Post-Pandemic Trading. 10 Trends To Shape Forex Market In A Year
The impact of the coronavirus on the world is so huge that it’s believed to be worse than the 2008 financial crisis. During the first few weeks after the disease was upgraded to a pandemic, major stocks all over the globe experienced huge declines. Yet Forex brokers are an entirely different story. And it looks like it is going to be yet another story in a year.
The pandemic has already given a boost to the industry. ATFX, ADSS, eToro, GMO Click, CMC Markets and numerous other FX brokers are reporting a remarkable rise in trading volumes. Saxo Bank informed that brokerages around the world generally experienced a surge in trading volume. But the biggest growth is yet ahead, as people’s perception of the world and money in particular changes.
5 Scenarios Of Collaborating With Influencer Traders
Social media influencers or opinion leaders are the people whose words influence the tastes and consumption habits of the wide audience around them. Their Facebook or Instagram posts, their comments on Medium determine what their readers will spend money on. The watch brand they prefer, the restaurant they go to, as well as the place they invest their money. And in particular, which broker they choose.
Collaboration with influencers who specialize in trading is a smart tool that allows to reach out to potential traders and engage them. In some cases, collaboration helps directly increase sales.
How to find influencer traders to help attract traders to your brokerage? Traders whose posts on social networks, articles and comments in specialized media or blogs gain likes and provoke new discussions are the people you need. Getting into the circle of their interests is not so difficult. Some of them may already be your clients. Someone is ready to test new brokerages out of curiosity and publish posts about the ones whose services they like. But in most cases, opinion leaders need to be motivated.
Each of the 5 formats below allows you to establish partnership with influencer traders to attract the attention of potential clients.
1. Surprises: gifts and parcels
Do you like surprises? It’s no surprise that social media influencers like them too. If an influencer likes your gift, he will definitely speak out about it on his social media page. It will be a genuine review, unblemished by greed. Plus, your company will get sincere feedback.
For example, an offer of a generous bonus deposited in the trader’s account or a T-shirt and a cap with your logo will cheer up and attract the attention of an influential trader.
A giveaway is a contest that takes place on social media. In order to participate and compete for a prize, a number of requirements must be met. For example, competitors should subscribe to a brand page and repost a certain post or answer a witty question in the comments.
To draw attention to the brand, the opinion leader announces a giveaway on his page. Winners may be rewarded both on the brand page or on the influencer’s page. Marketers keep predicting the decline of the giveaways, but until that actually happens, brands are using them in collaboration with opinion leaders.
For example, you can agree with a selected expert trader to distribute your merchandise among those of his subscribers who best answer the question “What should have better been invested 10 minutes ago?”
3. Influencers as content creators
This format regularly beats the giveaway format. At first it seems rash to let a blogger create content featuring your services. But nothing ventured, nothing gained, and in this case risk is justified and confirmed with numbers. 67% enjoy the spirit of competition with other influencers to create content, to make it brighter, more expressive, and more attractive. And 58% of marketers reasonably believe that content created by influencers is better perceived by the target audience.
It is important that the value of content created by influencers is lower than that of content created by the brand itself.
For example, guest posts in your blog on behalf of a small influencer trader will take him to the next level, and you may be given useful content.
This is an offline format. The broker organizes an event: an opening of an office in another country or a birthday party. Influencers are invited to increase coverage and draw attention to the event. The more influencers, the greater the engagement. They post pics on social media, tweet, and share brand news. This creates hype.
At the same time, events help maintain friendly relations with influencers.
For example, you can come up with your own festive occasions for traders — crypto-trader day or client day.
5. Sponsored posts
The most straightforward format. The broker provides a service and pays the blogger to create a detailed review and posts it on his social media pages. He can invite his audience to use a promotional code provided by the company. It can be used to track the effectiveness of the publication.
For example, you can ask the influencer to create a review that is as honest as possible: describing not only the benefits of working with you, but also the negative points. You can provide the key ideas, but don’t edit the text – authenticity inspires confidence in potential clients.
