How to Start a Forex Trading Business (Company)

Integrity is an ironclad foundation for every kind of business set up for the long term. Forex trading is the same. Promising profits of 50-100% per month or 1200% per year, with leverage of 1:1000 you can attract thousands of traders, whose account will be within $100-1000. However, inexperienced market participants after demo-training in the first real trades will lose their budget and will never get involved in Forex-business. That's why you need to start a Forex company in such a way that a sound business plan is written, the stack and design elements are competently selected, and verification and blockchain-type protocols make buying and selling orders and transactions safe.

Forex business success of the brokerage company and participants

At the startup stage, inform the trader that the expected annual income will fluctuate between 20-70% of the deposit amount. In this way statistics shows. Let's say that if a trader's assets are equal to $1000, he can earn $200-700 for a year, in case of luck - 100%. Besides, it is often necessary to be patient, to be able to wait and plan. There is a formula for expected financial success based on previous history (if there is no minus in the result, everything is OK):

The experience of brokerage companies shows that their income on average is 7-20% from the amount of attracted capital and up to 30-40% from the traders' winnings. So logically, it is preferable to attract a thousand traders with the capital of $10,000 per one, who will earn their 35-40% for a year and provide the gross profit of the Forex company in the amount of up to half a million USD. We will consider and calculate the basic indicators proceeding from the initial parameters.

Number of traders, people	1000	Income of brokerage company from the lowest profit of traders, $, at 30%	60000
Deposit amount per one, $	1000	Income of the brokerage company from the highest profit of traders, $, at 40%	280000
Expected profit of traders, $, at 20%	200000	Minimum gross profit of the brokerage company, ths. $	130,0
Maximum profit of traders, $, at 70%	700000	Maximum gross profit of the brokerage company, ths. $	480,0
Brokerage company's income from attracted capital, $, at 7%	70000	Minimum expenses of the brokerage company (25% of the minimum), $ th.	32,500
Brokerage company's income from attracted capital, $, at 20%	200000	Maximum expenses of the brokerage firm (45% of the maximum), $ th.	216,000

Calculation is based on the estimated number of traders (1000 people) who have decided to make a trial attempt to earn money. In case their number is larger and the deposit is higher by an order of magnitude, it can be considered that the profit of the brokerage company increases many times. If thousands of small traders (capital up to $1000) with a desire to participate in Forex trading have entered the platform and trackers show that they spend 2 hours and more on the site, and the profit is not less than 50% per annum, there is a sense to “educate” promising participants.

Nuances of business plan and White Label

The foundation of a Forex brokerage firm starts with writing a business plan for a particular country, clients based on jurisdiction and licensing rules. For example, registering an LTD in the UK costs 79 pounds, booking a name will cost 90 pounds, with investors involved - about 100. In applying for a private or public format forex business specify information on investment and startup capital, availability of shares, address, without which it is impossible to perform these actions.

Thorough selection of legal entities that provide access to assets on favorable terms guarantees the interest of clients. For this purpose, in the calculation part enter such indicators as:

• starting capital for launching;
• initial basic support for traders
• anticipated costs (including Internet promotion) and revenues;
• comparison with the work of competitors.

In the startup period, one IT specialist performs a number of functions - an expert from the helpdesk, a marketer and an analyst. White Label in place of an elaborate MVP is a favorable solution when accumulating startup capital without the need to solve a pool of technical problems and defects, inconsistencies between design and backend.

Of course, you can connect a stock trading app development company and start developing your project from scratch. This will take about 4-6 months and a budget of 50,000 to 150,000 dollars.

Brokerage company operation formats: NDD, DD and hybrid

Everyone has his own roadmap for a Forex brokerage firm and it is not worth repeating. However, the basic concepts - trader's cabinet and security of payments, transactions, installation of stop loss and take profit indicators, compliance with the conditions of the country where the company operates and type of business model (NDD, DD and hybrid) should be qualitatively fulfilled and protected. That is why CRM and integration with Forex exchanges should be carefully considered and, if you do not have enough money to develop a platform in the amount of $40-80 thousand, you should consider renting or using White Label solutions and functionality.

