Introducing brokers or I.B is really a business that folks and other firms dealing in the real estate markets loves to do simply because of the lucrative earnings attached with it. A lot of people who’re those who own forums, blogs and various forex groups are that come with different brokerage firms including HotForex, Axitrader, FXCM etc. Anything really is easy. Introducing brokers or I.B introduce new clients to these overseas brokers and in-turn get paid a good commission on every trade made by their referral. There’s no maximum around the earnings that business can generate if the marketing is completed efficiently. The example below would clearly illustrate the tentative earning that an Introducing broker are certain to get on referring only 100 Clients.
Mr. Sudan from From India features a financial blog. He has almost 2000 Subscriber’s, these subscribers are known about the most broker Hotforex. Only 100 clients join on this referral basket. Meaning the conversion ratio is merely 0.05 which in reality inadequate normally in the marketing metrics any conversion ration lower than 2% can be a quite poor achievement. Now let’s calculate how much they can earn on a monthly basis from all of these referrals.
As per 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. You will find 28 trading days in a month. So, the approximate earning of Mr. Sudan will be 100 lots * 9$ * 100 referrals= 90,000$ which is a substantial income. This income doesn’t have a upper limit, actually from my personal experience being a corporate Introducing broker, there are various 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 it is provided to large institutional IB’s, some brokers share almost 70% of the revenue using the introducing brokers
Eg: Hotforex earns about 15$ per standard & with this tier an Ib can end up receiving almost 11$ per standard lots traded by their referral.
In spite of as being a lucrative earning opportunity, e-commerce may not be ideal for everyone, because this is not essentially a collection & forget kind of business. The duty of the Introducing broker is to provide all services including help for KYC, Selecting the suitable account types, funding the account, Help in withdrawal’s etc. So, there might be a need of dedicated support staffs who are able to aid in these things.
In this modern era, the Introducing broker concept is known to most of the people. These days there are various companies offering Forex cashback programs / Forex pip rebates this is entirely a new concept to drive new leads quickly without investing heavily on marketing. The actual IB’S simply shares 70-80% of these earned revenue making use of their introduced clients, it will help to attenuate the trading costs, recover a portion of losses for their trades. Just about the most successful venture may be the cashback forex running since the early 2006. Other new entities have cultivated to compete efficiently. Now 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 sure about having the maximum cash back.
We are a comparatively new company offering a solid rebate program, other value added services such as trading signals, managed account trading, Forex programming. But our main objective would be to use only trustable forex brokers who does never run away without client’s money. Most of IB’s blindly accept deals from various brokers without performing a necessary criminal history check. But as far my experience 95% of the foreign exchange brokers perfectly located at the internet are scammers.
# Shantz, Trader & Forex Market Analyst since 2007 © RISECAP Advisory Solution LLP
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