Author Topic: This will blow up your mind - - - Forex world snowden time  (Read 41 times)

ScalperKing

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PART 2



Please understand that business results are not reproducible because business model of one company is not similar to another for many reasons. For example -

a) A STP only company will make less money than Market Maker
b) A market maker which does slippage and requotes and sometimes produce spikes and not pay profits to big profitable traders will make more money than completely honest market maker.
c) Companies like Swissquote, FXCM where director is also a partner takes out big salary and that add into expenses and thus lower net profit.
d) Companies which are located in US or UK or 1st world countries pay more salaries and thus more expenses and revenues
e) Companies which are FCA or NFA or CySEC regulated have to spend a lot of money for compliance.
f) There are companies who buy sticky at forums for $1500 or $10,000 per month and there are companies which manage to remain on top of forum by some other way. Companies which spend on ad listing or companies which escape that by some other means. Companies which spend on google adwords or companies which get clients by mailing list.
h) Companies which has pamm accs and fraudulently display edited statements and once big investor deposits, they place rash trade = margin call.
i) Companies which provide managed acc services, companies which sell educational material, companies which have acc managers who actively guide traders to place trade which will result in margin call (iforex, xforex), companies which spike and give margin call to big depositors (Inarabia - Rs 2 crore this way), companies which promote in rural areas and and target less educated people.
j) Marketing budget. Ambit had 0 but very hardworking partners which took daily seminars and arranged Rs 2.5 crore very quickly but Mocaz had advertising budget but never bothered to arrange seminars and thus took lot more time. Ambit also has network to provide withdrawal same day, anywhere in India. Some brokers can collect cash and do wire, so if you cannot, you lose lot of business.
k) Companies like Instaforex organize so many contests, actively participate in expos, give car in prizes (from slippage money), keep on making new websites, star something innovative (for example Instaforex TV with everyday forecast several times a day).
l) FXDD has complete website to quick-launch white labels - http://forexware.com/en/

I hope you understand what I mean to say. There are so many variable! A company which does no innovation will suffer. A company which doesn't pays investors profit and does not employ army of fake posters posting for $0.1 per post to suppress every bad report on every forum will do lot better than who don't pay profit and does nothing about it.

I don't have any idea what you want to do from the above and income vary drastically based on above.
So I will provide you Company, their business model and net income. Based on that you can gauge your possible income. Otherwise we discuss your business model from above points and I can project most accurate number.
So have collected Financial report of many companies but companies which actually fit as per the SMART criteria are Avafx, FxPro, Hotforex

Swissquote -  pure stp -  http://www.swissquote.ch/sqw-group-resources/doc/pdf/report/report_Q3_2013_e.pdf
I guess you are not planning to run pure STP and swissquote pays a lot of salary (because of being located in first world country, highly regulated, don't have anything common to your business model.

FXDD - http://www.leaprate.com/files/summaries/fxdd.pdf
Still slip the orders asymmetrically in favor of broker - http://www.cftc.gov/PressRoom/PressReleases/pr6697-13
And paid over $5 million in fine so far

FXCM - They deleted their earlier financial statements. That average was 6.7% of client deposit per quarter.
As per http://www.leaprate.com/files/summaries/fxcm.pdf, it is 3.9% (because of $2 million fine + IPO)
They are market makers but do it very aggressively and pay out profits.

Brokers which are closest to your business -

1) Avafx - http://forexmagnates.com/ava-fx-is-valued-at-35m-and-then-at-45m/
http://forexmagnates.com/avafx-reports-118m-in-revenues-in-q1-2009-achieves-amazing-net-profit-market-making-pays-off/
http://www.leaprate.com/files/summaries/avafx.pdf
It had 16.7% profit in one quarter and almost half of it in next. Average of it is 12.45% of client deposit per quarter!
Presently they have $50 million reported client deposit (real could be much more, all brokers under report, nobody wants to say I make $6 million each quarter by market making).

But Avafx is not the smartest. They spent over $3 million in advertising in 1 quarter, don't have seminars, don't have multi level IBs, don't send signals, don't offer all deposit methods.

2) FxPro - http://www.leaprate.com/files/summaries/fxpro.pdf
http://forexmagnates.com/fxpro-ipo-details/
40 million cutomer deposit and net revenue of 26.55 = 16.6% of client deposit per quarter

It again matches 16.7% profit of Avafx (which is best profit Avafx reported) and FxPro reported this profit before IPO (so they want to report maximum profit).

3) Hotforex - You will not find this record anywhere because it is straight from their own internal mails.
1st 5 months - $0.35 mln client deposit
Next 1 year - $15.7 million client deposit
Next 8 months - $20 million
Marketing budget - $7k !!!!!!!

That is their annual budget is less than $100k. They market it SMARTLY.
Net profit - 19% of client deposit and monthly net (deposit - withdrawal) = $3mln+

4) Instaforex - This one collects more money from India, Malayasia than any other broker. Reason? There are so many. They offer bonus, 2 pip commission, bonus to IB, so many contests, so many sub websites, all payment gateways with automatic deposit, very innovative and come up with new things all the time.

5) Mayzus - He started Liteforex in 2006 for $100k. Then started Instaforex in 2008.
He ran several brokers in between which ran away when deposit grew. Then started Mayzus.com /UWCFX for 2.5 million euros.
http://www.carigold.com/portal/forums/showthread.php?t=119137

6) Some tricks brokers use - http://www.carigold.com/portal/forums/showpost.php?p=2980167&postcount=6


Conclusion -
a) Of all my reseach Hotforex is definitely smartest in using online promotion. 19% is most I have found anyone making.
b) 16.7% of client deposit is 2nd highest market making profit I ever came across.
c) For MM, average is 12% of client deposit per quarter. You cant do lower than this unless you are not having enough staff and following policies to segregate traders actively.
b) For STP, average profit is 4% without any slipppage and 7% with requotes and slippage.

So 4% STP with no slippage, 7% STP with slippage,
12% MM on average and 16.7% at best.

All figures are % of client deposit per quarter.

And if you want to sell off business, you receive it at 40-50% of client deposit (usually half immediately and remaining half in next 1.5 to 2 years)

For example, $10 mln client base, you will receive $4 million ($2 mln in cash and remaining $2 mln as share of revenue for next 1-2 years).
Amount that be recovered after a year is based on client base. For example -
Case 1 - $73 million client base sold for $35 million http://www.forexbrokerz.com/news/gain-capital-finalize-gft-forex-acquisition
Case 2 - $32 million client base sold for $8 million + 15% of revenue in next 1.5 years http://forexmagnates.com/details-of-gain-capitalcms-forex-acquisition-unveiled/

Both cases deal is 50% of client deposit as premium paid for acquiring. If the company has a total client deposit of $ 1 million then everything can be sold for minimum of 40% (that is $400,000).