What is White Label Forex-a Complete Guide
As the forex market has been continuing to expand as an attractive place for traders, there has been a 14% increase in the average trading volume between 2019 and 2022. This is a rough estimate based on the Bank for International Settlements’ triennial survey and on top of that, the growth in average trading volume for the last 3 years was 30 percent. The numbers are clear evidence for the rise in the number of traders who are actively engaged in forex trading. Each and every new trader who enters the forex market is a potential client for a forex broker. The forex brokerage industry has also been growing alongside the forex market. And white label forex is opening up new opportunities for every entrepreneur aspiring to become a forex broker. So, today we will help you out with a complete guide on white label forex and its endless possibilities.
What is White Label Forex?
In simple words, white label forex is a service model using which one can easily set up their own branded forex trading platform by using the very same software infrastructure that is owned by another leading broker. The primary broker will function as your white label service provider by allowing you to use their trading platform and back-office panel. Developing a trading platform from scratch can be a lot of work for a beginner broker. But the entrance to the forex market as a broker has been made easier with white label forex solutions. You will be collaborating with a well-known forex broker with experience and expertise in the forex industry. They will act as your guide and take you through the steps that are needed for establishing your own brokerage.
One interesting fact that you may not know yet is that many of the top tier forex brokers that are ruling the market space today, have also availed white label forex solutions in the past while starting their journey. They entered the forex industry as a white label forex broker and built their brand name with consistent efforts. This way they were able to grow and expand as an independent forex brokerage with their trading platform over the years. This means starting out as a white label broker will never limit your prospects, if you are planning to emerge as a top-tier forex broker in the future.
White Label Forex Vs Introducing Broker Program
As we mentioned before, the goal of white label forex is to help beginners to start their own branded white label forex brokerage, whereas the goal of IB programs or Introducing broker programs is to bring more clients to the broker’s platform by acting like their affiliate or agent. An IB or Introducing broker is only in charge of introducing the broker platform to potential clients and helping the broker in growing their client base. An IB will be using their social networks, websites, blogs, social media pages and so on to promote the broker platform that they are associated with. They will be compensated with commission based on how many new clients they end up persuading to join the broker’s platform.
The benefits of an IB program is limited to commission and your role will be limited to being a promoter for the forex broker platform. On the other hand white label forex programs are much wider in scope and here the goal is to become a branded brokerage yourself with your own client base and trading platform. You will be using the technological infrastructure set up by another broker but still you are the one who owns the business here. The trading platform will be having a brand name of your choice which means you get all rights and benefits that a business entity gets by offering services to clients.
Benefits of White Label Forex
Helps to Cut Down the Initial Cost
Like any other business model, establishing a forex brokerage also requires a large amount of capital to begin with. The exact amount of capital needed will vary based on what kind of platform you want to offer to your clients. But this overall cost can be cut down to a great extent by simply opting for a white label forex solution by finding a broker who provides white label forex services. There will still be some initial setup cost and monthly platform maintenance charges you will have to bear, but it is a lot less in comparison to the capital that you will have to spend for setting up a forex brokerage all by yourself.
An Easier Entry With the Backing of an Expert
As we said before, white label forex programs are designed to provide an easy entrance to the forex brokerage industry. Some forex white label service providers will help you to get started within weeks with a simplified sign up process that can save a lot of time and effort on your part. Because the forex white label solution comes with a trading platform that is already being used and maintained by experts, you won’t have to worry about all these complex procedures and processes. They will be providing you full support from background which sometimes includes training, advice and assistance with promotional activities.Read More
Customisation and Brand Building
You will get a variety of customisation tools and options to make your white label trading platform different from that of the competitors. Being unique is an important aspect for building your brand image and brand name among thousands of other brokerages. And the forex white label solution you choose can also help in this regard to some extent.
Provide a Better User Experience to Clients
Your clients or traders who join your white label forex trading platform will be getting the very same seamless trading experience that they get on a tier-1 forex broker’s platform. The experience you give the user will decide your fate as a forex brokerage. A startup can’t afford to take the risk of relying on their own technology or software which can often fail to stand up to the expectations of traders. But a white label forex trading platform will be a tested and proven model as the broker is already serving and satisfying many clients with the very same software solution. This will help you to get more clients and widen your customer base over time.
