Forex brokerage is a complicated yet very rewarding business. With new regulations constantly introduced, clients growing more and more demanding, and ever-increasing competition, it might seem like more trouble than it’s worth. Whilst there is no single recipe for success, surrounding yourself with the best people and best software can make the process much more enjoyable and profitable.
But what, exactly, constitutes the ‘best software’? It’s a tricky question as rarely can anything be described as truly perfect. To help figure out what the best software is, we’ve come up with a list of criteria which both we and our clients believe are must-haves. We’ve compiled a list of the most important aspects of software during our 10 years’ experience with many of our clients across the globe, and which we’ve then implemented in our own product, our Trade Processor.
Bridge is arguably the most important aspect of any brokerage business — it’s a connector between brokers and liquidity providers that makes trading processes possible. Let’s explore the criteria in more detail using the example of bridge solutions:
1) It must be user-friendly
There’s no point having the best software in the world if, in reality, nobody can use it. It needs to be intuitive, provide extensive and in-depth information, and integrate seamlessly with the execution of your daily work. You must also be able to see everything through a single console — no one has the time to go back and forth and constantly have to switch screens.
2) It must be transparent
You must understand what happens within the software, including how it’s configured and the logic behind it. To achieve this, in your bridge solution you need to have all settings unlocked and visible in the console. In addition to seeing the settings, you need to be able to adjust them at any given time to instantly react to market changes.
3) It must be reliable
There are some perceptions that brokers can’t risk today, and principally among them is being untrustworthy. In an industry where literally every millisecond counts, it’s unthinkable to have unreliable software that fails you if volumes are too high and transactions too often. No matter how big or small your business is, you must provide top-level, 24/7 experience to your partners, similarly to how it’s fair to expect the same SLAs from your service providers.
4) It must be flexible
Just like we can no longer keep up with new smartphone releases, it’s nearly impossible to track everything that comes out on the market in the financial industry! While there are some giants that seem to stick around forever, you still want to have flexibility embedded into the solutions you use. That way if there’s a new tool or platform creating hype in the market, you’ll be able to play with it and see if it could potentially replace or complement your current setup.
On top of support for MT4 and MT5, seek software that has APIs built into the bridge solution to give you freedom to work with any vendor you prefer. If one day you decide to become a liquidity yourself and cater to your bigger clients directly, you’ll have no technical obstacles in making that happen.
You should also bear in mind that it’s not enough to just have an option to integrate with third parties: it should also be an easy and straightforward process. On top of that you must still have access to a technical team who can help you out should something within the process not make sense to you.
5) A/B risk management should be built-in
Depending on your business model and goals, you might trade both A- and B-books or just the A-books. Regardless of your current plan, you need to have access to both. It’s a market best practice for a reason: it mitigates your risks and also optimises revenue flows. Based on the experiences of our clients, it’s one of the crucial functionalities that every business needs at some point. That’s why automatic switching between A-books and B-books in real-time is integral to the modern bridging solution, making that aspect of risk management an easy and trouble-free process.
6) It must be fast
Similar to the earlier point made about reliability, you can’t afford to waste time in the current environment. The market is ruthless, and with slow-paced software you can lose not only time, but also money and — most importantly in this industry — your reputation. There’s no single formula for testing speed, but we’d recommend running a trial on a replica of your environment to see how it performs. And remember to never test new software on your live hosts!
7) Have a network system in place
As a broker, the last thing you need is being tied up to a single liquidity provider. It’s inefficient, inconvenient and simply not enough to run a successful brokerage business. Ideally, you want to have a mix of market leaders and niche players available to you, so that regardless of your clients’ requests you’ll be able to execute them in the most suitable way for both parties.
Some of the criteria listed above are more important and others less critical for certain enterprises. However, they’re a good starting point in your decision-making process, and should give you an idea of where to begin your evaluation.
As we’ve already mentioned, please make sure you find the time to play with the software before committing to purchasing it. Webinars and product descriptions are great for some, but they won’t replace first-hand experience. It’s not a pleasant situation to find yourself in should you commit to a tool that you end up unhappy with and being forced to stick with!