Choosing a safe broker
How Trading Works

Choosing a safe broker

7 cards and 4 quick questions. About 2 min.

The lesson in full

  1. Scammers love beginners. A fake platform can look slick, show made-up profits, then refuse to let you withdraw. Checking a broker takes five minutes.

  2. Check the licence on the regulator's own website: FCA (UK), CNMV (Spain), CNBV (Mexico), SEBI (India), OJK or Bappebti (Indonesia), ASIC (Australia), CySEC (Cyprus), CFTC and NFA (US) or MAS (Singapore).

  3. Client money should sit in segregated accounts, apart from the broker's own money. In the EU, UK and Australia, retail clients also get negative balance protection.

  4. Compare total costs: spread, commission, overnight financing, and deposit and withdrawal fees. Check how fast and easy it is to take money out.

  5. Red flags: bonuses for depositing more, an "account manager" who keeps calling, pressure to decide fast, and any promise of profit.

  6. Common mistake

    Myth: a licence number on the website proves a firm is safe. Scammers copy real firms' names and numbers. Check the register yourself and make sure the website and contacts match.

  7. Key takeaway

    Real licence, separate client money, clear costs, no promises. Then practise on a demo account and start small.

Quick check

  1. The first thing to check about a broker is... Its licence with a real regulatorA licence means a regulator supervises the firm and you have somewhere to complain. Looks and bonuses prove nothing.
  2. Segregated accounts keep... Client money separate from the broker'sIf the broker gets into trouble, client money held apart is much better protected.
  3. A broker who promises profits is... A warning signNo one can promise trading profits. Licensed firms aren't allowed to, and scammers do it all the time.
  4. A firm's website shows a real licence number. What should you still do? Check the regulator's register yourselfClone firms copy real licence numbers. The register shows the real firm's website and contacts, so you can compare.

Words in this lesson

How Trading Works

  1. Long and short
  2. The market clock
  3. Market, limit and stop orders
  4. Bid, ask and spread
  5. Leverage: bigger wins, bigger losses
  6. Margin and margin calls
  7. CFDs: trading the price, not the thing
  8. Futures contracts
  9. Choosing a safe broker
Practise it now: Follow the Sun Practise it now: Order Up! Practise it now: Margin Call Practise it now: Own It or CFD It?