What results can be achieved by the scenarios above? The broker will undoubtedly expand its audience. Depending on the opinion leader’s level of influence, hundreds of potential clients might visit your website. And of course, sales can go up.
Of course, collaboration with influencer traders is not limited to these formats. Experiment and choose the formats that fit your brand and business tasks.
Posted by Kate Nutriakova, Marketing Specialist at Takeprofit Tech
So far, there are not many brokers in the world who use customer journey maps. This particular fact was mentioned this March at a MetaQuotes webinar, which was dedicated to analytics.
Today we will reveal how you can greatly improve customer experience, as well as increase the number of registrations and active clients. A trader journey map will help us with this goal. It allows to find out how and why the client chooses your service. You can use it to visualize the analytics of your website and of your customers going through it. And to find problem areas to work them out.
Step 1. Create Client Portraits
Who are these people, what do they want from their lives and from your service? There is no need to invent anything – just trust the analytics. It would be perfect if your website is integrated with Google Analytics. The service provides all the information you need: audience demographics and interests. You will get several groups of client portraits.
Speaking of interests, there are traders who open several accounts with different brokers as part of their thoughtful strategy and go all in, which increases the risk of negative balances. (Moreover, every client may encounter negative balances). Max Position Exposure allows to prevent such scenarios.
Step 2. Highlight The Main Stages Of The Interaction
Answer the following questions:
How does a trader find you? Which channels bring him to the site?
How will he move around the site to register? And then to make the first deal? What pages will he interact with?
What actions will he take at every stage of the journey?
Based on the answers, describe all the stages that the client goes through. There can be several paths for each group in your audience. But first, describe one path for each of them in detail.
You can go through with this step perfectly if you try to get into the client’s shoes. How would you use your own services? Apparently, no one is looking for the “give all money away” button, unless it’s a new iPhone website.
If the bonus is an element of attracting traders to your website, then Real Margin Stopout will come in handy. It doesn’t allow the trader to go negative while he has your bonus in his account.
If your promotional package includes bountiful margin rates, then our Dynamic Leverage will reduce the risks of granting it. The plugin doesn’t allow clients to crash down to a minus or get superprofits.
You have learned about the possibility of investing from Google – went to the website – examined the conditions and reviews – liked everything – and finally registered, and after the registration you were sent to a page with a bonus offer and a proposal to make your first trade. As a result, the whole process is structured in six stages.
Step 3. Find Out The Key Actions
Here your goal is to find out what the trader needs to do at each stage to move on to the next stage. You need to think through your contact points and customer actions. See what they do at each stage, where they need to click, what to fill in, which sections of the site to visit, how to go there – describe all of this for each stage.
The client visited the website → contact point is design and content → he read the advertising messages and brief information about the service.
He went to the registration block → saw the CTA button and the registration form → did not click on the button / got stuck on complicated fill-in form.
Step 4. Find The Problems That The Trader Encounters
There are no perfect services. So, here your task is to make everything as clear and fast as possible. An easy way to find weaknesses is to look at site analytics. Look at the number of returns, and check out the exit pages – the pages traders leave your website from. Think about what is wrong with them and how to fix it. Pay attention to all those various little things that make the trader journey through your website comfortable.
The client did not click on the CTA, because he did not fully understand how he can earn money. And the registration form is too complicated, because it asks for both the phone and e-mail.
In the end you will get the following table:
Block 1 – stage name
Block 2 – user experience (contact points and expected actions)
Block 3 – recommendations (how to improve user experience).
The exact look of the table doesn’t matter. You can apply a scale of emotions for the stages: which sections are convenient and understandable for customers, and which are not. The key thing is that it can be used not only by you, but also by your team.
Posted by Kate Nutriakova, Marketing Specialist at Takeprofit Tech, and Valentine Piotrovich, Head Of Business Development at Takeprofit Tech
The impact of the covid-19 on the world is so huge that it’s believed to be worse than the 2008 financial crisis. During the several days after the disease was upgraded to a pandemic, major stocks all over the globe experienced huge declines. However, Forex market is a totally different story.
