Do you think a "Forex exchange" website is a good idea?

[quantuz]

So...do you think it's a good business if a website acts as a forex broker that matches orders between its customers? Something like an ECN or a DMA broker...but without offering the orders on some intranet of other banks, hedge funds - but just its own customers? Like...on the fictional website "exforex.com" someone wants to buy 100,000 eur with usd and another customer wants to sell 100,000 eur. The website makes money of the spread - which here can be just one pip fixed. Because there are no middlemen and middlemen of middlemen and middlemen of middlemen of middlemen...etc. I guess this could be a very profitable idea...but there's one problem. In order for such orders to be matched, one will need say 100,000 customers or more. So if I start such website, I don't see how I will get thousands of customers so that the orders are easily matched, or at least some serious % of them. Even big stock exchanges like ASX have problems with liquidity, let alone a new website. I guess if I had one million in my bank account it would be much easier, but I can start such website with as low as just $50-$70k of my own money which won't be enough even for leverage. Would you use such a broker anyway?

10x and happy new year!

 

[Enivid]

You'll need thousands of customers for that idea to work. But to get so many customers you'll have to offer something to them. I don't think it's possible without offering them access to the "external" market.

 

[quantuz]

You'll need thousands of customers for that idea to work. But to get so many customers you'll have to offer something to them. I don't think it's possible without offering them access to the "external" market.

I guess in the beginning such website can act as a dealing desk and then abandon this once the accounts become some high number...but the math can be very roughly calculated here. Again in any case I can't imagine such a venture to work without millions invested.

 

[Enivid]

Yeah, $50-$70k definitely won't be enough to launch such a project.

 

[jmathers]

This is how paypal was started my friend, 50-70k is easy to launch the project, most of the money will end up going into the internet marketing portion of it though. One of the biggest things with creating such a website is solidifying the identity to be secure. If people do not trust your site, then there will be no repeat business to pull from.