Like anything related to money, the retail Forex industry is fiercely competitive. Forex brokers spend hefty budgets just to retain their existing clients. They are continually enhancing technology, introducing new deposit and withdrawal methods, adding useful trading tools, and improving service quality. Certain tools and features have become essential. Without these, a Forex broker will struggle to compete with those that have them. Today, we’ll take a peak into the proverbial toolbox of a Forex broker. We’ll explore must-have features, software tools, and solutions necessary to implement your initial forex broker marketing plan. Additionally, we’ll share our hands-on experience and the sequence of integrating these elements. Each day, new players enter the scene while some of the old ones exit dramatically and are quickly forgotten. Don’t want to be one of those forgotten? Grab a cup of coffee, because we’re about to begin.
Introducing Broker (IB)/Affiliate Program
So, your newly registered and licensed Forex broker is up and running. What happens now? Now, you need to attract clients in bulk. How do you do that? One way is through direct advertisement. However, the effectiveness of this option has been significantly reduced since Google introduced its restricted financial products policy in 2018.
What Does an Introducing Broker Do?
Another way to bring in new clients is through the creation of an IB (Introducing Broker) program or a Forex affiliate program. A robust IB program is a cost-effective way to grow your business and expand your global presence. Therefore, any forex broker marketing plan, should have creation of such a program on the very top of their to-do list.
IBs, as we define them, are individuals or firms that offer Forex-related products and services to the general public. Examples of these products and services include trading robots (also referred to as expert advisors), Forex education (technical and fundamental analysis), social trading platforms, and trading signals.
How Do Introducing Brokers Get Paid?
However, clients won’t be able to use these services without a broker. Therefore, IBs and brokers form mutually beneficial partnerships. IBs refer clients willing to use their product or service to a broker through a referral link and receive a commission. Let’s look at the two most popular forms the commission may take:
- CPA, short for Cost Per Acquisition, is a remuneration model that pays off once a referred client makes a deposit and executes some trades, thus generating a specific volume.
- Revenue Sharing is another common remuneration arrangement where the affiliate gets paid a certain percentage of the spread each time their referred client trades.
There are, of course, other variations and hybrid forms of IB programs. For example, you can allow your clients to refer their friends and family. This type of IB program may be called “Refer a Friend” or “Refer and Earn,” among other names.
It is difficult to overstate the importance of a multilevel referral (IB program). For this reason, a newly established Forex broker should invest time and effort into designing and integrating this essential functionality. If you go online and look at well-established top Forex brokers, you will see that absolutely all of them have IB/Affiliate programs.
An IB program was one of the first things we focused on once our broker went live. Since its introduction, it has been constantly updated and improved.
Very often, your IBs will ask for your help and assistance. Sometimes they will request visuals (e.g., banners, icons, etc.). Other times, they might ask for something more exclusive, like a deposit bonus, which we will review next.
Deposit Bonus
Another essential feature that a forex broker marketing plan will need is a tradable bonus. There are different variations, including deposit bonuses and no deposit bonuses.
The mechanics of the deposit bonus are quite straightforward, so any competent web development team should be able to integrate it into your MetaTrader infrastructure easily. For instance, when a client makes a deposit, the equity in the client’s account is increased by the bonus amount. The client then needs to make a certain number of trades to receive the bonus.
Strategic Uses of Deposit Bonuses
The deposit bonus is a powerful tool used by all top-rated forex brokers to incentivize clients to take specific actions. For example, you can use the deposit bonus to encourage clients toward a specific payment system. In that case, you would implement a bonus that is added every time your client deposits via the preferred payment method. If you want to incentivize your newly registered clients to make their first deposit, you might offer them a first deposit bonus.
Alternatively, if you want your demo traders to switch to a live account, you could offer bonuses for specific actions. For example, they might receive a deposit bonus when they verify their profile, or another one once they make their first deposit, and so on.
Many IBs/Affiliates will likely ask for a custom deposit bonus for the clients they refer. This is something you should consider when developing your bonus program. We didn’t initially, and it caused us a lot of headaches down the road. Therefore, it is a vital tool in your Forex broker toolbox.
Important Considerations
It is important to note that forex brokers registered and regulated in the EU cannot use bonuses as incentives to encourage clients to trade with them. This is due to the ESMA Decision (EU) 2018/1636 (and its renewals) regarding the temporary restrictions on the marketing, distribution, or sale of CFDs to retail clients. These measures include restrictions that effectively limit marketing practices involving financial incentives such as bonuses. (See Article 2).
MAM (Multi Account Manager) Account
The next topic on your forex broker marketing plan the MAM or similar functionality. The MAM module features a specific account type (master account) that allows money managers to manage multiple accounts (sub-accounts) from a single master account and charge a performance fee based on the profits they generate for their clients.
Whenever the master account executes a trade, that trade is then replicated across the sub-accounts. That’s the basic logic behind it.
This type of setup is fully transparent and relatively safe. Clients do not transfer their funds to anyone, and at all times, they can see what the money manager does with their investments.
Every respectable broker should have this or another similar infrastructure (e.g., LAMM, PAMM) in their toolbox. Like a well-thought-out affiliate program, it can help you grow your client base and tap into new markets. Just think about it: you find a professional money manager, and with a snap of your fingers, all their clients could potentially become yours.
Considerations
- It is crucial to design your MAM accounts so that each step of the registration process is clear to your clients. They should understand clearly that you (the broker) act as an intermediary, and that the money manager is the one trading on their behalf.
- It is advisable to implement functionality that allows clients to exit the managed account if they are dissatisfied with the services provided by the manager.
- Additionally, establishing a vetting process for the money managers you onboard is beneficial. The reason is straightforward: if you permit just anyone to use this functionality, there is a significant potential to damage your reputation in the long term.
Summary
Above, we described a tried and true set of tools and features that any forex broker marketing plan should consider, if the success of your company is your top priority. Ideally, it would be nice to have all three of these ready when you decide to go live for the first time. However, we don’t live in an ideal world. That’s why we had to sequence their introduction.
As we mentioned earlier, the functionality to issue bonuses isn’t absolutely necessary, but it is something to keep in mind and prepare for when developing your IB/Affiliate program.
Realistically speaking, you can integrate it relatively quickly. Based on a fairly recent example, it may take three to four months (subject to the number of people working on the project and their qualifications) to create it from scratch and go live.
And last but not least, the MAM (PAMM or LAMM) module. It is less important than the first two items in our toolbox for a newly registered broker, which is why you can integrate it once you are done with your IB/Affiliate program and bonuses (if your jurisdiction permits their use).
Here, you have a choice. You can either develop your own MAM solution or purchase one. However, if you have the resources and time, creating your own MAM solution gives you complete control over it and will save you money in the long run. Additionally, if it turns out to be decent, you might even be able to sell it (just an idea).
Well, that’s about it. Should you have any questions, please send us a quick email.
In the previous series of articles, we reviewed the different stages—planning, implementation, and going live—of starting your Forex brokerage firm from scratch.