The virus has given a boost to the industry. Saxo Bank reported that Forex brokers generally experienced a surge in trading volume.
Let’s have a look on the particular cases. How the brokerages are dealing with the epidemic and who already got the profit.
Posted by Kate Nutriakova, Marketing Specialist at Takeprofit Tech
The Influence Of Regulation On The Russia FX Market
The purpose of regulation is not to squeeze players and products out of a market. The purpose of regulation is to provide security for both the service providers and their clients.
But what will happen with the Forex industry in a country where the regulator is turned against it, and due to this, applies numerous prohibitions and restrictions – referring to the good intentions to protect traders’ rights? Takeprofit Technology’s team located in Russia conducted a brief research study on what is going on with Forex regulation in Russia. The situation in Russia, where recently a new law was adopted by the government, is that since the beginning of 2016 Forex brokers aren’t officially allowed to work without a Central Bank license. What’s actually happening is a very clear example of the negative influence of the regulator.
According to the new law, the Central Bank of Russia becomes the only regulator in this specific field. The Central Bank of Russia is essentially a megaregulator, among whose duties now is to supervise and maintain the activity of all the Forex brokerages within the country.
So why does the Central Bank resort to drastic preventive actions in order to improve the regulation of the Forex industry?
A large number of brokerages which had been established in Russia used to have Russian traders as their clients. Forex trading has grown in popularity in Russia over the past few years, driven in part by a feature of Russian mentality — the venturesomeness, which overcomes people’s resistance to stop depositing their money unless they become completely broke.
Russian traders, like the traders from any other country and nationality, see the prospect of earning easy money in Forex trading. They tend not to let that prospect of easy money slip through their fingers. Lots of them might even become obsessive, which seemed to be a good reason for dozens of newly established brokerage companies to try to manipulate the masses for the sole reason of ripping them off. Some of these brokers have gone even further than the others – they didn’t just make the trading conditions worse, they didn’t let traders withdraw money from their accounts. Such brokers, using the loopholes in regulation, deceived their customers and thereby considerably damaged the attitude of legislatures to all the FX brokerages operating on Russian territory.
The Ministry of Finance and the Central Bank’s attitude toward FX brokers started turning negative around 2012, when the number of newly established brokerages started to significantly grow. Essentially, experts from the Ministry of Finance always related to the Forex industry the same way they did to the gambling industry. Apparently, they’ve been quite disturbed by the continued rise of the FX industry in the country, and their legislative inability of supervising and controlling it.
According to the Central Bank’s Vice Chairman Sergey Shvetsov, “CB will not assist the growth and expansion of the FX market and its distribution among the masses. Forex is a casino, it fulfills people’s desire for gambling, but not for asset investment. Using these kind of products without financial discipline can cause trouble”.
As represented at one of the local SRO’s web forum, KROUFR, there have been many recent complaints from traders. But because of the loopholes in regulation, nobody could do anything about it. There was no legal ground to get those traders’ money back. Such brokerages could not be punished for fraud because their activity wasn’t regulated, and nobody was able to prove the fact that fraud occurred.
Eventually, as a result of the long term activity of unscrupulous brokers, the Ministry of Finance along with the Central Bank insisted that the legislatures adopt a new version of the law. This updated law has given the Central Bank the authority and power to control the FX market, making it the only and general supervisor of this industry with CRFIN’s assistance.
Considering the regulator’s negative attitude to Forex, this power is enough to choke the FX industry off if it deems it necessary.
So, since the 1st of January 2016, the new version of the “On the Securities Market” (“О рынке ценных бумаг”) law had been in force. According to this law, all the brokerages registered in Russia have to apply to the self regulatory organization CRFIN (Centre for Regulation in OTC Financial Instruments and Technologies) and obtain a Central Bank license. The new requirements which brokers have to deal with have been tightened so much, that only the biggest of them were capable to keep operating on a legal basis.
