All You Need to Know About Introducing Brokers
IB, an abbreviation for Introducing Broker is a company or individual who refers clients to a forex or CFD broker. While the description makes IBs seem similar in function to affiliates, IBs provide added advantage to their clients by providing necessary guidance and advice on their trading journey. In this write-up, we’ll be discussing about who are Introducing Brokers and how they work with both exchanges and individual clients.
Introducing Brokers Explained
While IBs do work closely with their clients, they never make any transactions on behalf of their clients. They only seek to recruit new customers to an exchange in turn for a commission on trades the customer executes. For IBs marketing helps in a great way to bring in new clients but to keep them, IBs strive to offer them more tailored services and advice.
How to Become a Forex IB
The certifications and requirements to become an Introducing Broker is different for different countries. Although certifications are not a necessity in certain regions, it is good to have one as most exchanges prefer to work with certified IBs. The type of certification you’ll need is dependent on factors such as the exchange you want to partner with, and your region.
Choose Your Brokerage
When it comes to finding a forex or CFD brokerage, you’ll have hundreds of exchanges to choose from. Listed below are some factors you will need to look at when selecting a broker:
- Is the brokerage a regulated entity?
- How good are their trading platforms?
- Which are the different financial instruments you can trade through the brokerage?
- Do they have trading apps compatible for mobile devices?
- Does the brokerage have a demo account?
- Quality of their Live Support
Partnering with the Brokerage
In addition to those factors mentioned above, another factor you will need to check is the commission per trade. You will need to ensure that the commission your preferred brokerage offers is in line with your expectation and type of clients you have. Commission rates are largely influenced by how your customers trade with the brokerage – frequency and the amount which is traded. Apart from the commissions, also check if they are providing any special tools for IBs and any other additional unique perk.
If your preferred IB broker satisfies your requirements, then you can confidently go ahead and partner with them.
Finding Clients
Now that you have partnered with a brokerage, the next step is to find clients. One of the first steps you will need to take in this regard is to establish an online presence – website, social media pages, etc. Unlike how an affiliate, you’ll need to due diligence on your clients as you’ll be introducing them to an exchange and your reputation is on the line.
Be sure to provide your clients a thorough run-down of the trading platforms available on the exchange. Additional to provide proper guidance and advice to the client, be sure to stay updated with the latest financial news and advice.
Online Presence
Not only is having an online presence, important to attract new clients, but is also important in terms of building your reputation. Having a personal brand online can give your added sense of security to your clients about your credibility. Once you have a Google-friendly presence online, you are likely to be suggested a top introducing broker for relevant search queries.
Apart from Google, having a solid social presence is vital when it comes to building on your credibility. Have YouTube videos, blog posts, and other content that can provide value to its readers or listeners.
Benefits Introducing Brokers Offer to their Clients
As mentioned, Introducing Brokers generate earnings in form of commission against the volume traded by their clients on a given exchange. IBs as such have an added incentive to ensure that their clients succeed. Additionally, IBs are known to provide their high-performing clients with lucrative gifts such as EAs, books, and other premium trading resources.
Additionally, certain IBs also provide their clients with Rebates. In other words, they offer their clients a part of the commission which they receive from the exchange. Rebates, in fact, are one of the most important factors which influences a client’s decision to work an IB.
Conclusion
To be successful as an Introducing broker, you’ll need to ensure that you build up and maintain a credible reputation. Additionally, being transparent and honest with your clients and the brokerage can also help in the long run to help you earn more and improve on your brand.
Additionally, certain IBs also provide their clients with Rebates. In other words, they offer their clients a part of the commission which they receive from the exchange. Rebates, in fact, are one of the most important factors which influences a client’s decision to work an IB.
