Mason Dean Capital FOREX Blog

Mason Dean Capital FOREX Blog

Benefits for a CTA to go through an IB

IB and CTA Relationshps

IB and CTA relationships are important to understand in terms of the potential benefits to both parties concerned.

The number one benefit for the CTA is the Introducing broker's resource to a pool of existing customers and their ability to pass on these customers to the CTA. This alone is a good justification for the CTA to form a relationship with the IB and therefore a viable mutual relationship. The CTA increases their customer base and the IB is able to generate more commissions.

Business Extension

Business extension is a distinctive reward and a reason why It is wise for the CTA to consider an established Introducing broker. When a CTA partners with an IB it expands their reach and sphere of influence.  The IB is about the closest thing for the CTA to opening up a new office. This recognition of expanding influence is a two-way street as well.  When treating Introducing Brokers as an extension of the CTA Business,the IB's Development team will work harder for the CTA more so than any other broker they have an agreement with.

Free IB consultancy

Free IB consultancy for the CTA is possible throughout the entire business life cycle, This is especially helpful within the initial set up phase as it can be a daunting experience handling all of the NFA general compliance hurdles. The introducing broker can assist on all matters including, but not limited to:

 

      General procedures

      Software Platform technical help        

      Business Set up 

      Customer on boarding 

      Help with navigating through the whole process from inception to NFA approval

DDOC Assistance 

Personalized customer service

      Personalized customer service is achieved once the CTA is up and running and the introducing broker is able to stream line back office operations. This means that the CTA is able to better concentrate and focus solely on trading. This is made possible by saving time via::

 

      No 800 number and multiple departments to deal with - i.e. direct access to the IB

      All calls and emails answered more promptly as it is in the IB's best interest

      Saving time by allowing the IB to take care of any issue/s that arise.  

 

Access to reliable and proven resources

 

      Access to reliable and proven resources is a great benefit to the CTA. Most IBs have access to many valuable services that could be useful to the CTA. These services range as follows:

 

      Compliance consultancy services

      Custom Algorithm services 

      Accounting and Bookkeeping

      Performance tablets

      Legal Counsel

      CPA (CTA Specialist)

      IT Services - for data analytics 

 

 

Commission Rebates

Commission Rebates can be a big plus for obvious reasons. In certain circumstances IBs are able to offer a commission rebate back to the CTA. Since the IB is compensated each time their client makes a round turn trade, some IBs, especially those with a large enough client base, will offer their CTAs a rebate on every trade they make.

Many CTAs use this trade rebate as an instrument to preserve their capital, and others look at it as a way to tighten the spread. Regardless of what angle the CTA  look at from, it’s free money to receive on every trade.

 

Top Ten Tradings Tips

Yes, FOREX/Currency trading can be very risky especially if not exercising proper risk management and money management. Substantial losses can occur. A beginner trader must especially be very careful when trading these markets. 

In order to control/ower risk, there are certain controls a trader MUST use. Please review the following important trading tips below:

  1. Do not over trade or use too much leverage 

  2. Never loose more than 1-2% of your account balance on one trade 

  3. Always use an automated stop loss 

  4. Try to avoid trading during a major news event (Always check the economic calendar first) 

  5. Start out with a demo account in order to get used to live market conditions 

  6. Always have a trading plan BEFORE placing a trade. (Plan the trade and trade the plan) 

  7. Be patient and never be too anxious to get into the market. There are always opportunities every day 

  8. Learn what your personal trading is based on your own personality and stick to it. Do not copy some one else's style 

  9. Always perform both technical and fundamental analysis to gather a bigger picture of the market 

  10. Exercise proper money management and concentrate more on capital preservation rather than maximizing profit