Let’s just put up the restriction applied to the amount of leverage. According to the law, brokers are not allowed to provide leverage to customers more than 50:1. And this restriction is only the tip of the iceberg. The set of documents required for licensing consists of about 40 different surveys, references, conclusions and the business plan for next two years. By comparison, the set of documents required for obtaining the CySEC Cypriot license is roughly half as much. In addition, the applicant company must meet certain additional Central Bank requirements. Forex brokerages have to deposit 2 mln rubles (about USD $27,000 at the time of writing this article) into the compensation fund of the self regulatory organization CRFIN.
This fund is formed in case of company bankruptcy. Also, brokerages have to increase the company charter capital and make it as much as 100 mln rubles (about USD $1.36 mln). But due to the fact that the law is related only to the companies which are registered on Russian territory, companies registered elsewhere do have legal permission to work. Brokers are also prohibited from advertising their services, until they create a Russian legal entity and join the CRFIN.
At the time of this article’s writing, the activity of FX brokerages in the Russian Federation is outside of the official legal field (with the exception of Finam Forex which was the only brokerage to obtain the license so far). Only a few of the biggest local brokerages from the overall number (about 88) have actually applied for the license. So far, some of the rest of brokerages had closed, while other companies continue to work with Russian traders through foreign entities. For example, AlfaBank opens Forex accounts for their new traders through their subsidiary located in Cyprus, Alfa Capital Holdings which operates under the brand Alfa Forex. The market leader – Alpari – serves customers through Alpari Ltd (St Vincent and the Grenadines).
Thereby, there are effectively no prohibitions or restrictions in this law related to Russian traders. Brokers are still allowed to conduct operations based in foreign locations, and the FX market is not an exception here. The problem is, that because Russian traders have been deceived very often, as a group they’d rather trust a brokerage company which has the Central Bank license. They know that if they start trading there, their rights will always be protected by the law. They didn’t have that kind of “protection” back then when the FX industry was not regulated. This protection avoids traders from getting fooled by brokers worsening the trading conditions, or getting robbed outright by brokers not letting them withdraw the earnings they have made.
From now on working with Russian traders is a matter of choice, which a broker has to make. If you consider that it’s worth working with Russian traders without a license, you’re best to find a way to make them feel the value of being “protected” and of being able to make real profits which they can actually withdraw. In addition to excellent customer support and the quality of services you provide, of course.
To make your company appealing to Russian traders, find a way to attract them without resorting to just advertisements. Another option is to spend time, effort and money to eventually enter the SRO, then obtain the Central Bank’s license. Why not, if you find Russia an attractive market.
The Three Most Often Overlooked Pitfalls In Risk Management
The topic of risk management has been making headlines ever since the SNB crisis proved that no one in the Forex industry can feel safe. Many called it “a lesson taught to everyone.” But even after all the media buzz, technology improvements, and leverage decrease, are brokers seeing the full picture? What if there was something important missing from the very start?
There Is No Risk Policy In A Brokerage
Who is always on the front checking the risk exposure or trade reconciliation? In most of FX brokerages, this job is done by dealers. What background does an average dealer come from? Finance? Management? Math? Nope — all wrong. In fact, some dealers have almost no experience when it comes to understanding the nature of market risk and volatile environments.
The only solution to keep them in check is an internal regulation document called Risk Policy. Written by a single person from the company who has vast experience with risk management and approved by the board of directors, it will serve as the backbone of everyday operations.
The dealer found a position mismatch? Look for the corresponding clause in Risk Policy. Want to make something not specified in the Risk Policy? Make a suggestion to Risk Policy.
Over the course of time, the document will be filled with more details and cases, so it will cover the vast majority of a dealer’s routine and ensure the stability of the business, even if a key employee decides to leave the company.
