New forex brokers have different ways to enter and offer forex trading services in one of the most fascinating and lucrative markets in the world. One way to do so is by becoming an introducing broker (IB).
Much like an affiliate marketer, introducing brokers operates in collaboration with another brokerage firm that already has a client base and a successful profitable operation. However, an IB broker is much more than an affiliate marketer. It’s a real partnership between two firms where the IB broker is able to offer additional services and even make higher commissions.
Therefore, if you have the ability to attract forex clients and provide forex trading services, becoming an introducing broker could be the ideal solution for you. With the steps we have outlined in this article, you can start an IB business. But firstly, let’s understand what an IB Introducing Broker is…
What is an Introducing Broker (IB)?
An introducing broker, also known as IB, has a direct relationship with forex clients but without having to directly execute trades for them. Instead, the trades are executed by the brokerage firm with whom the IB partners. This means that the introducing broker directs clients to the partner broker, provides trading services such as consolation and customer support, and in return, receives a commission for every trade executed by the partner broker.
Essentially, referring clients to a brokerage firm might sound like what an affiliate marketer does. However, there are some notable differences between an affiliate and an Introducing Broker. An affiliate basically can set up a website or simply refer clients by using affiliate links and get paid for referrals for the brokerage. An IB, on the other hand, not only brings in clients but also provides trading services and consultation. An IB can create long-term relationships with clients that are based on the quality of their services and the professionalism they offer. Secondly, an IB doesn’t accept and hold clients’ funds. Lastly, an IB does not need to have a compliance department and proceed with KYC procedures with clients.
How to Become an Introducing Broker (IB)?
If you are wondering how to become an Introducing Broker, here are the steps you need to take.
1. Find the Right Brokerage Firm to Partner with
The next step is to find the right broker you want to partner with. There are lots of forex and CFD brokers to choose from so this step might be the most important of all. In some cases, you might have to open a trading account with the prospective partner broker and find clients’ reviews about the firm.
Further, you should consider the following aspects before you sign up with a partner broker:
- Is the broker licensed and regulated?
- What financial assets do they offer? Forex, CFDs, options, stocks?
- How long do they operate in the forex trading industry?
- What’s their reputation?
- Do they have good trading platforms and mobile trading apps?
- What’s their commission structure for IB?
- Do they offer marketing assistance?
As we mentioned, finding a regulated brokerage firm to partner with is not an easy task. The forex industry is filled with unregulated brokers and occasionally, even scam brokers. As such, you need to ensure that clients get safe trades and are able to withdraw funds whenever they wish. Partnering with a regulated and reputable broker is essential for your success as an IB.
What’s more, you need to sell your clients a top-notch trading experience and preferably, low trading costs. So, an advanced trading platform and a mobile trading app will help you attract more clients. Additionally, a wide range of financial instruments would be another crucial factor. Make sure you choose a partner broker that gives your clients access to shares, ETFs, Forex, commodities, indices, and cryptocurrencies.
2. Close the Partnership Deal with the Partner Broker
Now that you have set your mind on a certain brokerage firm to partner with, it’s time to check out what they are actually offering you. Look at the execution model they have – ECN/STP or market maker, check their commission per trade, and understand all the terms and conditions they have for IB.
Also, try to figure out whether the rates they offer match your clients’ style. If you can bring heavy traders with a large sum of money to trade with, you might have to choose forex brokers with VIP accounts, and special terms for those who trade with large account balances. Ask your partner broker how flexible they are with the commission types they offer and do they have special packages for the type of clients you plan to refer. Further, will they provide special trading tools for IBs? Do they offer a demo account? Islamic account?
Then, once you have got the answers and you are certain you made the right choice – close the deal.
3. Find Clients and Refer them to the Partner Broker
Now it’s time to find clients and refer them to your partner broker. After all, this is how you can make an income from becoming an IB.
To do so, you need to create a website and social media pages or use your existing contacts, if you have any of these. Try to differentiate yourself with the unique service and trading tools you provide your clients. Most importantly, be attentive to your clients’ needs and help them find a way to get reliable access to the market.
When your clients feel that you have the tools to provide them top-notch access to the trading world, you’ll be able to develop a long-term relationship and increase your client base. This will benefit you as an IB as well as the brokerage partner you are promoting.
4. Build on Your Success
Lastly, you need to build a successful business. One way to do that is to develop an online presence by building a website, social media pages, newsletter, etc. Obviously, you’ll have to create a unique name for your business, whether you decide to use your personal name or a professional brokerage firm name.
One thing you need to remember – in the world of online trading, reputation is everything. A successful introducing broker usually has the most satisfied customers. So, make sure your clients are satisfied with the trading experience you provide them and do everything possible to transfer that information forward. This can be done via reviews, forums, a YouTube channel, trading tutorials, etc.
Becoming an Introducing Broker (IB) – Things to Keep in Mind
Now that you have the necessary information on how to become an introducing broker, here are some additional key points to keep in mind.
You need clients, and you need them now!
As an IB, you need clients. And the more clients you have, the more successful your IB business will become. This means you need to get the word out quickly and aggressively. Use different marketing methods, and set aside a generous budget for marketing. If you don’t have clients, you cannot build a reputation and your business will fail sooner than expected.
Find a business model
Finding a business model that works takes time, especially in a competitive industry like the forex one. Nonetheless, try to do your best in order to build a business that works for all sides – that is your company, your forex clients, and your partner broker.
Some forex brokers prefer working with beginner traders while others insist on working with professional high-volume traders. It all depends on the circumstances. Be attentive to your partner broker and make all the calculations that may benefit all sides. If doing so, eventually, you’ll be able to find the right business model.
Make your partner broker satisfied
In this arrangement, your partner broker is your most important client. Make sure you not only choose a brokerage partner that is regulated and licensed, but also a broker that has a good staff so you can build a long-term relationship and mutually profitable partnership. Also, ensure they are happy with the service you provide and ask them occasionally if there’s anything you can do to improve your offerings.
Become an Introducing Broker Now!
With more people joining the online trading arena and looking for ways to grow their wealth, now is the best time for you to find a partner broker and build your own client base. Start today by reaching out to them, and making the first step to create a successful IB business.