10 Things to Check Before Opening a Trading Account

Learning how to choose a broker or exchange is the single most useful skill a beginner can pick up, because a good decision in a bad venue can still end in loss. We do not recommend or rank any firm. Instead, here are ten checks that work on any forex broker, stockbroker or crypto exchange you are considering, including ones you have seen in adverts or "top" lists.

Checks 1 to 3: is the firm allowed to serve you?

1. Find it on your regulator's register

Every major country keeps a public register of authorised financial firms: for example, the FCA register in the UK, national regulators in each EU country, ASIC in Australia, or the SEC, FINRA and NFA databases in the US. Search the register directly (type the regulator's address yourself rather than following a link) and look up the firm's legal company name, which you will find in its terms and conditions.

2. Rule out a clone

Fraudsters copy the name and registration number of genuine firms. On the register entry, check the website address, phone number and email domain. If the details on the register do not match the site you are using, treat it as a clone and stop. Many regulators also publish warning lists of unauthorised firms; search those too.

3. Check which entity you would deal with

Large groups often run several companies in different countries. A well-regulated parent does not help if you are placed with an offshore subsidiary where leverage limits, negative balance protection and complaint routes may not apply. The entity name should appear on the application form and in the client agreement.

Checks 4 to 6: who looks after your money?

4. Client money and asset segregation

Regulated brokers must keep client money and shares separate from their own funds. Look for this in the client agreement or a "safety of funds" page, and note which bank or custodian holds it.

5. Compensation schemes

Some countries run schemes that pay out, up to a limit, if a regulated firm fails and client money is missing. Find out whether the entity you would use is covered. Crypto holdings are generally not covered.

6. For crypto: reserves and storage

Ask how the exchange stores customer coins. Most keep the majority in offline "cold" storage and a smaller share in online "hot" wallets for withdrawals. A proof-of-reserves report should show customer liabilities as well as assets, carry a recent date and explain who verified it. Check too whether customer assets would be kept separate from the exchange's own in an insolvency, which depends on its terms and local law.

Checks 7 and 8: what does it cost and how does it work?

7. Price a full round trip

Add up the spread, commission or trading fee, overnight financing if you would hold leveraged positions, currency conversion, and deposit and withdrawal fees. Our trading fees guide shows how, with worked examples. A platform advertising "zero commission" still earns money somewhere, usually through the spread.

8. Leverage, protections and order types

If you intend to use leverage, check the caps that apply to you. UK and EU retail clients are limited to 30:1 on major currency pairs and 2:1 on crypto CFDs, with negative balance protection and a margin close-out at 50%. Check that stop-loss and limit orders are available, and read how the firm handles fast markets. Very high leverage, far above these caps, is a sign you are not dealing with a strictly regulated entity.

Checks 9 and 10: can you get out, and can you get help?

9. Withdrawal terms and a test withdrawal

Read the withdrawal policy before you put money in. Look for minimums, fees, processing times and any rule that withdrawals must go back to the original payment method. After a first small deposit, make a small withdrawal and time it. Any request for an extra payment before a withdrawal can be released, whether it is called tax, commission, insurance or verification, is the clearest scam signal there is.

10. Support and complaints

A regulated firm must have a complaints procedure and, in many countries, gives access to an ombudsman or dispute body if you are unhappy with the answer. Check the procedure exists and has deadlines. Be wary of support that happens only through messaging apps or insists on remote access to your device.

How to choose a broker using a simple scorecard

Extra checks that apply only to crypto platforms

Crypto exchanges raise questions that stockbrokers do not. Beyond the ten checks, look at which networks the platform supports for each coin you plan to move, whether it lets you add withdrawal-address allow-lists, and whether it offers products such as "earn" accounts or lending. Those products can mean your coins are lent to others, which adds risk even when the platform itself is sound. If the terms say the platform may use customer assets, read that clause twice.

Signs you are not dealing with a real broker

• An "account manager" calls you repeatedly and urges larger deposits.
• Bonuses for depositing, which regulators in the UK, EU and Australia ban for retail CFD clients.
• Guaranteed returns, or a trading history that only ever rises.
• You found the platform through a stranger on social media or a dating app.
• The app is not in an official app store, or arrives as a download link.

These are covered in depth in our scam guide.

Questions worth asking any platform directly

A genuine firm will answer these in writing, usually by pointing you to a published document. Vague or evasive replies are informative too.

• Which legal entity will hold my money or assets, and which regulator supervises that entity?
• Where is client money held, and is it kept separate from your own?
• What is the full list of fees for depositing, trading, holding and withdrawing?
• How long do withdrawals normally take, and can they be paused? If so, when?
• For crypto: which networks do you support for each coin, and what happens if a deposit arrives on the wrong one?
• How do I make a complaint, and which outside body can review it?

Before opening a trading account

Once a platform passes all ten checks, read the key information document or risk summary, set up two-factor authentication, and start with an amount you are prepared to lose. For the maths of sizing a first trade, see our lot size calculator.

Sources

• UK Financial Conduct Authority, Financial Services Register and warning list
• European Securities and Markets Authority, CFD product intervention measures
• Australian Securities and Investments Commission, professional register search