Your STP Flow Can Be As Vulnerable As B-book One
Until the 15th of January, 2015 brokers have been working under the assumption that “full STP” is much safer than B-booking or any hybrid model. One way or another, if a broker decided to pass all trading risk to your liquidity providers, he is protected from the toxic strategies of clients or volatility, right?
Well, that’s never been true. If you look at the aftermath of the Black Swan, you can see that it was A-book brokerages who suffered most of the losses — FXCM, Saxo, Boston Prime, Alpari UK, just to name a few. Moreover, institutional clients (small and medium brokers) who kept accounts in such companies also took losses, yet we will never know their names.
While the capital requirements for opening a STP brokerage are significantly lower than for opening a B-book one, the broker should take extreme precautions to protect his money from possible events like position mismatch, stopout on your LP’s account, errors with execution reports, cancellation of already executed trades, and so on. Another issue to watch for is segregation of funds. If your liquidity provider uses your funds as collateral for its own trades, then your trades are as vulnerable as your LP’s trades. Furthermore, any insolvency of the liquidity provider will put your business in danger as well.
Keep An Eye On Your Clients, Not On The News
Let’s imagine a risk manager on Friday preparing for a busy week ahead. What is he looking for? Economic calendar, news, announcements, forecasts, etc. And what will he find? Experts’ opinions of all sorts: “We’re decreasing leverage to 1:25 on all pairs,” “some currency pairs switched to ‘close only,’” “watch out for that massive spike on EURGBP” — all the regular fluff.
While I’m not judging whether what they say is true or false, one thing is clear: they are giving advice based on THEIR clients, not YOUR clients.
It may look like traders are the same everywhere, but in fact, when technology and liquidity in retail FX can be roughly equal, the real difference between brokers comes down to sales approach and their clientele. When it comes to what decision a risk manager should make, it must be based on his clients, not others’ clients.
He should develop a routine to gather and evaluate all trading flow stats: how did traders respond to a non-farm payroll or central bank announcement? Which trading hours are the most active and how do they correlate with the news? What’s the distribution of the clients’ trading patterns? The more data he has behind, and the more he extracts from it, the better he will be prepared for the future.
Black Swans Are Important, But Not For Everyone
Once something huge like SNBomb hits, it attracts the attention of the whole industry. Its damage is massive, but in my opinion, the reception of the whole event was overblown. Yes, some companies took huge losses, some dissolved, but the majority of the market participants got away unscathed.
If you look at the whole history of retail FX, it is clear that most companies went down not because of Black Swans, but because of running their books poorly. I hope that this article will help you avoid their mistakes.
Posted by Valentine Piotrovich, Head Of Business Development at Takeprofit Technology
One of the most common statements in sales is that the first thing a salesperson should do is to create a trusting relationship between her and the client. Some companies mistakenly think that the sales process starts with a call, email, or meeting. No, the first point of a company’s communication with people is its website, at least in regards to a Forex brokerage business. So if you want to widen your sales funnel, start to create trust right there.
Help Your Client To Understand
To make your potential clients read all 45 pages of your site and then make them write a list of questions to your support email is not a good idea. It means that site visitors don’t understand which information is important for them and which is not. They don’t know on which pages they can find answers to the questions. So, only the most patient ones will go all the way to the end. If you want to help your clients to find necessary information, start with these first steps:
Write in language that your clients speak. Of course, explaining something to the experienced stock exchange traders is completely different from speaking to housewives and retired people. Ask several clients to take part in the experiment. Give them an assignment to explain what is written on your site to another trader in the most understandable way. Believe me that the value of this information is even higher than it seems in the beginning.
Describe a workflow of the most important processes in the most detailed way. It may be evident to you that to open an account you just have to create a login and password in the top right corner of the main page, but it may be not so obvious to a beginner. Show all steps in screenshots, write short comments, and suggest calling a specialist via a toll-free phone number. It doesn’t matter that this number is also given on the “Contacts” page.
Explain how your business earns money. What a beginner trader sees on any brokerage site—“Tiny spreads, 1:5000 leverage, $100 bonus, invest $10 and get $10,000”—looks a little bit exaggerated. Demonstrate that it is not a scam by opening some brokerage business mechanisms.
