How to Become a Binary Options Broker - Part 2
In the first part of this article series, we discussed where to get the initial capitalization to start a binary options brokerage. In this article, we will discuss your marketing plan. This will form part of the business plan you can use to raise capital.
Marketing your Binary Options Brokerage as a Startup
Getting Your Clients
The success of any business relies solely on its ability to attract enough clients to keep it going. The funny thing about binary options is its simplicity. Would-be traders are attracted to the yes or no proposition of binary options and relatively low risk. They only lose money they put in, and that’s it.
However, as a broker, it is not as simple as that. A binary options brokerage operates much like a game of roulette (hence the “gambling” characterization). It has a statistical advantage or “house edge,” which exponentially increases with the number of traders and number of trades made. You can use this calculator to get an idea of your house edge and two models for deciding on your option pricing and settlement
You can project your income by assuming a certain number of customers a year generating a certain amount in average revenue based on your house edge. From there, you can think about how you are going to attract that many people to your business.
The most obvious way to do this is to ask yourself what attracted you to your broker for your own trading back in the day. This will help you understand what kind of service you need to give to get and keep your own clients trading. Knowing what is likely to get them through your door is the first step in designing your marketing strategy.
You Need a Marketing Plan
In order to attract the right kind of clients, your online presence has to be spot on. You will need a website, and it needs to be a good one. It has to look good and work even better because a user- friendly and functional website says a lot about your professionalism.
You have a lot of competition out there, from both legitimate and shoddy brokers. You need to capture organic traffic through social media and SEO marketing and supplement that with strategic ad placements. You will also need to think about putting a sales team together to help you spread the word. All this will take quite a bit of investment in time and money, so you will need to factor them into your startup costs.
It is important to note that building all this from scratch will probably wipe out a large chunk of your startup capital. You can use turnkey solutions for both front-end and back-office operations. They are bad, but there are also binary options platform solutions that offer full customization, so that’s something you may want to consider. Do take your time in choosing one that will best fit your business goals, as you will be stuck with it for some time.
The next article will deal with building your offline presence and discussing regulation issues.