How profitable is it to be a broker and is it worth opening your own brokerage company?
The main intermediary between the forex and stock markets is the brokerage company, which receives profit in the form of a commission or spread.
Sooner or later, almost every trader comes up with the idea of creating their own brokerage company.
At first glance, providing brokerage services seems like an easy and profitable business, allowing you to earn a commission on every client transaction.
There is no need to have a large number of employees, rent retail space, or set up production; also, unlike banks, there is no minimum amount of equity capital.
Learn more about opening a brokerage company - https://time-forex.com/vopros/kak-stat-brokerom
Many believe that money in this business is practically made out of thin air, with leading brokers' revenues running into billions of dollars. In fact, many of these assumptions are true, and the profits are substantial, while setting up a business is truly not difficult.
But is it as easy to make money in this field as it seems at first glance?
• High competition – every year, more and more companies appear on the market for similar services, with which you will have to compete. In addition, there are an equal number of large brokers with a solid reputation.
• Huge advertising costs – in order to attract a client to a new brokerage company, a huge advertising budget is required. According to rough estimates, it should be at least $100,000 per month.
The prices for financial advertising on the Internet are simply comical; for example, the cost of one click on contextual advertising in popular search engines exceeds $10.
In addition, brand promotion is necessary to make it recognizable among potential users.
• Payback – as a rule, new brokerage companies begin to earn money only after three years of existence and only if they provide truly high-quality services.
This means that the actual costs of creating and promoting a brokerage are estimated at $3-5 million. However, even this amount doesn't guarantee high profits, as larger and more established competitors will still benefit.
The apparent simplicity and low cost of registration misleads future brokerage company owners who do not take into account the advertising budget for attracting clients.
This leads to hundreds of new companies being registered every year, of which only a few remain on the market. Therefore, if you decide to register your brokerage company, you should once again increase your efforts and capabilities.