Make headings to clients testimonials. Put a main message in the heading. That way, readers don’t need to scan through all the text. It will help them save time by reading feedback that contains the most interesting and pertinent information to them. Also let people rate feedback, so it will be clear which aspects are more important to your clients. I’ve never seen something like this on a broker’s site, but here is a good example from the touristic business. Look at Booking.com’s feedback:
Surround With Care
A lot of brokers think that they have an excellent customer care system, as their support specialists are highly skilled and all replies are worked out individually. However, why would a new site visitor figure that out and trust you?
Pay attention to your “About” page. Try to make it more humanizing. A reader should imagine a person after reading this text. It should be a person with a certain character, principles and attitude. If it creates a pleasant image, it means that this site visitor will already like your company and trusts you.
Make them feel safe. Use all means possible to assure visitors that they are safe working with you. Write that you won’t use their private information in an improper way, and write about your regulations. Also your site visitors will feel that they are safe if they see that you are an expert. It is long and hard work to build expert status (write articles, educational courses), but it will go a long way in making people trust you.
Start to collect statistics about questions that are asked most frequently. You can get such information from your call center and customer service email. Then put the answers on site. I don’t recommend putting all of these questions on a “FAQ” page. Make a logical chain to understand where the answers for these questions should be placed on the site and put them there. You may think that it doesn’t make sense to put all of the information on the site, because it is better to have private contact with a potential client when he asks you these questions via email or phone. You may be right if the number of people who reached out to you is bigger than those who went to your competitor’s site after not finding the necessary information. Are you sure that most of them will call you?
Create A Sense Of Over-Delivering
Don’t make too many big promises. It will raise doubts. When overly high expectations meet an imperfect reality, there will be a strong negative effect. On the other hand, imagine feedback where your client writes that he was given better service, better conditions, and a bigger income than was promised. I’m sure that your potential clients will want to be over-delivered in the same way. You can read more on creating a WOW effect in “Delivering Happiness” by Tony Hsieh.
To bring all of these recommendations to life you need to study your clients.There is no need to order a big market research project with a special agency. Just do it any way you can. Ask your sales managers to make a list of clients’ values according to their own notices, invite several clients for an interview. The information you get this way will help you understand how to make people trust you from their first site visit.
Takeprofit Technology At The iFX Expo 2016 In Limassol
Last week we took part in the iFX Expo in Limassol. It was a great time for our team. We were happy to meet our existing clients to discuss common projects.
Of course, we got a lot of new contacts and ideas. Now we see the main trends in Forex brokers’ technological needs, and after taking part in this networking, we can definitely say that our products like Klondike Bridge, Ashira dealer, Easy MAM, and others absolutely satisfy them.
We are looking forward to attending such an event again.
The Hype Of Fully Integrated Solutions: What Lies Beneath
For the last couple of years, there’s been a turmoil on the retail FX market. As the big names are consolidating in Europe and the U.S., new brokers are emerging from the Middle East and Asia. Following the shifts in the market landscape, technology providers are also changing their offerings. Many of them promote new large-scale products that are designed to fulfill multiple purposes at once or provide control over several parts of a broker’s platform: STP bridge, dealing engine, back office, website, CRM, and others. Such products are also known as “fully integrated solutions.” The idea is great and the features are appealing, but are these products as good as they look on paper?
How It All Began
The concept of deep integration through various components has been around for a while, but it skyrocketed with the boom of smartphones and gadgets. Having access to the everyday functions of personal computers in your pocket made them invaluable in everyday life. As the software behind gadgets got more advanced, it also allowed interconnection between different applications so you could get the benefits of using them at the same time.
Since then, technology giants Apple and Google have delivered alternative visions of the whole software environment. While Apple thinks about everything from A to Z, Android has a slower, do-it-yourself approach. If you’re using Apple, then the developers have already chosen an application which carries a certain goal. In contrast, Android users can choose from a variety of options to fit their setup.