Choice of Partial or Full Forex White Label Solution
When you opt for a partial forex white label solution, the primary broker will take up the responsibility of handling the deposits and funds of your clients. But in case of a full forex white label solution, you will be the one taking deposits from clients. You do have a choice to avail the one that sounds better to you.
Drawbacks of White Label Forex
Fierce competition from well-known brands
Traders may prefer popular and reputed brokers over a new broker. So, you should be prepared to face the fierce competition from the well-known brands before deciding to launch a white label forex brokerage.
Customisation may result in added costs
You can customise your platform to a certain extent but any further customization may result in added costs based on the white label forex provider you choose to work with.
What Features Should a White Label Trading Platform Have?
A seamless trading experience
Since your clients will be interacting and using the primary broker’s trading platform, you need to make sure the broker platform that you choose can provide a seamless trading experience to your clients and meet their expectations by testing it yourself.
Customer relationship management or CRM solutions would mean that the forex white label service provider will also work on customer support which is an integral part of a trading platform. So, make sure the platform you choose has a responsive customer support team to make sure your clients get help as and when needed.
Safety and security
Make sure the primary broker is trusted and provides a safe and secure trading platform to all users. Checking for regulations can be a good way to find a reliable white label service provider.
How Much Does a Forex White Label Cost?
The cost will vary based on the primary broker you choose. But it can range between $10000 to $20000.
What Can We Get in a White Label Forex Program?
You will get a fully functional trading platform with your own brand name and logo. Most brokers will be offering MT4, MT5 platforms as they are most popular.
Can Anyone Become a White Label Forex Broker?
Yes, the very purpose of white label forex solutions is providing an easy entrance to new brokers. So, anyone with some basic knowledge can become a white label forex broker by bearing the initial setup cost.
Are Forex White Label Trading Platforms Safe?
Yes, you can ensure the safety of your platform by choosing a reputed broker with good reviews.
What Are MAM and PAMM Accounts?
What Are Managed Forex Accounts?
Managed forex accounts are MAM and PAMM accounts which are controlled or managed by professional traders on behalf of the account holder. In a managed forex account, instead of placing trades on his own the account holder entrusts his funds to the money manager in the hope to leverage the expertise of the professional trader. In managed forex accounts, the investor gives a partial power of attorney to the account manager and the profits or losses will be shared between the account holder and the manager depending on the agreement between them.
The MAM and PAMM systems are designed to make the process of investing with a professional money manager more accessible and convenient for investors. It allows them to benefit from the experience of professional traders without having to go through the hassle of setting up and managing their own account.
What is MAM
A Multi-Account Manager (MAM) is a trading system that allows an experienced trader to handle multiple forex trading accounts simultaneously, while managing them as a single portfolio. The managed accounts in the MAM system are linked to the main account. Thus, all the trading orders that the money manager executes on the master trader account are distributed on the connected accounts. But the specifics, like stop-loss, take-profit levels, position size are altered depending upon the parameters set by the investor. MAM accounts provide greater flexibility to account managers allowing them to set different trading conditions and restrictions for each individual account. MAM systems are commonly used by professional money managers and institutional traders, but can also be used by individual traders who want to manage multiple accounts at once.
What is PAMM
PAMM, or “Percentage Allocation Management Module,” is a type of investment strategy that allows multiple investors to pool their funds together and have them managed by a professional money manager. With a PAMM Forex account, the money manager, also known as the “account manager,” has complete control over the trading decisions and execution of trades for the account. The manager is then able to make trades for the entire account, using a strategy that is tailored to the combined investment goals of all the investors.
The returns generated by the account are then distributed among the investors according to their percentage of the total investment. So, the more you invest, the greater the potential returns.
Difference Between MAM & PAMM
When it comes to professional money management, PAMM and MAM accounts are both really good options. But there is a difference between the two!
PAMM accounts are like a private investment club where multiple investors pool their funds together and give the charge to manage it to a seasoned trader, who will use his expertise to manage the combined pool of funds with the goal of maximizing returns.
