Earning revenue online is not too hard anymore. You do not need to know how to develop and promote a website, as almost everything happens automatically now, and you receive traffic from search engines and other organic or paid sources. Affiliates and Introducing Brokers earn their revenue in a quite easy way as well. In simple words, they partner up with a forex brokerage and sign an agreement in which they earn commission for every client they refer.
Types of Introducing Brokers
IBs are divided into two types. The first type refers to IBs who are usually not familiar with the financial markets and forex trading but will try to encourage clients to join a broker and use their platform. Sometimes these Introducing Brokers might not be traders but are really experienced at marketing and at promoting. Also, they know how new traders think and what they want and focus on this when advertising.
The second type is the more educated one, who will act as the mentor, providing you with all the necessary knowledge and information you need to choose whether to join a broker’s platform or not.
The majority of these IBs are active traders, so they know about forex trading, making it easier for them to share their experience as well as provide useful trading tips and guidance on how to trade more efficiently. Most of the time, you will see that they genuinely want traders to succeed, that’s why they even risk their reputation. There is an unsaid truth that if clients are happy and keep trading, then they will too.
How do IBs get their commission?
Every Introducing Broker program has unique commission models. However, there are some common types like the below:
- For every new trader who registers and starts trading there is a one-time commission paid
- For the total volume traded by the referred clients, there is a recurring commission paid
- For the losses incurred regarding the referred clients, there is a commission paid (without proof)
- For referring a big number of traders or for a huge trading volume by the referrals, there is a bonus commission paid
The benefits of Introducing Brokers
All of the above offer many opportunities to IBs to earn their revenue and most IBs strive to provide the best and most useful information to new traders. If the referral client registers with a brokerage and succeeds, it means recurring commission based on the volume of the traders for the IBs.
Introducing Brokers in numbers
The CPA (Cost Per Action) commission model is the most common one. Some brokers pay $650 per new qualified client (the one that registers an account). Some other brokers pay up to $1,100 per approved registration.
However, the good thing with IBs is passive income, which means making money while you sleep. In fact, some brokers pay IBs a percentage from the money they make through your referrals. These are clients that stayed with the broker for years and opened several positions.
Some brokers pay their partners up to 60% of the spread (pip) they charge when clients take a position. For instance, if you refer 1,000 clients to a broker, you would have made $60,000 per month, assuming that the spread of the monthly position taken by clients is 10 pips in total and the pip value is $10.
As Warren Buffett once stated, “If you don’t find a way to make money while you sleep, you will work until you die.”