How profitable is it to be a broker and is it worth opening your own brokerage company?
The main intermediary between Forex and the stock market is a 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 his own brokerage company.
At first glance, it seems that providing brokerage services is an easy and profitable business that allows you to receive a commission from each client transaction.
At the same time, you do not need to have a large number of employees, rent retail space, set up production, and, unlike banks, there is no minimum amount of equity capital.
More information about how to open a brokerage company - https://time-forex.com/vopros/kak-stat-brokerom
According to many, in this business money comes out of thin air, and the income of leading brokers is estimated in billions of dollars. In fact, many of these judgments are correct, and the profits are large, but organizing a business is really not difficult.
But is it as easy to make money in this area as it seems at first glance?
• Great competition - every year an increasing number of companies appear on the market for such services with which you will have to compete. In addition, there are no fewer large brokers that already have a solid reputation.
• Huge advertising costs – in order to lure a client to a new brokerage company, a huge advertising budget will be required. According to rough estimates, it should be at least $100,000 per month.
The prices for financial advertising on the Internet are simply ridiculous; for example, the cost of one click on contextual advertising in popular search engines exceeds $10.
In addition, brand promotion is needed 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.
That is, we can say that the real costs of creating and promoting a broker are 3-5 million US dollars. Moreover, even this amount does not guarantee high profits, since larger and older competitors will still benefit.
The apparent simplicity and low cost of registration misleads future owners of a brokerage company, who do not take into account the advertising budget to attract clients.
This leads to the fact that hundreds of new companies are registered every year, of which only a few remain on the market, so if you decide to register your brokerage company, once again build up your strengths and capabilities.