Introducing brokers or I.B is a business that folks and different firms dealing in the markets loves to do simply because of the lucrative earnings placed on it. Many individuals who are those who own forums, blogs and various forex groups are placed on different brokerage firms such as HotForex, Axitrader, FXCM etc. Anything is fx rebates . Introducing brokers or I.B introduce new business to those overseas brokers and in-turn get paid an excellent commission on every trade produced by their referral. There is no maximum on the earnings that business can generate in the event the marketing is performed efficiently. The example below would clearly illustrate the tentative earning that the Introducing broker can get on referring only 100 Clients.
Mr. Sudan from From India includes a financial blog. He’s got almost 2000 Subscriber’s, these subscribers are referred to one of the popular broker Hotforex. Only 100 clients join in this particular referral basket. Which suggests the conversion ratio is merely 0.05 which actually very poor normally inside the marketing metrics any conversion ration under 2% can be a quite poor achievement. Now let us calculate how much he is able to earn on a monthly basis from these referrals.
According to tentative contract let’s say HotForex pays 9$ per standard lots (100,000 units of base currency) traded through the referrals.
By using an average, each referral trades 100 standard lots. There are 28 trading days in the month. So, the approximate earning of Mr. Sudan will probably be 100 lots * 9$ * 100 referrals= 90,000$ which is a substantial income. This income doesn’t have any upper limit, in fact from our experience as a corporate Introducing broker, there are numerous tiers of earnings like:
T1= Tier one Basic Tier the lowest 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, this is the maximum level and is provided to large institutional IB’s, some brokers share almost 70% of their revenue using the introducing brokers
Eg: Hotforex earns about 15$ per standard & using this 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 might not be suited to everyone, since this is not essentially a group & forget sort of company. The job from the Introducing broker is always to provide all services including help for KYC, Selecting the suitable account types, funding the account, Assist in withdrawal’s etc. So, there could be a need of dedicated support staffs who can assist in these matters.
On this modern era, the Introducing broker concept is already known to most of the people. These days there are various companies offering Forex cashback programs / Forex pip rebates this really is entirely a brand new concept to operate a vehicle new leads very easily without investing heavily on marketing. The property owner IB’S simply shares 70-80% of their earned revenue using their introduced clients, it will help to minimize the trading costs, recover a share of losses for their trades. Probably the most successful venture may be the cashback forex running considering that 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 having the maximum cash back.
We are a somewhat new company offering a solid rebate program, other value added services such as trading signals, managed account trading, Forex programming. But our main objective is to work with only trustable forex brokers who would never hightail it without client’s money. The majority of IB’s blindly accept deals from various brokers without performing a necessary criminal history check. But as far my experience 95% from the forex brokers based in the internet are scammers.
# Shantz, Trader & Foreign exchange market Analyst since 2007 © RISECAP Advisory Solution LLP
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