An Introducing Broker (IB) plays an important role in connecting the traders with the forex brokers. The duty of the IB is to know the trader’s trading needs and introduce him to an appropriate forex broker who will cater to the requirements precisely. There are various introducing brokers in the market, and that is why it is crucial for the trader to find the best one. The IB will benefit both the traders and forex brokers significantly. The IB will earn through commissions, which will be paid by the forex brokerage firm upon fixed agreement and trade volumes carried out by the clients. Many brokerage firms offer attractive Forex Multi-Level IB solutions to motivate the IBs to bring in more numbers of potential traders. An IB can get to know about every forex IB solution offered by every broker to decide which one suits his preferences the best.
There are numerous business models for the IB to follow. This article will help you learn some of the major IB business models.
Customer Service IBs
This type of IB focuses and thrives mainly on customer satisfaction. The ultimate goal of the IBs who follow this model is to cater to the customers’ trade requirements. Therefore, the IBs of this model should clearly know what the trader wants and connect him to a relevant brokerage firm accordingly. The IB will provide a personalized trading experience for the traders at an affordable cost. These IBs usually work throughout the day 24*7.
As the IBs know the trader’s needs accurately, they will choose the most appropriate broker and provide suitable trading services. One drawback of this model is the low amount of commission earned by the IB. As the model prioritizes the needs and satisfaction of the traders, this model will clear the trading issues much sooner and more effectively. The transaction issues will also be sorted out in a quick manner.
White label IBs
When the IB has more traders, it can shift to the white label IB model. The IB that follows this model will provide complete trading services to the clients including the trading platform, transaction index, marketing tools, corporate strategy, etc. The IB will not be able to hold the funds of the clients. Most customers prefer white label IB for lower spreads.
The trading environment of the client will be controlled by the white label IB efficiently. He can make profits through this model by earning commissions from the forex broker. The commission amount is based on the funds that the trader invests. If the trader makes a large volume of trades by taking bigger positions, the IB has the probability to earn high.
Social Media & Transaction Signal Related IBs
This IB model is based on social media and transaction signals, as the name suggests. Social media IBs use the platform to gather transaction ideas, results, and methods from investors or traders. After the trader shares this info, the IB will share the info with other traders who are unaware of such methods and results. These traders can just copy the transaction methods, results, and ideas of other traders to win trades and gain profitable returns. The traders can get the transaction signals from their forex trade accounts. The transaction signal-related IB will help them obtain the signals. The traders or customers have to pay a separate fee to the IBs to follow this model. The trade signals can be obtained from both beginners and experienced traders irrespective of their trade experience.
Rebate Related IBs
These are introducing brokers who get a commission from the brokerage firms for their service. The duty of rebate-related IBs is to bring potential traders to the brokerage firm. When the trader invests money and makes profits, the brokerage firm will charge a service fee from the trader. After this, the broker will allocate a commission fee and share it with the IB (upon the agreed commission amount) as remuneration for his service. Most reliable IBs share a part of the commission they receive with the customers. This will lessen the customers’ transaction costs and help them build trust in the IB. The commission is just a bonus to the IBs. Their main revenue is through rebates.
We’re sure you would have not got a pretty clear picture of different models of IB in the forex market. It is important for a trader to sort out his trade requirements and goals first before choosing an IB. An IB should also introduce his clients to the best forex brokers to maintain his reputation in the market. One negative feedback can have a great impact on his trade career. Therefore, it is important for the IB to earn customer satisfaction.