Which countries are best?

So, you are a new forex broker who is wondering which country would be the best to set up your business in. How can one rank countries in which to do business?

There are many factors, but assuming that you want to become a regulated broker and you need a quick look at countries from a marketing and cost perspective, the criteria should run along these lines:

  • Marketing and media
  • Competition
  • Size of target audience
  • Sophistication of target audience (difficult to measure)
  • Regulatory cost

Depending on what type of business you foresee for yourself, different parts of the world will appeal to you; lowest cost is not always the #1 objective, of course.

For instance, if you have a high marketing budget and you are on the hunt for sophisticated traders who typically have large account opening deposits, then Western Europe will probably be your region of choice. That part of the world also offers a strong regulatory structure, if that is important to you.

On the other hand, if you are on the lookout for a region that has a low entry cost, lots of other beginner traders and low media cost, then parts of Asia might fit your bill. Don’t expect the big spenders that you will find in Western Europe, obviously, but realize that you will have less competition for many small investors, too.

In between these extremes of high budget/sophistication and low budget/sophistication is Eastern or Southern Europe, in case you want to split the difference between Western Europe and Asia along several lines of comparison.

Below is a handy chart to compare different regions of the world. In the table, “cost” represents the total cost of doing business, including media, regulation and personnel. “Competition” refers to both the amount of competitors and their relative intensity in the market. “Size” gives a number representing the relative quantity of your potential target audience, and “sophistication” is a non-scientific term judging the knowledge and skill of the traders in a given region. This table is certainly open to debate.

With that caveat, consider this comparison, with 5 as the highest possible number assigned to each category:

REGION COST COMPETITION SIZE SOPHISTICATION
Western Europe 5 5 5 5
Southern Europe 3 2 3 2
Eastern Europe 2 3 3 2
Middle East 3 3 3 3
South Africa 3 3 3 3
Other Africa 1 1 3 2
Singapore and Hong Kong 5 5 3 5
China 2 2 4 2
Japan 5 5 5 5
Australia 4 3 3 4
Other Asia 2 1 4 2
North America 5 5 5 5
South America 2 2 3 2

As you can see from even a quick look at the table, the more expensive markets have more sophisticated clients living in them, and thus will insure higher account opening sizes, on average. That also means that you have to up your game as well, and bring a higher budget to compete effectively.

Conversely, less expensive markets means easier entry and establishment of your business thanks to lower budgets and competition.

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