Very often, companies starting a business in the retail forex segment have little idea of which business schemes work in this market and which do not. In this article I want to talk about what alternatives are, what are their pros and cons.
1. Classic (TeleTrade)
The basis of the model is a Nice, presentable office staffed with a sales department. The minimum sales team size is 10 people. Cold dialing is carried out on the bases of telephone numbers, the final sales with the signing of contracts take place in the office, most often either for consulting management (they call the client and recommend transactions), or for trust management (the most popular option). In the case of trust management, the client's acquaintance with an independent trader has proven itself very well. This business model starts working from the second to the third month as soon as the sales team is formed and trained. The company starts the planned attraction in about six months work. Since most of the clients are non-professionals, the trading conditions are poor, almost all transactions go through Book B, and risk management is needed only for large clients. The broker's revenue is about 50-70% of the funds raised.
2. PAMM service (Alpari)
Most often, this model involves combined (offline and online) attraction. Since a good PAMM service needs a history, promotion takes a long time - at least 1-2 years. In addition, trading conditions must be better than the market average in order to attract competent managers. For a business model to work, you need to have either very good managers, a lot of managers, or both. This state of affairs is explained by the fact that in the presence of high-quality PAMM accounts with a very attractive history of profitability, the broker is promoted automatically - due to recommendation services and an agent program. This makes this business model very popular recently, and its elements are used by most forex brokers.
3. Game model (InstaForex)
The closest model to the gambling business to attract customers. Large starting bonuses, bonuses for attracting friends and replenishing an account, bright aggressive advertising, various trader contests. In contrast to the first two models, the orientation is for clients to trade (play) on their own. Exclusively online attraction. Trading conditions are average. Binary options brokers work in the same model. After a serious tightening of anti-gambling legislation, this model has become even more attractive, the niche of a forex broker focused on an audience of players is not yet occupied. It should be noted that the success of the model mainly depends on the effectiveness of the advertising campaign, and with proper organization, this model allows you to get the fastest start in terms of attraction.
4. Broker model for pros (FXOpen)
Perhaps the narrowest niche is a broker for professional traders. And not necessarily professional in terms of results, but rather in terms of self-identification. The best trading conditions on the market, respectively - the minimum margin and, as a result, strict cost control. To minimize costs, some companies operate without a client office or sales department at all, relying solely on Internet promotion. Due to good trading conditions, this business model is the most demanding business model for risk management. As for the return on business, this model is the “slowest” of all: it is difficult to attract a professional, but then he works with a broker for years.
Which model is preferable? It depends on your goals and resources. For a quick start, the "Classic" or "Game model" is suitable, and the first should be chosen by companies with a streamlined technology of direct sales, and the second - by organizations whose competence lies in the field of Internet attraction. In case a forex broker grows out of its own investment fund, it is reasonable to choose professionals as your target audience. Well, if you intend to move the leaders of the forex market, you should look towards your own PAMM service.
Whichever business you choose, WhiteLabelsFX will help you organize your own forex white label business mt4.