Inspired by the accomplishments of the industry leaders, brokerage software providers decided to replicate the concepts in their own products.
The Flying Start
As the brokerage businesses expanded, the overall complexity of their systems increased. Each new service, tradable asset, platform, liquidity provider, branch in a different regulation—everything—has to be planned and considered from a technology point of view. That’s where fully integrated solutions came in handy. Nowadays there are products on the market that allow you to control A/B book execution in one interface, aggregate liquidity from several providers on your own MT4 server, and manage your clients within a single CRM integrated with your brokerage website and sales tools. This allows the broker to reduce staff expenses and automate the routine work. For startup brokers, there are one-stop-shop offers, when one provider will handle everything from license to website and liquidity.
Yet with all advantages lying on the surface, some brokers prefer a more conservative, hands-on approach. Why is that?
The Pros And Cons Of Fully Integrated Solutions
Unified control panel
Complicated architecture and configuration
Routing of execution flow
Reduced stability and speed
Extensive list of features
Higher purchase and upkeep cost
Incorporation of best practices from provider
Inability to replace the components on the go
Ties broker to a single technology provider
One of the main concepts in software development is that the stability of the whole system is inversely proportional to the number of components. The simpler you make the product, the more stably it will perform. This basic rule applies to fully integrated solutions in the best way possible. Most of these solutions consist of several components, and some of them are installed on multiple servers. This brings numerous questions into consideration: overall speed, compatibility, connection issues. Some parts can only be managed by a technology provider, which means that the brokerage does not have full control over its platform. Moreover, maintenance and upkeep of such solutions is much more difficult and costly.
Imagine a situation when the broker bought a set of integrated products from one provider, like trader room + CRM + back office. Everything looked good until his regulator introduced new policy or reporting. All of a sudden, one of the components has to be replaced and there’s no quick solution because the provider did not think through the standalone compatibility of each component. It only worked when everything was provided by one company.
Better Safe Than Sorry
It is often said in the technology market: “Do not reinvent the wheel.” The providers who rely on this point consider their fully integrated products as the “Next Big Thing” in FX technology, but remember that one size does not fit all. Before making a decision, consider how flexible a particular product is, how scalable it is to perform one year from now, and how it will behave when the unexpected happens. These questions will eventually help you to define your own understanding of your needs and help you to improve your business.
Finding paying clients is what usually makes or breaks a retail Forex brokerage company, so many FX companies consist mostly of a marketing/sales department, because acquiring and retaining customers is the most important (and, probably, the most difficult) thing a broker can do to be profitable.
One way to lose your hard-earned clients is if some dishonest competitor gets access to a whole list of your clients — their names, emails, phone numbers, and payment histories — and targets their advertisement campaign at them directly, by emphasizing your shortcomings and their own advantages, even if untrue.
In this article, we will take a look at how MetaTrader 4-based retail brokerages can protect themselves from theft of their clients’ contact details.
Who Steals Clients, Why, And How
Obviously, the beneficiary of your client database theft is your competitor. Nobody would mind extending their mailing list with thousands of emails of fresh traders eager to make a live deposit. Every sales department dreams of an opportunity to get a thick list of leads with full names, phone numbers, and valid addresses.
But how could it happen that your full list of clients that you’ve cultivated carefully with years of honest operations would end up in your competitor’s hands?
First, of course, it could be a server security breach — your website could get hacked, or your trading server’s passwords could be guessed. We will not be discussing this possibility in this article. It is a very broad topic well beyond our interest here. To mitigate such risk, you should hire competent IT personnel.
Secondly, your employees could leak or sell your clients’ personal data to third parties. They say that if you go to a bar in Limassol on Friday night, $1,000 could get you a full client database from an FX company across the street. If your chief dealer or IT guy think that they are under-compensated, they might have an easy time making up that difference.
