Do you know you can make money in the financial market without actually trading? An introducing broker, IB is an agent that introduces its clients to the forex market through a regulated broker. These agents make money by providing traders with information and educational materials.
This article discusses introducing brokers, their role in the financial market, and the relationship between an IB and an affiliate marketer. We then went on to share tips on how to become an introducing broker. Let’s get right into it.
What Is an Introducing Broker in Forex?
An introducing broker is an entity that acts as a middleman or agent between clients and the broker. It could be an individual or organization that intervenes on behalf of customers in placing purchase or sell orders. In the futures market, the IB interacts directly with clients, though it delegates its operations to another futures merchant, mostly the futures commission merchant, FCM.
In most cases, the IB is affiliated with the FCM, acting as a direct subsidiary of the firm. However, in specific scenarios, it may act as an independent entity in partnership with the merchant firm. The IB does not accept money or other assets from customers in scheduling trade orders. Instead, they already have an agreement with the broker, where they receive a spread or commission from the clients’ trades.
Features of an Introducing Broker
Below are some features of an introducing broker.
- The introducing broker acts as an intermediary between a client seeking access to trade different assets in the market with an interested party willing to be at the end of such a transaction.
- Besides delegating trade orders, the IB can sometimes execute trade orders on the customer’s behalf.
- An IB can act as an advisor to the clients on actions to take in the market. In other scenarios, it delegates the execution of trades and other operations to another entity. Therefore, the IB isn’t just after its interest; instead, it focuses on that of its customers.
- The IB operates as an affiliate of the FCM or acts independently. It may also partner with an online trading platform or a land-based firm.
The growing increase in online trading has brought another dimension to the activities of the IB. Recently, IBs now act in partnership with a broker or affiliate as a signal provider. In this case, they provide copy trading services to interested clients.
Comparing an Introducing Broker with an Affiliate
Basically, the activities of an introducing broker and an affiliate are pretty similar, considering an IB primarily acts as an affiliate. Both entities provide customers access to the financial market through their brokers. You won’t be wrong if you say they share similar goals; they help to introduce clients to a particular brokerage platform. However, there exist some apparent differences between both parties.
While an IB acts as an agent that introduces customers to an online trading platform, such as MTrading, an affiliate essentially promotes the services and products of brokerage services. Affiliate marketers focus more on marketing and getting more clients to their trading platform. They can do this by setting up ads via a website or a social media platform like YouTube or Twitter.
Unlike affiliates, IBs go the extra mile; it’s beyond just getting more traffic to an online trading platform but providing credible resources, such as advice and information. The IB cares more about the actual interest of the customers. Though, in the long run, both the client and the broker benefit from the actions of the IB.
How to Become an Introducing Broker?
Becoming a new introducing broker in the forex space, first, you need to have an idea – a plan on how to get clients for the broker. One excellent strategy to help you get more clients for your broker is offering educational materials.
So, if you choose to get more clients for your brokerage firm by educating traders on how to succeed in the market, you may need to create a series of webinars and online courses. It works best if your broker has a functional website. Building a top-notch social media presence, too, will help get more clients.
Once you’ve strategized, you’d need to select a broker you’d provide your services to meticulously. The broker you work with must be reputable, transparent, and regulated. Clients won’t like to trade with a trading platform that lacks those three vital traits. The broker must be under the regulation of appropriate authorities, at least one of FCA, SVG, or ASIC. You see, it is pretty easy to get into forex IB trading. For example, you can become an IB with MTrading.
Whichever broker you intend to work with will require proof of your identity. It could be as simple as an ID card or a driver’s license. If you are applying as a company, you’d also need to show a certificate that proves you own the company with a bank statement bearing the company’s name.
Your goal is to improve the client base of your employer – the brokerage firm. As soon as you are employed, you can start to carry out promotional and marketing activities that can help bring more traffic to the brokers’ trading platform. In doing so, you also assist clients in becoming more refined traders. Notably, you don’t have a fixed salary; the money you earn is proportional to the client’s trading. So, you must have your client’s best interest at heart to help make more money.
By being an introducing broker, anyone can start earning an income from the financial market without necessarily being a trader. You just have to equip yourself with the needed knowledge and have the right strategy to get customers. Also, the brokerage firm you partner with can determine how much you’d make as an IB. Anyways, if you are looking for a forex partnership, you can become an IB with MTrading.