Introducing brokers or I.B is a business that individuals and different firms dealing in the real estate markets loves to do simply because of the lucrative earnings attached with it. Many people that are people who just love forums, blogs and different forex groups are placed on different brokerage firms such as HotForex, Axitrader, FXCM etc. Anything is very simple. Introducing brokers or I.B introduce new customers to those overseas brokers and in-turn get money a great commission on every trade created by their referral. There isn’t any 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 the Introducing broker can get on referring only 100 Clients.
Mr. Sudan from From India includes a financial blog. He has almost 2000 Subscriber’s, these subscribers are known one of the popular broker Hotforex. Only 100 clients join on this referral basket. Which suggests the conversion ratio is merely 0.05 which actually bad normally in the marketing metrics any conversion ration less than 2% is really a quite poor achievement. Now let’s calculate simply how much he can earn each month readily available referrals.
Depending on tentative contract let’s say HotForex pays 9$ per standard lots (100,000 units of base currency) traded from the referrals.
By using an average, each referral trades 100 standard lots. You will find 28 trading days in a month. So, the approximate earning of Mr. Sudan is going to be 100 lots * 9$ * 100 referrals= 90,000$ which is a substantial income. This income doesn’t have any upper limit, in fact from my own experience being a corporate Introducing broker, there are various tiers of earnings like:
T1= Tier one Basic Tier the cheapest revenue paid to IB 1-100 Clients approximately
T2= Tier two Secondary Tier, the revenue is increased on this tier by almost 20% 100-1000 Clients.
T3= Tier three The ultimate level, this is actually the maximum level and is also agreed to large institutional IB’s, some brokers share almost 70% of their revenue using 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.
Despite as a lucrative earning opportunity, this business is probably not ideal for everyone, because this is not essentially a collection & forget sort of company. The obligation with the Introducing broker is always to provide all services including help for KYC, Choosing the suitable account types, funding the account, Help in withdrawal’s etc. So, there can be a need of dedicated support staffs who are able to help in these matters.
In this modern era, the Introducing broker concept is known to most people. There is various companies offering Forex cashback programs / Forex pip rebates this really is entirely a new concept to drive new leads quickly without investing heavily on marketing. The master IB’S simply shares 70-80% of these earned revenue using their introduced clients, it will help to attenuate the trading costs, recover a share of losses for trades. One of the most successful venture may be the cashback forex running since the early 2006. Other new entities have cultivated to compete efficiently. Now this is really a war between Introducing brokers. Customers often consult 3-4 Introducing companies before finally joining one, to ensure that he/she is sure about obtaining the maximum cash back.
We are a relatively new company supplying a solid rebate program, other value added services such as trading signals , managed account trading, Forex programming. But our main objective is to use only trustable foreign exchange brokers who would never try to escape without client’s money. Nearly all of IB’s blindly accept deals from various brokers without using a necessary background check. But because far my experience 95% with the fx brokers based in the internet are scammers.
# Shantz, Trader & Foreign exchange market Analyst since 2007 © RISECAP Advisory Solution LLP
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