Rethinking Your Forex Brokerage Account
As the forex market matures it’s easy to become complacent about choosing a forex broker. I mean, don’t all forex brokers have tight spreads and fancy trading platforms?
Generally – yes. However, neither of those things will guarantee that you make money as a forex trader– if anything it can distract and have the opposite effect. A solid trading plan and/or a reputable advisory service (Aspens’ shameless plug) is what will pave the path to profits.
However, in this hectic day and age where you can get what you need instantly with a click of the mouse, the one thing that never goes out of style is quality, personalized service. Enter my colleagues over at Forest Park FX.
Forest Park FX sets back the clock and places a friendly face and voice in front of their clients. As an introducing forex broker for many firms, their goal is to place you with the forex broker and trading platform that is best suited for you. In addition – clients get rebates on their trading volume each month – pretty sweet.
I sat down with Justin at Forest Park FX to talk about their unique approach with clients.
DF: As an Introducing Broker, what brokers do you work with?
FP: Forest Park FX is registered as an independent introducing broker, which means that we can introduce clients to any registered brokerage firm. In the US, we work with CitiFX Pro, Forex.com, FXCM, FXDD, IBFX, ILQ, Oanda and MB Trading.
DF: How does a client choose which broker to use?
FP: In some instances, the client knows which forex broker he wants to use and we are happy to assist that person in opening up their account. But in many instances, the client is unsure about which broker to use and we are there to help.
DF: How do you help a client choose a broker?
FP: Unlike many other introducing brokers who direct clients to open an account with the broker that pays them the highest commission, we are more inclined to ask questions about the client and his trading. This enables us to pair him with the right broker, pricing model, execution model, technology and rebates that we believe give him the greatest likelihood of success, regardless of what we receive in commissions.
DF: What do you mean, regardless of commissions?
FP: Well, we like to focus more developing long-term relationships with our clients and providing real value. If we just sent clients to where we make the most in commissions, we might make more in a week or a month or two, but we also risk that client losing money and, in turn, losing a client. We would rather build that client up and have him be a client (and hopefully an endorser of the service we offer and value we add) for many years.
DF: What types of questions do you ask in determining which broker, etc. a client should use?
FP: We usually start general and work our way down to specifics. Are you trading Forex? Live or Demo? What type of Forex education and experience do you have? Are you a technical and/or fundamental trader? Are you using your own strategy or one you learned, acquired, modified, etc.? What brokers, platforms and technology have you used before? How would you describe that experience? How much capital are you looking to invest? How much are you willing to risk? What type of trading volume do you generate? And others, depending on where the conversation leads, but the idea is to use the client’s responses to actually guide us in what we believe to be the right brokerage solution, much the way a doctor might diagnose and treat you for an illness after asking about your symptoms.
DF: So once you diagnose the situation, what do you do?
FP: At this point we should have a good idea about a few recommendations and we take the time to explain the pros and cons of each to the client so that they understand how we’ve arrived at this conclusion. In some instances, the solution requires a bit of customization and negotiating with the brokers to create a specific solution for a particular client. Ultimately, the goal is to have a more informed and empowered client. Once the client has made his decision, we assist with the account opening process and routinely follow up with the client to see how things are progressing or to answer any new questions or issues which arise.
DF: Earlier you mentioned, rebates, what are those?
FP: One of the ways in which we support our clients is by passing back to them the lion’s share of the commissions we receive from the broker for introducing a client. For instance, with a non-dealing desk account at FXCM, we receive a 1 pip commission on every round turn trade placed by the client. In turn, we give 0.7 pip back to the client. This in effect reduces their spread from, say 2.5 on the Eur/Usd to 1.8. Rebates are paid to the client via a deposit into their trading account, a check or PayPal transfer. These rebates can add up to thousands of dollars each month and can help defray the costs of subscriptions such as those with Aspen Trading or others.
Update: We have launched an in-house Cashback Program for international clients.
Learn How Forex Rebates Work for US Residents From Our Partner At Forest Park FX.