Introducing brokers or I.B is a business that individuals and different firms dealing in the markets likes to do simply because of the lucrative earnings placed on it. Many people who are owners of forums, blogs and different forex groups are attached with different brokerage firms including HotForex, Axitrader, FXCM etc. The contract is very simple. Introducing brokers or I.B introduce new clients to these overseas brokers and in-turn get money a good commission on every trade made by their referral. There’s no upper limit around the earnings that business can generate if the marketing is done efficiently. The instance below would clearly illustrate the tentative earning that an Introducing broker can get on referring only 100 Clients.
Mr. Sudan from From India has a financial blog. He’s got almost 2000 Subscriber’s, these subscribers are referred to about the most broker Hotforex. Only 100 clients join within this referral basket. Meaning the conversion ratio is only 0.05 which actually bad normally within the marketing metrics any conversion ration under 2% is really a quite poor achievement. Now allow us to calculate simply how much he is able to earn each month from all of these referrals.
According to tentative contract let’s say HotForex pays 9$ per standard lots (100,000 units of base currency) traded from the referrals.
With an average, each referral trades 100 standard lots. You will find 28 trading days in the month. So, the approximate earning of Mr. Sudan will be 100 lots * 9$ * 100 referrals= 90,000$ that is a substantial income. This income doesn’t have any upper limit, in fact from our experience like a corporate Introducing broker, there are many tiers of earnings like:
T1= Tier one Basic Tier the best revenue paid to IB 1-100 Clients approximately
T2= Tier two Secondary Tier, the revenue is increased within this tier by almost 20% 100-1000 Clients.
T3= Tier three The greatest level, here is the maximum level and it is provided to large institutional IB’s, some brokers share almost 70% of their revenue with the introducing brokers
Eg: Hotforex earns about 15$ per standard & with this particular tier an Ib can end up receiving almost 11$ per standard lots traded by their referral.
Regardless of as being a lucrative earning opportunity, this business is probably not suited to everyone, as this is not essentially a group & forget type of job. The job from the Introducing broker would be to provide all services including help for KYC, Choosing the suitable account types, funding the account, Aid in withdrawal’s etc. So, there could be a necessity of dedicated support staffs who is able to help in these tips.
In this modern era, the Introducing broker concept is known to most of the people. There is various companies offering Forex cashback programs / Forex pip rebates this is entirely a fresh concept to drive new leads effortlessly without investing heavily on marketing. The actual IB’S simply shares 70-80% of the earned revenue with their introduced clients, this can help to reduce the trading costs, recover a percentage of losses for their trades. Probably the most successful venture is the cashback forex running since the early 2006. Other new entities have cultivated to compete efficiently. This can be a war between Introducing brokers. Customers often consult 3-4 Introducing companies before finally joining one, to ensure that he/she is certain about getting the maximum cash back.
We are a relatively new company supplying a solid rebate program, other value added services including trading signals , managed account trading, Forex programming. But our main objective is to use only trustable fx brokers who would never run away without client’s money. Most of IB’s blindly accept deals from various brokers without conducting a necessary background check. But as far my experience 95% with the fx brokers perfectly located at the internet are scammers.
# Shantz, Trader & Foreign exchange market Analyst since 2007 © RISECAP Advisory Solution LLP
To learn more about managed account trading go this useful web site.