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90% of Forex traders
go bankrupt in the first few months. The rest receive a steady income, but they constantly pay for market access and servicing operations. Most of this money goes to brokerage sites. In this article, you will learn how to create such an Internet site and get your share of the profits on one of the largest financial markets.
Launching a trading platform on Forex
is a complex and expensive event that requires thorough preliminary preparation. This process includes such things:
- Marketing research. It is important to study the competitors in advance and understand who your target audience is: age, gender, hobby, income level, country and so on. The place of registration of the legal entity, the approach to promoting the platform, the number of languages supported, etc. will largely depend on this.
- Formation of start-up capital. When launching a brokerage business, you need to plan the allocation of funds to cover current expenses for several months. To do this, determine the size of the operating and trading fund and fill them.
- Registration of a brokerage company. To accept money from traders, you need to open a bank account for a legal entity with a brokerage license.
- Agreement with payment service providers (PSP). It is advisable to build relationships with several PSPs in order to diversify the risks associated with financial calculations.
- Choosing the type of trading platform. They are of three types: Market Maker, STP, ECN.
The moments associated with market research and the formation of startup capital do not need an additional description, since they are typical of any type of business. The rest of the things (in the case of the launch of the Forex trading platform
) are unique and require close attention.
Registration and license
Recognized Forex Centers
. There are a number of international companies in which you can register a company
and obtain a brokerage license in accordance with the financial regulations of the host country.
With this license you can:
Recognized financial centers
- provide brokerage and other financial services;
- optimizing profit due to low or zero tax;
- retain and control customer assets;
- get more favorable terms with banks;
- work all over the world.
include the United States, United Kingdom, Malaysia and Belize. They are followed by Hong Kong, Singapore and Japan. In these countries, there are no problems with government regulation and control of financial activities; therefore, trading platforms with such registration are trusted.
. A broker's license costs a lot of money, and its design takes a long time (from a month to a year). To speed up this process and reduce costs, you can register an offshore company. For this fit:
- British Virgin Islands.
- Saint Vincent and the Grenadines.
- Cayman Islands.
If you decide to register in the offshore zone
, please note that this may adversely affect the reputation, as traders, banks and investors do not trust brokers with unknown owners. In addition, since the early 2000s, developed countries have begun to fight offshore companies, passing laws that impose restrictions on offshore companies and their partners.
Type of trading platform
Market makers create dealing centers that provide “artificial” prices for certain currency pairs. When the user makes a bet on such sites, he plays against the broker. In case of winning, the trader receives a reward - the difference in the value of the asset, if he loses - the broker takes this difference to himself.
Market makers perform three tasks:
- Make available supply and demand rates for certain currency pairs.
- Undertake to conduct transactions with all traders at a price that is indicated in the charts of the dealing center.
- Take financial risks for each position.
Market makers generate profits from the difference between the purchase and sale price of an asset. Or, to put it simply, the loss of a trader in a transaction is the broker's profit. For this reason, such trading platforms
are treated with caution, as there are concerns (and confirmed precedents) of possible exchange rate manipulation
from the site to the damage of traders.
. STP stands for Straight Through Processing. Such trading platforms send customer orders to liquidity providers
(banks or liquidity pools) and thus avoid conflicts of interest. Ideally, the order is sent to several suppliers who place an order on the interbank market with different conditions, after which the order is executed with the best available price.
This type of Forex trading platform
generates profits through commissions and spreads. Commissions are calculated for an order or a traded lot, and the value of spreads usually depends on the liquidity of each market.
. ECN stands for Electronic Communications Network. These sites send traders orders directly to the Forex market
, as a rule, without any intermediaries. Due to this, trade orders are executed with minimal delays, therefore, traders can respond to market dynamics with maximum efficiency.
Brokers do not guarantee the execution of orders precisely at the price that the trader indicated in the trading order, since orders are placed on the interbank market where there are no “guaranteed orders” (only dealing centers guarantee such).
Site Development Approaches
Buying a platform
. Forex trading platform can be purchased for a fixed price, to which you usually also need to add a relatively small monthly fee.
- MetaTrader4 (MT4) trading terminal for trading in fiat currencies, which can be connected to the site for $100,000 plus another $20,000 for 12 months or $1,500 monthly for maintenance. And you can also use MetaTrader5 (MT5) with an extended list of assets for trading: stocks, crypt, Fiat, etc.
- Such an ACT Forex. The price of this terminal is $ 25,000 plus $ 2,000 monthly for maintenance.
- Other terminals. Most can be bought for $ 100,000 plus a few thousand more per month.
. To start the trading platform
, you can also use someone else's software, indicating the name of your brand on it. Through this approach, you can save a lot, but at the expense of losing individuality in many things.
