Start Your Own Brokerage for Dummies
As you know, I was idly perusing the Boston Technologies website the other day when I happened across their very own MetaTrader robot, which seems to have developed an unfortunate habit of losing money rather than making it hand over fist.
I happened across some other interesting stuff over there too, including instructions on how to start your own forex brokerage, with Boston Technologies able assistance of course. Apparently:
Boston Technologies is working with companies such as FXCM, Gain Capital, ODL, Alpari, MIG, Interbank FX, and FXDD to create the most competitive Retail Forex business in the world. We couple the immensely popular MetaTrader4 Platform, our extensive partner network, and our own innovative technology to start organizations off with the right foundation needed to succeed in retail forex.
Like me you might well be wondering why all these "competitive Retail Forex businesses" would want to get into the brokerage business in the first place. Helpfully Boston Technologies also provide an answer to that very question. If you download the "Detailed Business Plan Framework" from that page you will discover all sorts of interesting snippets of information about how forex brokers make money. Various business models are outlined. For "straight through processing" it seems as though:
Rule of thumb calculations show that if [a customer] deposits $10,000 then the broker will make about $1000 in profit over a month if he is active. For an inactive trader he will make $100.
In the "closed loop dealing desk" model however, the broker takes on more risk, but makes bigger profits:
Most small retail customers have no experience and 95% of them WILL lose money.
Here, most customers act like gamblers and your job is to act as the "house".
This is a "non-recurring" customer model in that most customers lose their cash, and do not come back with additional investments. Ongoing customer acquisition is therefore very important.
So there you have it. You now know how the over the counter brokers make their money from forex. The obvious question to ask next is how can you make money from forex? If you still fancy your chances at those odds we humbly suggest that you fill in the little form at the top left of this page, then click the "Sign Up" button. If you don't mind sending us your email address we will periodically send to your inbox all sorts of useful information on how to avoid being amongst the "95% that WILL lose their money".