Broker supports the trader, starting with account registration and access to large exchanges, where there is access to various assets - oil, gold, gas, cryptocurrencies. Given the fact that the base price of a lot on such a resource starts from $10,000, support in the form of leverage in the amount of 1:10 or 1:100 will significantly increase the probability of trader's income. In case the broker wants to retain the trader, he can offer proxy trading (managed PAMM account). The broker's financial model should be transparent and show what shares of the spread or commission will be retained.

So it would be a good idea to increase the number of traders in the NDD (A-Book) category, where they can go out by themselves with orders on the interbank, than to get income from the losses of users in B-Book, which take place on the broker's platform itself. Conflicts and reproaches of the broker in manipulations are frequent in the second version. Given the advanced functionality and a lot of features, it would be better to choose a flexible format of a hybrid strategy, where there is a balance between risks, order execution and the possibility of access to the external market.

Back office and trader's room in CRM

Plentiful Forex brokerage companies have generated a real surge in the CRM development to manage, monitor and analyze processing operations and activities. At the heart of CRM schemes are back office and trader room modules. Back office involves reconciliation and protection of client accounts, instant deposit transactions, asset withdrawals and stored history for each trader. The functionality with automated settings is accessed by verified programmers, brokers and authorized company personnel.

Quotes with indicators, news and trends visually displayed in the trader's room are common options of the module. There, a trader opens and closes orders, sets take profit and stop loss levels, monitors trading processes and changes settings manually if necessary. Communication with the broker and back-office staff completes the functionality. Successful completion of the Challenge (according to statistics no more than 10-15% of traders pass the primary threshold and 1% reach the advanced level) and obtaining the status of prop trader increases the safety of his operations.

Examples of CRM functionality and SaaS options

It is clear that it takes 15-20 years from the launch of a Forex business to reach the level of LXCRM CRM servicing $200 billion worth of transactions per month, the services of which are used by 350 brokerage firms and a million traders. KPIs, visualization of activity and marketing performance on dashboards drive financial decisions based on tier and allowed access to features. B2Core has support for cryptocurrencies and fiat money, trader personalization and administration and financial management of commodities and financial assets.

SaaS solutions in the cloud or on your own servers are a consistent set of actions and options:

• easy-to-understand account registration;
• tools to manage orders and marketing operations;
• partner tracking and segmentation;
• automation of back office and rewards systems;
• balancing mechanisms for process stability;
• KYC and AML maintenance protocols;
• integration into secure PSPs with instant transactions.

With its focus on talented traders, UpTrader is expanding its customer base through digitalization of campaigns, lead generation and clear risk management. Cloud Forex solutions in Cloud Forex are based on Excel capabilities and ticketing support, MT4/MT5 and Vertex implementation, IB account availability. Zoho and HubSpot, Freshsales with Pipedrive, Less Annoying and Apptivo with scalability - the number of major Forex CRMs exceeds dozens of options. CRM software is united by automation and visualization, cyclical processes with sales funnel formation and convenient integration with different exchanges, websites and social networks.

Mechanics for Forex and broker jurisdiction

Demonstrating the difference of operations on charts with 4- or 8-hour, daily rhythm, use of pending orders and visual demonstration of trading lessons in blogs, podcasts, regular and premium courses - something that will attract a potential trader. For instance, not every trader knows that you need a PC with 16 GB RAM and a 3 GHz quad-core processor, multiple screens. 100-200 Mbps is the optimal speed of wired Internet, so it will be difficult to trade on a cell phone, the speed of which rarely exceeds 5-10 Mbps.

In the USA brokers are licensed and controlled by CFTC and NFA, in Britain - by FCA. STP technology works without a dealing center, has an internal pool of assets, there is competition on the spread and orders are executed without stops. The ability to choose Bid and Ask prices increases the attractiveness for scalpers and those who assess the impact of events on volatility. A brokerage firm stipulating that it complies with CFTC and NFA regulations is a confirmation of its transparency and legitimacy.

