FAQs
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FAQs
Frequently Asked Questions
How Forex and CFD Brokers Make Money?
There are 2 kinds of method to make money in this business.
First method, the Straight Through Process (STP) brokers, where they make money through commissions or trading rebate from hedging with their liquidity providers.
Second method, we call them market making forex brokers, some call them B brokers. This type of brokers make money through taking market risks. Market makers may use professional risk management systems to increase their revenues.
There is another ‘hybrid’ model where they will invest in a risk management system, where on a discretionary level, they will decide which positions or clients will be hedged through their liquidity providers.
We provide clients with solutions on all 3 types business models. Reach us for an inquiry.
Which Trading Platform Technology Attract The Most Clients?
In the past, broker dealers were limited to choosing from a few traditionally developed platform providers to attain their white labels.
As demand from the users of broker dealer changes, the developer community has created many more service focused platform technology that helps the broker dealer acquire more business, and keep the cost of owning a trading platform at a more cost efficient level. This is another level up for the financial services industry, as we will be seeing more innovative technology in years to come.
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How to Get A Forex License?
To be able to legally operate as a forex broker is the first step to this business. A license where the broker dealer is regulated, is the most ideal way for starting out as a brokerage company, as it bring clients some assurance that they have met the requirements laid out by whichever jurisidiction where they have applied for license.
For some startups, where they may have their small group of followers who are willing to lend them their support to run this broker dealer businesses, being regulated in a regulation sets as a high hurdle for them. As compliance costs, licensing costs, compulsory local rents may not be what they could afford for a start. Therefore, our services do offer startups of these scale, some perspective as to how we can run such a startup operation.
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Will You Make A Fortune Starting a Broker Business?
Like running any business, this business has it costs, client acquisition work, legal work, day to day operation work, customer service, and many more involved.
It is a business about acquiring as many clients as possible. The larger your clients’ resourcces customers, the easier it is for you to see success. So like any business, hard work and good resources pays.
If you would like to find out more, reach us for more information.
What is a Market Maker?
A market maker is an entity or person that becomes a counterparty for a specific or several markets. For the broker dealer business, another term used would be to act as principal.
So does this mean being a market maker mean the broker is running a risky business operation? The answer is simple, market makers have the business decision to decide whether they should hedge out their risks or to ride out their risks. So it is a discretionary business decision. Decisions are all made considering about the company’s capitalization, resource and risk management capabilities.
If you need more elaboration on this form of business operation, feel free to reach us for more information.
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