It is a term that you must have been seeing everywhere in the forex trading ecosystem – introducing broker. MTrading IB program is one of the latest developments in the industry, geared towards improving the experience for all parties involved.
Read on as we explain what it is, and the benefits that you stand to gain from participating in IB forex trader; whether as an introducing broker or as a trader.
What is an introducing broker in forex?
An introducing broker in forex trading, commonly referred to as IB, is a third-party person or business entity that facilitates trades and sundry forex activities for their clients, without actually taking the trading money from them. Simply put, an IB facilitates relationships between traders and brokerage houses but doesn’t actually handle the assets and capital being traded; they leave that to the brokerage houses themselves.
The introducing broker sources clients and funnels them to their partner brokerage house, and then provides support services throughout the length of that relationship. All in exchange for a commission on each transaction executed with the broker by these clients.
Advantages of using an introducing broker
What do clients stand to gain from transacting through introducing brokers, instead of dealing directly with the brokerage houses? In this section, we list a few of the advantages of using an introducing broker in forex trading.
Enhanced service delivery
By trading through an introducing broker, you would be opening yourself to a much more improved customer service and trading experience. Brokerage houses often have thousands of clients and it’s impossible to have any near-personal relationships with all of them. Many of them even use AI to handle customer requests and complaints. But with an introducing broker, you can be assured of a more personal relationship with an actual human who is attentive, understands your issues, and is ready to help you find solutions. Especially since the commissions that they get paid are determined by how happy they can keep you.
Improved leverage capabilities
Forex traders often need to trade positions that require more capital than they have in their trading accounts. The usual thing to do is to take out some leverage to take that position. Leverage helps traders to trade bigger lot sizes than they normally would, helping them to widen their profit margins. But obtaining leverage can be quite a hassle when you have to deal directly with the brokerage house, especially when you’re not a spectacularly high volume trader. But with an introducing broker, you can access leverage faster and more smoothly.
Rebates based on trade volume
Because they receive a commission on every trade that their clients execute, some introducing brokers give rebates to their clients; as an added advantage. These rebates might be in small amounts, but depending on the frequency and volume of your trades, they can easily add up to a significant sum monthly or quarterly.
Wider access to the markets
Another advantage of using introducing brokers is the wider access that they provide. The forex ecosystem is an enormous industry. There are limits to what a single trader working alone can know or access, but by accessing the market through an introducing broker who has been trained for the purpose, you can receive access to aspects of the market that you might have never imagined existed.
Access to educational resources
As part of the service, introducing brokers build up extensive libraries of educational resources with which they can guide their clients. When you team up with an introducing broker, you will receive access to these vast resources by default. Everything from books to YouTube tutorials to webinars and online courses.
Access to advanced tools
Something else that you can benefit from teaming up with an introducing broker is access to some advanced trading tools. Introducing brokers are usually people who have gained years of cognisant experience in forex traders. And through those years, they have built impressive collections of trading tools. Also, when they sign up to become introducing brokers, they often get access to certain sophisticated trading tools for free. By using an introducing broker, you can receive access to these tools by extension, greatly improving your trading experience.
Best practices for conducting introducing broker programs
Recognizing the importance of introducing brokers and their clients to the success of their operations, brokerage houses must carefully craft their IB forex programs to be attractive to both clients and introducing brokers; whether they are in Kuala Lumpur or in New York. In this section, we list a few features that brokers must consider in building a truly competitive IB forex program.
Brokerage houses must not take the efforts of their introducing brokers for granted; they must ensure that they are always well paid. The market for introducing brokers is pretty competitive in Asia because brokerage houses have come to realize the value of the program. So, to retain some of the best talents, brokerage houses must offer competitive remuneration.
This is not only good for the introducing broker but also the clients. With these competitive remunerations, you can keep your IBs highly motivated enough to provide the best of services to their (and yours, by extension) clients.
Brokerage houses must provide continuous and round-the-clock assistance to their introducing brokers and their clients, in whatever ways are necessary. This includes everything from customer service to marketing assistance.
Advanced brokerage software
To run an effective operation, introducing brokers needs special sophisticated software. Brokerage houses must provide access to these to their introducing brokers.
At MTrading, for example, we try to help our IBs with access to all the advanced brokerage software that they might need. Giving them all they need to run smooth operations and keep our clients satisfied.
Introducing broker programs are an exciting new frontier in forex trading. By including third parties in the relationship between clients and brokers, the program ensures that the clients receive enhance personalized customer service, and the brokers receive more clients and transactions; thus helping the ecosystem grow.
At MTrading, we run one of the best introducing broker programs in the Asia Pacific region. We have the best brokerage software and provide competitive remuneration packages to our IBs. Why don’t you join us today to start your foray into IB forex trading?