Hopefully, by now you've had your chance to absorb some of the Dan Perry's wisdom he had shared in the Part 1 of our conversation about becoming a FX Broker. So, let's keep going:
6. Deciding on a type of spread is important
Depends on what sort of traders you will have to deal with in your future House of Profit and how aggressive do you want to be in your future policies. It’s all risk vs. reward, right? If you are offering a 1 pip fixed spread and your trader is trading $1 per pip and makes a one pip move in his direction, which will equate to that $1 in order for him to break even, you both should be fine. But if you go for 2 pip fixed spread, the scenario, in which the price feed exceeds your spread and you take a loss is more likely...
7. Any bank will do
Choosing a bank for your future operation is easy: any commercial bank will do. Get incorporated, bring your papers, IDs and pretty much any bank will be happy to oblige
8. Baby steps
Start small, begin with trading over the counter, do it with the securities, with which you are quite familiar so that you remain within the regulatory framework that is clear and manageable. Becoming a spot Forex broker is pretty much a necessary step before you go on to more complex options and futures.
9. Choose carefully the country of incorporation.
Choosing jurisdiction for your future financial services is vital. We make it official that the British Virgin Islands is probably the most suitable place to get documented in terms of starting costs and flexibility.
10. Carefully consider your business model and KNOW THY CUSTOMER!
Will you go slow, just sending your customers’ trades to a liquidity provider and collecting commissions? Or will you boldly go closed loop dealing, playing “Casino” with your customers, knowing that 98% of them will lose their deposits in two-three months? Or will it be hybrid?
Since there’s no way for you to tailor your approach to the needs and wants of every single one of your future customers, you DO need to come up with a fairly straightforward client service strategy and ForexOfficials can definitely help you with that!