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If you have a network of traders, manage a trading forum, or routinely answer forex questions for those wanting to begin trading, you may already be performing part of what a forex IB does – without the commission structure that makes it a formal arrangement.
To become a forex introducing broker (IB), you need to know the model very well: what the job entails, how profits are generated, what brokers typically require, and how to get started. This guide has it all, and none of the marketing spin that most IB recruiting pages have.
What Is a Forex Introducing Broker (IB)?
A forex introducing broker is a person or corporation that introduces new clients to a forex or CFD broker and earns a commission based on those clients’ trading activity, not a one-time referral payment.
The IB model is based on an ongoing partnership. As an IB, if you send a customer to a broker and that client opens trades, you will earn a rebate on their trading volume for as long as they remain active. The broker handles execution, compliance, client services, and asset management, while the IB is responsible for introducing clients and supporting ongoing client relationships.
And that’s the main difference between an affiliate and an IB. Most affiliates are paid a cost-per-acquisition (CPA) fee — a one-time payment when someone they refer to the company makes a deposit and meets certain criteria. An IB receives a commission on every trade the client they refer makes, which means the earning relationship continues throughout the client’s trading lifespan.
IBs who bring in active, long-term traders will make much more money with this approach than they would with a one-time CPA. If you want some insight into what your referred clients will be trading, CFD trading is a good way to understand the instruments most forex brokers offer.
How Does a Forex IB Earn Commission?
The IB commission model is volume-based. Every time a referred client trades a normal lot, the IB gets a fixed amount. This is cumulative across all referred clients and their trades.
The forex IB commission is per lot and is usually paid in USD for each lot traded when a referred client trades one standard lot of EUR/USD. The actual rate will depend on the broker, instrument, and the IB’s level in the program, but the mechanism is the same: the more trading volume the client generates, the more commission you will get.
Client quality counts as much as quantity. An IB with ten active, consistent clients is earning more than an IB with fifty recommendations who do nothing. The model rewards depth of interaction with referred clients, not the number of clients referred.
Most IB programs have a dashboard that allows the IB to see referred customer activity, trading volume, and commission accruals in real time. Payments are usually made monthly or weekly, according to the broker’s terms.
They do not receive a commission. It all depends on referred clients actually trading – if they are inactive, commission accruals are zero, regardless of how many you referred.
What Are the Requirements to Become a Forex IB?
The requirements for Forex IB programs depend on the broker and the regulatory jurisdiction in which the IB operates. You can join some programs easily, while others require official registration.
General criteria for most IB programs are:
- Signing of the IB agreement: A written contract specifying commission rates, payment terms, compliance criteria, and termination terms. Read all this before you sign.
- Identity verification: Most regulated brokers will need IBs to undertake KYC verification – proof of identity, proof of address, and even business registration documents for entity IBs.
- Adherence to local regulations: In many jurisdictions, brokers are required to formally notify the financial regulator of their operations. IBs must ensure that they conform with the necessary local regulatory norms before starting any activity.
- Marketing or network ability: Most programs will ask during the application process how the IB plans to recruit clients.
Requirements are not the same. Some brokers do not restrict admission to individual IBs, while others limit programs to businesses with proven marketing infrastructure. Checking specific requirements before you submit can save you time on applications that don’t apply to you.
How to Get Started as a Forex IB
The method involves four practical steps, the most crucial of which is choosing the correct broker.
- Step 1: Research and pick a regulated broker that offers an IB program. The broker your clients are referred to is the broker they will trade with. The quality of their regulation, reputation, execution, and client support directly impacts your clients’ experience – and how long they remain active. Working with an unregulated or otherwise badly regarded broker will ruin your reputation and theirs. Always make sure that the broker is regulated before you apply to their program.
- Step 2: Apply for and sign the IB agreement. Most IB applications are performed online through the partner site of the broker. You will enter your personal/entity info and how you are going to attract clients and go through KYC verification. If the IB is approved, it is electronically signed. Be very careful about commission rates, when you will get paid and termination clauses.
- Step 3: Obtain your unique referral link or IB Code. Once accepted, the broker will send you a unique tracking link or IB number to identify clients as your referrals when they register. All referrals must use this link or code for their trading activity to be attributed to your IB account.
- Step 4: Refer clients and track your revenue in the IB site. Distribute your referral link through any medium your audience uses, whether it is a trading community, educational content, or direct relationships. Monitor client activity and commission accruals referred through the broker’s IB dashboard. Make sure you’re referring clients who are actually interested in trading, not just chasing volume.
For the novice forex trader who wants to know what their referred clients will go through, read our guide to how to start trading.
Frequently Asked Questions
Find a regulated broker with an IB program, apply through their partner portal, complete KYC verification, sign the IB agreement, get your referral link, and start referring clients. You receive continuous commission from the trading volume of the customers you refer. Terms and conditions vary per broker and jurisdiction.
In forex, an introducing broker (IB) is a person or firm that introduces new clients to a forex or CFD broker and earns a per-lot commission on those clients’ trading activity. An IB is paid commission as long as their referred clients are active and trading, whereas a standard affiliate gets a one-time CPA payment.
Commission rates per lot are affected by the program, product, and broker tiers of the IB. Your overall earnings depend on the number of clients you refer and the trading activity they engage in. Income is not guaranteed and is variable – inactive referred consumers generate no income regardless of their quantity.
An affiliate receives a one-time commission for each qualified client referred. An IB receives a recurring commission per lot on any sale done with a referred client. The one-off CPA scheme has some benefits, but in the long term, the continuous strategy yields much more for IBs that consistently refer active traders.
Licensing requirements vary by country. Some countries have restrictions requiring you to obtain formal permission before offering clients financial products. In other circumstances, individual IBs can function without a financial services license. Before you commit to any IB program, check the regulatory requirements in your location.
Some common approaches include developing educational materials on forex and CFD trading, establishing a trading community or building a social media following, and leveraging existing networks of traders. Active, engaged traders will, over time, generate significantly more commission than a large number of idle recommendations. It’s not about the quantity, but the quality.
Conclusion
Becoming a forex introducing broker is a simple concept once the fundamentals are understood: bring in clients, receive commission based on how much they trade, and grow the relationship over time. An IB that brings in 10 active, engaged traders will generate more than an IB that brings 100 dormant clients.
The two most important factors are which broker you want to work with and whether the regulatory requirements in your jurisdiction enable you to operate as an IB. Make sure you get those right before you sign any arrangement, because the operational stuff – referral links, dashboards, commission tracking – is primarily the broker’s infrastructure.
This is not investment advice. CFDs and Forex trading carry a high degree of risk. IB commission is not fixed and relies on the trading activity of referred clients. This is just for educational purposes.
Want to know more? Read the CFD trading guide to learn about the products your suggested clients will be trading, or the getting started guide to learn about the beginner’s journey your referrals will go through.
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