MAM accounts allow professional money managers to manage multiple accounts simultaneously, in an efficient manner. Instead of having to execute trades individually for each account, a money manager can make trades for multiple accounts at once. MAM accounts also provide greater flexibility for money managers, as they can tailor their trading strategies and risk management to the specific needs of each individual client.
Therefore, the significant difference between the two is that PAMM focuses on pooling the funds of multiple investors to maximize returns while MAM focuses on managing multiple accounts through a single terminal at once. Read More
Advantages & Disadvantages of MAM Account
MAM accounts offer a unique combination of benefits and drawbacks.
Let’s Talk About the Advantages First:
- Professional Management of Your Account: Your funds are managed by a professional money manager who has the knowledge and expertise to make informed trading decisions on your behalf. This can potentially lead to better returns and less stress for you.
- Customized Strategies: MAM account allows the manager to tailor their trading strategies and risk management to the specific needs of each individual account. This means that your account may be managed differently from others and can align with your risk appetite and investment goals.
- Increased Transparency: With a MAM forex account, you can see all of the trades being made on your account in real-time. This allows you to have a better understanding of how your money is being managed and can build trust between you and the manager.
- Diversification: By spreading trades across multiple accounts, MAM accounts can help to reduce risk for the client. Instead of having all of their capital concentrated in one account, your funds may be diversified across different instruments and currencies which can minimize the potential impact of a losing trade.
- Scalability Of Fund Management: MAM account can also help in increasing the scalability of the fund management business which can lead to more professional management, more options to invest and thus better returns.
Now Let’s Look at the Disadvantages:
- Dependence on the Account Manager’s Performance: The returns on your investment will depend on the performance of the manager and their ability to make profitable trades. If the manager is not performing well, this can lead to lower returns on your investment.
- Risk of Fraud: As with any investment, there is a risk of fraud. It’s important to do your due diligence and research the MAM provider and the money manager before investing your funds.
Advantages & Disadvantages of PAMM Account
PAMM accounts are also a type of managed accounts like MAM accounts and offer a number of benefits and drawbacks.
- Percentage Ownership Profits: The biggest advantage of PAMM accounts is that investors can earn profits as per their share of investment. The percentage ownership profit is the percentage of the total profit that is allocated to each investor based on their percentage of the total investment. For example, if you have a 20% ownership in a forex PAMM account and the account makes a profit of $1000, you would receive $200 in profit (20% of $1000).
- Pooled Resources: PAMM accounts allow multiple investors to pool their funds together, which can lead to larger trades and potentially bigger returns. It also allows access to professional money management to investors who wouldn’t have been able to afford it otherwise.
- Easy to Diversify: PAMM accounts can offer a way to gain exposure to different trading strategies and styles. PAMM accounts are managed by different traders, each with their own unique approach to the market. Some traders may focus on long-term trends, while others may focus on short-term opportunities. By investing in a PAMM account, you’re gaining exposure to a specific trader’s strategy and style, which can help to diversify your overall investment approach.
- Ideal for Investors With Limited Knowledge: PAMM accounts can be beneficial for investors who have limited knowledge or experience in trading the forex market but still want to participate in the potential profits. Instead of trading the market themselves, they can invest in a PAMM account managed by an experienced and successful trader, who will make trades on their behalf. The profits generated from these trades are then distributed among the investors based on their percentage of ownership.
- Reduced Control on the Account: As your funds are being managed by a professional money manager, you may have less control over the trades being made and the direction of your investment.
- Bigger Investment, Bigger Risk: The return in a PAMM account depends upon your share of investment which can both be an upside and a downside of a PAMM account. If you own a big share in a PAMM account and it has made a loss, your losses will also be higher.
Can I monitor my PAMM or MAM account in real-time?
Yes, most PAMM and MAM accounts provide real-time monitoring and reporting of the account performance through a client portal or a dedicated platform.
Are there any fees associated with PAMM and MAM accounts?
Yes, most PAMM and MAM accounts have a management fee or a performance fee which is taken from the profits generated from the account.
How much money do I need to invest in a PAMM or MAM account?
The minimum investment amount can be different and depends on the money manager. It’s important to check with the money manager or the broker for the minimum investment amount.