Thinking about opening a foreign currency exchange and brokers business? We tell you what you need to know to get started.
Advice for Startups
Foreign currency exchange (a.k.a. Forex) businesses have the potential to deliver solid earnings for the right entrepreneurs. Rather than buying and selling a good or service, Forex brokers buy and sell currency in the global marketplace using electronic software and relationships with large brokerage firms.
However, a Forex business is also a great way to quickly lose startup capital. Although Forex brokerage is similar to stock trading, there are also some major differences. Before you get too serious about dropping a wad of cash in Forex, it's critical to educate yourself about Forex and the strategies successful traders use to beat the market.
Part of the education process involves familiarizing yourself with the tools and resources Forex brokers use on a daily basis. Software analysis tools, up-to-the-minute currency listings, and other resources are an absolute must for entrepreneurs serious about making a living in foreign currency exchange.
After you have spent time familiarizing yourself with the tools and strategies of Forex, it's time to open a demo account. Nearly all brokerage firms offer a demo (or practice) account that lets users hone their skills with imaginary cash before they invest in the actual marketplace. Demo accounts are also a useful tool for evaluating each brokerage firm's trading platform and analytical tools – a necessity because you will eventually need to select a brokerage firm and platform for your business.
Once you are confident in your trading skills and brokerage firm, you can transition your demo account to a live account with an initial investment as low as $500. The return on a $500 initial investment won't be great, but that's okay. Smaller investment means smaller risk and you can increase your investment level as you become more skilled in the market.
Experienced Forex traders realize that trading in any market can be a highly emotional experience. An emotional commitment to a specific trade can lead to bad business decisions, so it's essential to implement a rational system with stop losses and other mechanisms that minimize emotional interference.
Best Practices for Writing a Foreign Currency Exchange & Brokers Company Business Plan
As a startup entrepreneur, you're learning that small business ownership can be a lonely career path. That's especially true when it comes to writing a business plan – the seminal document that will shape the direction of your new foreign currency exchange and brokers business.
But even though you have primary responsibility for drafting a business plan for your foreign currency exchange and brokers business, you aren't entirely alone. There is a broad range of resources available for solo entrepreneurs who face the daunting task of writing a business plan from scratch.
Our Business Plan Help section discusses some of the business plan resources other entrepreneurs have found useful.
Evaluate the Competition
Long before you open a foreign currency exchange and brokers business in your area, it's a good idea to see how many competitors you have. Use the link below to get a list of local competitors in your area. Just enter your city, state and zip code to get a list of foreign currency exchange and brokers businesses in your community.
Is the local market large enough to support another foreign currency exchange and brokers business? If not, you had better be sure that you are doing things much better than the competition.
Talk to People Who Are Already in the Business
After you've evaluated your local competitors, you really ought to speak with somebody who is already in the business. If you think your local competitors will give you advice, you're being overoptimistic. Why would they want to educate a future competitor?
On the other hand, an individual who has a foreign currency exchange and brokers business in another town may be more than happy to give you a few tips, provided that you won't be directly competing with them. Indeed, many experienced entrepreneurs enjoy offering advice to startup entrepreneurs. It can take a while to find an entrepreneur who is willing to talk, but it's well worth the effort.
How do you go about finding a foreign currency exchange and brokers business manager in a different locale who can assist you?
It's easy. Here's a link you can use to find a mentor outside of your area.
Benefits & Drawbacks of a Foreign Currency Exchange & Brokers Business Acquisition
An acquisition can be a great way to enter foreign currency exchange and brokers business ownership. But it's important to evaluate the benefits and drawbacks of buying a business before you decide on either an acquisition or startup approach.
BENEFITS: Existing companies have proven business models and a history of profitability. They should also have some degree of brand recognition and an established customer base.
CONs: However, purchased companies can also come with pre-existing challenges and/or liabilities. Ultimately, it may be more difficult to tailor a purchased business to your ownership style.
Explore Franchising Options
The odds of becoming a successful entrepreneur are higher when you opt to franchise and benefit from the prior work of others and their lessons learned.
Prior to making the decision to open a foreign currency exchange and brokers business, you would be wise to check out whether franchise opportunities in your space might be worth investigating.
The link below gives you access to our franchise directory so you can see if there's a franchise opportunity for you. You might even find something that points you in a completely different direction.
These additional resources regarding starting a business may be of interest to you.
If you already are in business and came here to learn about growing an existing foreign currency exchange and brokers business, these resources will come in handy:
If you sell to foreign currency exchange and brokers businesses, you're in the wrong place. These resources are more appropriate for you:
If you are interested in starting a different kind of business, please browse our directory of guides below.