Introducing brokers make for a more advanced partnership in comparison to forex affiliates, and the rewards that come with it are also in the same league. However, there are lot of differences when it comes to promoting a forex broker as an Introducing broker. Unlike operating as a forex affiliate, which only involves signing up and making use of the tracking links and getting compensated for the referrals, Introducing broker operates on the completely different level.
Most first time introducing brokers tend to apply the same logic as that of an affiliate when signing up to partner with a forex broker. However, such methodology often brings with it many disadvantages that forex IB’s learn over a period of time and usually it is too little too late to make amends.
Tips for Introducing Brokers
In this article we mention some key tips for introducing brokers to act as a guideline to enable the forex IB’s to choose the right forex broker to partner with.
Forex IB Tip #1: Account Creation & Approval
It is a known fact that in order to become an Introducing broker for a forex brokerage, the forex IB needs to provide due documentation. In most cases and over 90% of the forex brokers usually require:
- Proof of ID (Passport/Drivers License/other similar document)
- Proof of Residence (Utility Bill/Latest Bank Statement with address)
There are instances where some forex brokers require additional documentation and in some really weird cases require the forex IB to notarize the documents and/or provide a bank reference letter or even a reference from a lawyer.
In an attempt to lure the forex IB, most forex brokers aren’t upfront on this matter and it is brought to the forex IB’s attention only when the contract is being prepared.
It is always a good practice to check with the forex broker on what documentation is required in order to sign up as an IB.
Forex IB Tip #2: Tracking and Reporting
There is nothing more disappointing for a forex IB than to go through the process of providing the documentation, waiting for a day or two to get approved only to realize that the forex broker does not offer an interface to track your activity.
Sure, while there are a contracts in place, blindly placing your trust in a forex broker that they will provide you with the correct details would be naive. Tracking and reporting of your clients is an important factor that determines your success as a forex IB and also helps you gain the insights as to what regions/markets your traders are signing up from. Proceeding with a forex IB partnership without such tracking in place is like driving in the blind.
Forex IB Tip #3: Research the forex broker
Forex Introducing brokers can do a lot more in regards to marketing than forex affiliates. Due to the nature of the partnership, forex IB’s get access to their referred client’s details such as trading volumes, deposit and withdrawal amounts P/L and so on. Forex IB’s also enjoy a higher commission model in most cases. This gives them enough margins to attract clients by way of giving forex rebates to their traders.
Before you intend to partner with a forex broker, make sure that you have done your due research on the broker. If you are just starting out as a Forex IB, and you happen to partner with a forex broker who is already saturated in the forex rebates niche can be a lost cause right from the start. Forex IB’s that offer rebates tend to offer really high rebates to their clients. They make their profits by way of sending large trading volumes/clients. Competing against such established forex IB’s can be devastating to a point that even if you do manage to refer a couple of traders, there is a high possibility that they would easily switch over to another introducing broker that offers a higher rebate.
Forex IB Tip #4: Read the forex IB contract terms
Many forex brokers that offer an IB partnership require that the forex IB send at least 1 – 5 live trading clients during a stipulated period of time that usually ranges from one month up to 3 months.
Unless you enjoy a good business relationship with your IB manager, chances are that in most cases you could have your IB account made inactive. This can be a great disadvantage for a forex IB who would have invested both time and money into that particular broker only to have their IB account revoked.
When negotiating with your forex broker that you want to partner with, first check if the forex broker has mentioned any such clause in the terms and conditions. If indeed you do find such a clause then speak with your forex IB manager in this aspect in order to mutually agree upon the time frame for bringing clients to the forex broker or if you are unsure, walk away from the deal.
Forex IB Tip #5: Marketing materials
Forex introducing brokers was initially conceived to cater to the institutional clients such as banks and big financial companies. Having gained popularity overtime forex IB has now become mainstream. This fundamentally explains why most forex IB programs do not have a ready set of marketing materials available. The way institutional clients operate is completely different and they usually have any need for banners or other such marketing materials.
Check with your forex IB manager before hand and inform them on the banners, HTML emails, etc that you might be needing.
Becoming a Forex IB as an individual is very simple and easy for those residing in Europe. For the US, in order to operate as a Forex IB, a valid license is required by the CFTC. You can also operate a Forex IB business by registering an office. Check with your local laws in regards to additional certification that is required by most countries.
To be successful as a forex introducing broker, especially someone who comes from an internet background requires a bit of perseverance and a different marketing strategy compared to a forex affiliate.
Forex IB can potentially even convert into a full time business as well if done correctly. By asking the right questions before you sign up as a Forex IB and maintaining good business relationship with your Forex IB Manager, introducing brokers having the right marketing mix and business insight can well be on their way to a successful financial business.