You guys just don't get it. The Dealers are your enemy--- this is from boston tech business plan for FX dealers---- it doesn't matter if its straight thru processing--what you erroneously think are ECN's or the traditional dealer model------
Wake up folks,
In the Financial Model section that follows, weâll give more detail on these numbers.
 Closed Loop Dealing Desk - The second business model is to take more of the risk.
The customer buys from the broker and sells to the broker. If the customer makes
money, the broker loses money, and the contrary. Most small retail customers have no
experience and 95% of them WILL lose money. In this model, which is more like
gambling for the customer, most customers spend 95% of their deposits in 2-3 months.
This model is simpler, but riskier. Here, most customers act like gamblers, and your
model is to act as the âhouseâ. If they start with a deposit of $10,000, because of betting
psychologymost end up losing 95% of that investment in 2-3 months. They take small
profits, and let losses run. Thus, this is a ânon recurringâ customer model, in that most
customers lose their cash, and do not come back with additional investments. Ongoing
customer acquisition is thus very important.
In this model, some of the more experienced or savvy customers will grow frustrated that
they are not dealing with Straight Through Processing. Segmenting these customers out
and dealing with them through a Straight Through Processing model is usually a good
idea. Below we discuss such hybrid models.
Estimated profit
from risk
Percentage lost over 1 year
-25% 25% 50% 75% 90%
Total number of
deposits
1,500,000 -$375,000 $375,000 $750,000 $1,125,000 $1,350,000
5,250,000 -$1,312,500 $1,312,500 $2,625,000 $3,937,500 $4,725,000
9,000,000 -$2,250,000 $2,250,000 $4,500,000 $6,750,000 $8,100,000
12,750,000 -$3,187,500 $3,187,500 $6,375,000 $9,562,500 $11,475,000
16,500,000 -$4,125,000 $4,125,000 $8,250,000 $12,375,000 $14,850,000
20,250,000 -$5,062,500 $5,062,500 $10,125,000 $15,187,500 $18,225,000
24,000,000 -$6,000,000 $6,000,000 $12,000,000 $18,000,000 $21,600,000
27,750,000 -$6,937,500 $6,937,500 $13,875,000 $20,812,500 $24,975,000
31,500,000 -$7,875,000 $7,875,000 $15,750,000 $23,625,000 $28,350,000
37,500,000 -$9,375,000 $9,375,000 $18,750,000 $28,125,000 $33,750,000START YOUR OWN BROKERAGE (SYOB) BUSINESS PLAN
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 Hybrid
Mod
Models
Send some customers to the liquidity providers and keep some in house
For all customers keep some trades in house and send some to the
liquidity providers
Send all trades of size X or larger to the liquidity provider