ECN brokerage is not suitable for novice traders, as they have to take a large leverage to deposit a lot size of 0.1 or deposit a large amount of money for trading. That is why they often use compiled solutions (hybrid) of STP and ECN, where spread, order entry and execution are automated. Thus, it prevents a high drawdown limit and allows withdrawal of funds, leaving a certain % for further growth.

Mentoring, UI/UX design and CRM quality marks

Attracting and retaining traders is task number 2 after you have decided to create a forex broker website with CRM system integration. It is a good thing when a broker can recognize and buy dangerous actions of a novice trader in the formative period. But order correction and offering deposit replenishment should not be the only nuances of work to expand the number of clients. A mentoring option is possible, when a broker teaches a trader how to work with commodities and ETFs, futures with cryptocurrency, matching CFD contracts and choosing IB systems.

Thoughtful and clear UI/UX-design in cross-platform version with night and day themes simplifies broker and trader operations in personal offices. Fast updates and multi-level information presentation expands the platform's capabilities, and multi-currency exchange simplifies withdrawals and deposits. Graphs or charts of financial balances in the history of operations are a must-have feature of the dashboard. As more asset classes are executed, aggregated and concentrated, the better the technology is designed.

The basic option is free connection of 250 clients in CRM with payment for each subsequent client up to $0.25 per client. Depending on the type and functionality (basic and standard, with advanced services and corporate), type and number of payment gateway channels, the payment depends on the payment. If 100+ Forex and 50+ crypto brokers, 20-30 margin and crypto exchanges, at least 5 converters are integrated with CRM, it is a quality software. EMI and PSP licenses are an additional sign of quality.

Widgets, analytics and verification, features and bonuses

Customizable widgets on the toolbar with data on trading accounts use adaptive layout techniques. Grouping and information on conversion rates are offered both in the classic version and with user interface elements. The analytics in table format complements graphical versions (charts, graphs), and key indicators of data from several platforms (three or four on one screen) based on metrics allow you to keep your hand “on the pulse” of trading.

A powerful match engine supports trading processes running on a dedicated server. If the software slows down, the trades will be executed with delays, and the calculation will be performed with errors. A deep liquidity pool supports trading without access to external exchanges. Verification of accounts and transition by levels are mandatory actions during the execution of transactions. If the brokerage exchange integrates proven software, this is an additional plus.

Order percentages, selected and monitored trading pairs, 3-4 screens of workspaces, multi-language (5-10 languages and more, mandatory translation into the trader's native language) - this is a short list of optimal features to be implemented. Some platforms offer bonuses with personalized settings, preset saving and time offers, activate rewards when reaching a certain level.

Deposits and their status

Deposit is the heart of Forex brokerage. A trader is sensitive to factors that relate to finances: the passage of invoices, the state of assets with the conversion function connected, the selection and calculation of rates depending on the risk. Not many people know the fact that in the period of 10 minutes before and after midnight it is not necessary to open or close orders - pips can grow many times. A separate column should include information on payments - commissions, orders that have been approved, payment statuses and movement of assets, including from referral links.

Exporting a hundred or two transactions with full client account details enhances transparency and trust. Reports are preferably downloaded in web, Excel and .csv formats, adapting to the trader's personal requirements. High accuracy on exchange rates, prioritization and calculation of conversion rates are key betting elements. Implemented Fibonacci levels indicate trend reversal, correction and new movement.

The opportunity to set limits in wallets and accounts, customize PAMM parameters and integrate REST API with other platforms, carry out registration with addition or deletion of fields and documents are among the options of the extended financial format of the site. IB top profitability ranking lists with demographic map of earning traders and tier affiliation, refinement of personal leverage multiplier are good for both sides.

Group action, defense and ELK application

Automating bulk actions when the same work needs to be done for multiple traders, including changing classes, check type, crediting deposits and deleting fraudulent accounts, simplifies staff work. Protecting your profile will help:

• whitelisting addresses;
• country and customer restrictions;
• differentiating access rights to confidential information;
• maintaining KYC rules and history;
• use of Google Authenticator service.