Finally, your technology partners could “borrow” your clients’ information rather easily. If you installed a plugin into your MetaTrader 4 server or logged into some third-party tool with your manager’s login and password, it would take less than 10 seconds for an untrustworthy IT vendor to sneak all traders out without leaving any traces. Some technology providers might even launch their own retail Forex brokerage division eventually.
Certainly, there are other, less common possibilities, but for the sake of brevity, we will concentrate on the second and third cases.
What Are Brokers’ Options To Protect Their Client Base?
Protecting your clients’ information is a two-step process:
Preventing third parties from being able to steal your database
Making sure that, should the database get stolen, you know exactly who did it
These are some pretty obvious things.
You should make sure that both your employees and technology providers are trustworthy. Ask for references from other brokerages in advance, and make sure you don’t give direct RDP, Radmin, or unsupervised TeamViewer access to your server. Don’t issue MT4 Administrator or unrestricted MT4 Manager credentials for newcomers.
If you ever share passwords with new technology providers, make sure you change them after the job is done — even if their account managers wish you the best, you don’t want to bet your database on the trustworthiness of all their temporary interns or soon-to-be-fired personnel.
Making Punishment Inevitable
Eventually, no matter how paranoid you get, there’s always a chance that some things might slip beyond your attention. “One of the greatest checks on crime is not the cruelty of punishments, but their inevitability” (“On Crimes and Punishments”, Beccaria). One of the most effective ways to prevent theft is making sure that every time it happens, you can find out who did it.
The problem is that there’s probably no way to pinpoint theft of a client base with 100% certainty, but there are many more or less reliable ways to figure it out indirectly.
After the database is stolen, and you know the approximate time when it happened. Of course, you should consult your Windows Event Logs for RDP access entries, you should check MT4 Journal logs to see who used their MT4 Manager account, and check what plugins were installed in that time frame.
But how do you know whether the theft has indeed been committed, and when? Here’s the trick.
Finding The Thief With One Curious Trick
Let’s say that your competitor gets their hands on your database of numerous clients. What do they do? They probably launch an email campaign to let future customers know about their unique proposition. If you add a new fake email to your database every two weeks, when eventually some of the emails receive a message from one of your competitors, you can be sure that the database was stolen after you generated that particular email address, and probably before you made the next one.
Make sure that you make those “fake” emails on public email services and not on your company’s domain, as they will be easy to filter out (please note that big email providers like Gmail, Yahoo, and Hotmail all require a phone number for new email registration and don’t allow too many emails to be associated with the same phone number).
Devise believable names. Mehmet Bilgin with the email address: email@example.com will be less likely to be noticed as fake by thieves than Dummy4 with the email address: firstname.lastname@example.org.
Don’t just put those fake clients at the end of your client list, but try replacing your old inactive clients from years ago with your “traps,” so that your defense pattern is less predictable.
Don’t bother checking all those fake emails at once. Take 15 minutes to learn how to set up auto-forwarding from those numerous mailboxes to your main account, so that you can catch those newsletters with no extra effort.
Automate the process in-house or contact your trusted software vendor. Although the steps are rather easy, it could get a bit tedious for one person to manage all these details.
By employing this simple technique, you can easily pinpoint when the database was stolen and recall what happened during that time: was it that extra-cheap agent commission plugin that you installed, or was it that sales intern who resigned after one month of work?
From my experience, so many brokers are oblivious about the dangers of their client database getting stolen. They install server plugins from people they’ve never heard of and give eternal unrestricted machine access to everyone who requests it. At the same time, retail Forex brokering is a highly competitive business that employs quite many people with floating morals who are more than willing to save themselves the effort of extending their client base.
The issue is made worse by the fact that usually it is very easy to make a copy of the whole database, leaving little to no traces, and the victim will almost never figure out when information was compromised. There’s no real way to effectively prevent every chance of stealing because of the way MetaTrader 4 works.
However, by using the easy trick described in this article, a broker can be more proactive in defending its clients’ personal data and finding the wrongdoers.
Posted by Timur Latypoff, Director of Takeprofit Technology