM
This can sometimes turn into a never ending project, so unless you feel completely comfortable with web development, it would be best if you find a good agency that can take care of this for you. Best if this comes in the packaged deal together with CRM setup
- Customer relationship management – CRM
A lot of companies realize that in the end their business needs are quite specific and unique and they need to have customization in order to grow. Because of that I would recommend going with open-source CRM system that allows custom user management. Good example would be vTiger CRM system
- Basic dashboards and alerts
Once again, unless you have extensive knowledge in this area and want something very special, when it comes to basic reporting and alerting there is really no need to spend all this time to create your own basic reporting tools that would end up being exactly as something that was already created by someone. These basic tools are usually coming packaged with other tech, so we would recommend skipping that part and focusing more on building and thinking through your proprietary risk model
- PSP – how you accept payments
This justifies having a post of its own. This most often depends on a lot of factors like: what can you implement technically, what your customers prefer as payment method, how much you are willing to spend on adding this new payment method, etc. It would be best to consult with the expert beforehand. Most often tech providers can help you with that
Buroka Technologies provides all these tools on affordable monthly subscription without a setup fee. Schedule a consultation in order to find out more.
This would be your main strategical task. Coming up with risk model that uses your liquidity to its full potential. In the beginning it can be as simple as rule based model built on basic alerts and reports. As an ultimate goal, you can go as sophisticated as creating a group of machine learning models that communicate with each other. However, when you are just starting out and have low volumes the only thing you would need at that point is business logic.
Unless you have revenues you don’t really have a business and revenues come from customers who pay. So one of things that you need to invest in is getting customers who pay
In short, some of the most popular sources are:
- Commission based marketing
Organizations or individuals who bring you customers and get a commission
Creating articles and moving them up search results pages
- Buying leads
There are a lot of organizations that work on lead generation model. For example, they create a navigation tool or content interesting for your potential customer base, get consent from them to sell their data and then sell it
These are fairly popular ways. There’s no need to invent new growth techniques when you are starting out. You just need some clients to test your initial assumptions
Best way to proceed would be to consult with many different experts to get a better picture
- legal professionals
- technical people and offers of technology providers
- forex brokerages who are not your direct competitors
- people who advertise forex products