ELK stack simplifies storage and processing of data and logs, and provides their presentation in a visualized format. Clusters formed from partitioned databases are easily monitored in the cloud. Load balancing and scaling enhances the security of service delivery, while pre-intermediate deployment prevents errors and enhances operational stability. Availability of SSL and SMTP is a simplified verification of data over communication protocols, which is mandatory to comply with KYC principles.

“Anchors”, business card and contests for traders

Server expenses, software and staff labor costs reach $3-10 thousand per month. So the clientele expansion (possibly with attraction of other beginning brokers) will serve the growth of business payback. If the purpose is “transit” under market-makers, traders pay a thin spread (the standard one reaches 4 pips for one order). Speedy execution and low commission are two initial “anchors” to attract traders, helping to generate profits even during a recession or bearish move.

A simple but expensive logo with a QR code integrated into it is a kind of advertising and business card for the Forex business. Such an emblem is needed in contextual advertising, for organic promotion, based on the location of the CA. To retain the client means to keep the spreads up-to-date according to market trends and regularly inform about new strategies and algorithms, linking to the world economy. Quizzes-competitions “without water” will interest people seeking risk and passive profit.

Among the list of successful zones where it is possible to launch a Forex business is Dubai. The country can be called a business paradise: free zone DIFC, offshore or onshore type determine a wide range of choice of taxation class, type and quantity (volume) of operations, registration and licensing conditions (up to $9 thousand, DMCC or DIFC), basic capitalization.

Forex trading methodology: static analysis

Discipline and planning: balance should be such so that the average amount of income exceeds the average amount of loss by 30-50%. Suppose the net income spread ranges from $50 to $400, with an average of $220. Consequently, the loss limit should be $30-$200, and the arithmetic mean should not exceed $155. It is important to exit the trade in time, seeing the loss and wait for the optimum (or boundary level), closing the profitable order. It is like in metal casting: you need to feel the boundary, after which the quality of rolled metal deteriorates, and in Forex - the change of trend and breakdown. The table of a beginner trader may look like this.

Net income	Loss	Statanalysis
		Indicators	Net income	Loss
50	30	Average	165	112,5
70	200	Median	105	115
120	150	Standard deviation	129,06	62,74
400	120	Minimum	50	30
250	70	Maximum	400	200
280	40	Amount	1320	900
90	110	Reliability level(95.0%)	107,9	52,4
60	180	Cv, %	78,22	55,76

It is visible that the average difference of $52.5 by orders (profit is higher), which is confirmed by the difference by amounts of $420 (loss of $900, but profit of $1320). The increased coefficient of variation Cv on income (by 22.46 %) and the standard deviation indicator 66.33 indicate that the trader made psychologically less balanced decisions during the period of quotes growth than when there were losses (perhaps, closed the deal earlier or failed to notice the trend change in time).

Charts and positions, trading journal

Real-time charts - a visual monitoring and evaluation tool - can help you form a strategy. One or several “candles” will show whether a reversal is in progress. It makes sense to visually analyze the positions of the trading methodology with the help of:

• order and trade size calculator;
• point price and leverage ratio or margin condition;
• time slice range;
• risk and profit indicators, entry and exit times (stop-loss and take-profit);
• number of simultaneous trades.

During the strategy aspect, it is good for a trader to keep a trading journal with personal results and achievements. It helps to improve the profitability of the operations - thanks to the conclusions. Like proven traders say, a profitable strategy on a demo account does not ensure the same success on a real one. Proceeding from the type of work traders prefer - permanent or part-time, part-time format - it is better for a Forex businessman to create two or three trading plans.

There have been a number of traders who started out as part-time traders, moving to a full-time schedule once their income exceeded their salary. Merehead knows that the initial bet on White Label, correct selection of CRM type and jurisdiction zone, gradual development of mentoring institute with trading journal and process automation are the stages and components of the methodology and strategy of a reliable Forex brokerage. So, for success go to contacts.