The cheapest option will cost $ 5,000 plus $ 1-1500 per month (the most expensive options cost hundreds of thousands of dollars.). If you refuse maintenance, it will be even cheaper.
. Here prices can range from $1 to $20,000 per month. the approach allows saving at the start, but in the long run it is much more expensive than other options.
Website development of the Forex trading platform
can be divided into two areas of mandatory and optional elements. The following areas of development are usually considered mandatory.
Forex Client Area
. A set of tools by which traders manage assets. They can range from back office management systems to mobile applications. Typically, client zone development includes such areas:
- trader's room;
- back office tools;
- partner systems;
- payment solutions.
. The interface of the site should be simple and clear, so that traders on an intuitive level understand what and where to do. In addition, the design should provide a platform among competitors
. In this direction, you need to pay attention to:
- branding and development of design solutions;
- integration of the trading terminal (for example, MT4) and CRM;
- developing user interface scripts;
- interactive tips.
. Promotion is just as important as the technological side, excellent design and monetization, because it doesn’t matter how cool your site is, if nobody knows about it. Therefore you need to do:
- creating landing pages;
- SEO content optimization;
- affiliate programs and sites;
- banners and much more.
. A customer relationship management system must support a complete process for selling and storing assets. It is best to integrate it with MT4, giving the project team access to all information about traders. That is, in the CRM need to do
- integration with MT4;
- lead management and client requests;
- customer account management.
Opportunities for a good trading platform
are not limited to buying and selling foreign currency assets. Top market players also integrate support into their website:
- contracts for difference and options;
- CFD trading;
- margin trading.
In addition, it is important to take care of the quality content of the site, which will help with attracting customers and increasing the loyalty of the community as a whole. For example, you can run a news feed or create training lectures, courses, webinars. Both users and search engines like this.
Another thing to think about introducing a demo account. With it, traders will learn to use your platform without risking losing real money. In addition, a demo account can be used in training courses
, but in this case access to it should be free, that is, do not require deposit replenishment.
Safety and reputation
Safety and reputation, from the point of view of the trader, is determined by the information footprint on the network and by the regulatory authorities that control the activities of the brokerage company.
The latter include:
- BaFin - Federal Financial Supervision Authority of Germany.
- FCA and PRA - Financial Conduct Authority and the UK Prudential Regulation Authority.
- NFA and CFTC National Futures Association and US Commodity Futures Trading Commission.
- CySec - Cyprus Securities and Exchange Commission.
If the site is under the jurisdiction of one of these departments, traders and financial partners will trust it more. Consequently, there will be more users and better conditions for cooperation. Conversely, being in a jurisdiction with a disreputable reputation scares people.
In addition, it is important to make a site in the main listings of Forex trading platforms
. Such resources check the reputation of brokerage companies and look for reviews about them. If your site is not listed, traders may find it unpopular, untrustworthy or just scam.
Most platforms earn on spreads and commissions. Spread is the difference between the purchase and sale price calculated in pips. Under the pips imply the smallest price change in the price of an asset - a price percentage point or just a percentage point.
For example, if the rate of the EUR / USD currency pair falls from 1.14009 to 1.4008, this will be a one point change (pip). If the price of a currency is indicated with only three decimal places, it means that changes in the third decimal place are one price point.
Examples of the size of spreads on various sites:
Spreads can be fixed and variable. In the case of variable spreads, their size, as a rule, depends on market liquidity - the more liquidity, the lower the spreads.
Commissions are trading expenses that are determined in advance and depend on the volume of trading (the larger the volume, the smaller the commission).
In addition to spreads and commissions, some sites also charge various additional fees. For example, for using trading software
, providing real-time asset prices, availability of indicators and other functions. Some companies go even further and charge for help desk calls, use of a securities account or set monthly fixed fees.
. When creating a website for the Forex trading platform
, remember that this is a very competitive market. The optimal strategy for starting a business in these conditions is to start small and gradually expand. So, you can start with a certain region (country), become a monopolist in this territory and then move on to global markets.
. Do not overdo it with monetization, especially at the start. Ideally, in the first year of launch, your commission should be minimal, and so much so that you will work at a loss or zero. So, Kyivstar made a mobile operator in Ukraine when it introduced the youth-oriented brand djuice in 2014. For the first six months, everyone could connect to djuice and communicate within the network absolutely free. The result - millions of attracted users in a very short time.
. To conquer the market can not only low prices, but standing out from the competition. In the world of cryptocurrency, this can be done, for example, by making a business completely transparent (as opposed to anonymity for a trena). To do this, you can reveal almost all the information about the company, present developers
with the owners and even conduct excursions to the office.