Common Mistakes New Forex Brokers Should Avoid When Choosing White Label Solutions
The world of online forex trading is constantly expanding and reaching new heights. We can see many top forex brokers climbing the popularity ladder with a huge client base availing their services. Hence, starting your own forex brokerage can be a solid business idea with the number of new traders entering the forex world. There are enormous opportunities to tap into as a forex broker, but launching your own business as a new broker is also challenging. Forex white label solutions can offer the pathway you need to succeed as a forex broker, provided you choose the right white label provider.
However, many new brokers make mistakes while choosing a white label provider. Here is a list of a few common mistakes that they make. Make sure to read till the end to ensure that you don’t make the same mistakes.
- Lack of Research
The first mistake many new brokers make while choosing a forex white label provider is blindly picking a popular broker without any research. In fact, many newbies are so impatient to enter the market that they don’t even spend enough time to understand the scope of white label services or devise a business plan. It is true that white label solutions make the entire process a lot easier, but that does not mean you can dive in without any knowledge or strategy. You need to consider all the possibilities and options before signing up with a white label provider. Because the services offered, pricing, and ongoing support will differ with each technology provider. So, you should not decide without proper research.
- Ignoring Customization
The 2nd common mistake many new brokers make while choosing their white label provider is ignoring customisation. The very purpose of opting for a white label solution is to get a customisable ready-made software solution to offer the same to your clients under your brand name. But the customisation terms and conditions will differ in each white label package, and some providers may even charge an added fee for specific customisations, which will increase your cost. So, you need to remember this and ensure the chosen provider will be there to make all the required customisations allowing you to give your personal touch to the platform.
- Overlooking Regulation
Many new brokers tend to look for the cheapest option while choosing a white label provider, and they may even overlook the regulatory status of the provider just because they are affordable. But being affordable is different from being reliable and trustworthy. Teaming up with a regulated broker is a big plus for a new broker as you won’t have to worry about the legal procedures and licensing formalities. Your potential clients will also be dealing with a regulated broker, which covers you from the stress of keeping your account and funds safe.
- Inadequate Technology
The primary product and service you will get from the white label provider is a broker website integrated with trading software and loaded with all the features and trading tools necessary to carry out trading with ease. Basically, you will buy the technology you would rely on for a very long time. This technology must be good enough to bring traders to your platform and determine your success as a forex broker. But many beginner brokers sign up for a white label solution without testing the platform or technology being offered. This can be a costly mistake, and you need to avoid it by checking the efficiency of the trading platform owned by the white label provider.
- Hidden Costs
The cost of a Forex white label solution can be divided into 2 parts: initial setup cost and ongoing cost. The initial setup cost comprises all the expenses you will have to bear while launching the platform, and the ongoing cost is the monthly platform maintenance fee that you need to pay to the white label provider later on. But sometimes, the white label provider may present an affordable package only to charge way more than stated in the form of hidden costs later. Hence, you need to discuss the pricing and costs in detail before choosing your white label provider. Check how much they charge for each service like platform integration, CRM solutions, Payment processors and all other services. This way, you can ensure the package is reasonable and worth the price.
- Limited Liquidity
When you function as a forex broker, clients expect you to support them by offering solid trading conditions, which require teaming up with top-tier liquidity providers. For those opting for a white label solution, the liquidity will be coming from the white label provider, as they will also be in charge of that aspect. Suppose the white label provider is not partnered with different liquidity providers. In that case, the trading process on your platform will get interrupted by insufficient liquidity, which will be a turn-off for your clients. So, you need to look into the liquidity offerings of the white label provider before making a choice.
- Inadequate Support
The Forex white label provider will be responsible for the platform launch and technical processes and provide ongoing support for your newly established brokerage business. White label providers will often include customer support solutions in their packages, and they will be the ones interacting with your potential clients. Hence, you need to make sure of the quality of these solutions. Being a new broker, you will also need some guidance and support, and you should choose someone with enough expertise and experience in the industry. This way, you can count on them to help you as and when needed.
- Poor Scalability
In the context of forex white labelling, scalability refers to the ability of a forex trading platform or service to handle increased demand, user activity, and trading volume without any drop in performance or service quality. It involves designing the platform’s infrastructure, technology, and processes in a way that allows it to efficiently accommodate a growing number of traders, transactions, and data without compromising on speed, reliability, or user experience. As the number of traders and transactions on the platform increases, the platform must be able to handle the additional load seamlessly. Hence, choosing a white label solution with poor scalability will be a major mistake for the new broker. So, you need to consider this while making a choice.
- Not Prioritising Security
Security is one of the most important points that all traders look for while choosing their forex broker. It also decides the future of new brokers. Hence not prioritising security while choosing a white label provider will be a big mistake, to say the least. Winning the trust of your clients is important to survive the cutthroat competition in the forex brokerage industry. So you must prioritise security while picking your white label solution.
- Neglecting Future Growth
Even though white label solutions are designed to offer an easier entrance to the market, you must plan for future growth and expansion while choosing your white label provider. The white label solution you choose should have a scope for growing to a bigger scale, and you need to assess the potential or possibilities it holds for the future. For example, if you offer a Standard account to your clients, but want to add, let’s say, an Islamic account to allow Muslim traders to trade on your platform, then your white label provider must have the feature to let you add the Islamic account into the list of your trading accounts.
- Failing to Test
Another mistake that new brokers make while choosing their white label package is failing to test its performance and proceeding with the launch right away. The technological bugs and glitches after the website goes live will negatively impact your reviews, which is fatal for a new broker. So, you must be testing the platform before it goes live.
- Ignoring Exit Strategies
The last mistake that most new forex brokers make is ignoring the exit strategy. Simply put, it is how you plan to discontinue or terminate their white label partnership or operation, either because you want to become an independent broker later on or for other reasons. You need to ensure the agreement you enter into with the white label provider has special clauses for contract termination if needed, or else you might face issues with it later.
In The End
Forex white label solutions are a feasible and cost-effective alternative for all aspiring brokers who face difficulties in starting the business on their own or just want some support from a reliable provider to play it safe in the initial phase. In any case, you must take a good amount of time to research the available options and go for the best one.