10 Things to Check Before Opening a Trading Account

How to choose a broker comes down to evidence you can verify yourself. Adverts, rankings and social media praise are not evidence. The ten checks below work for forex and CFD providers, share brokers and crypto platforms alike. TradoGlobal does not recommend, rank or review individual firms; this page is a method, not a list.

How to choose a broker: start with the register

1. Authorisation, checked at the source

Look the firm up on the financial regulator's own register for your country: in the UK, the FCA's Financial Services Register; in the US, FINRA's BrokerCheck and the NFA's BASIC system for forex dealers; in Australia, ASIC's professional registers; in the EU, the national regulator's register. Confirm the firm's full legal name, registered address, website domains and phone numbers match what you have been given.

Be wary of clone firms, which copy the name and registration number of a real authorised company but use different contact details. The register's listed contact details are the only ones to trust. Also check the regulator's warning list for the name you were given.

2. Which legal entity you would sign with

Large groups often run several companies in different countries under one brand. A strongly regulated arm might serve your country, while an offshore arm with looser rules offers higher leverage to anyone who asks. Read the client agreement to see exactly which company you would contract with and which regulator oversees it.

Protecting your money

3. Client money and compensation

Regulated brokers in major markets must keep client money separate from their own. Some countries add a compensation scheme, such as the UK's FSCS or the US SIPC for securities, that covers certain losses up to a limit if the firm fails. These schemes do not cover trading losses, and CFD accounts and crypto are often treated differently from shares. Find out what applies to the specific product you would hold.

4. Leverage and negative balance protection

For retail clients in the UK and EU, CFD leverage is capped at 30:1 on major currency pairs, 20:1 on other pairs, gold and major indices, 5:1 on individual shares and 2:1 on crypto. Positions must be closed when your margin level falls to 50%, and negative balance protection stops losses exceeding the account balance. A firm offering you far higher leverage is either not subject to those rules or classing you as a professional client, which removes protections.

5. The full cost schedule

Ask for, and read, the complete list of charges: typical and minimum spreads, commissions, overnight financing rates, currency conversion fees, inactivity fees, and deposit and withdrawal charges. If you cannot find it easily, that tells you something. Our guide to trading fees explained shows how these combine over time.

How the firm handles your orders

6. Execution model and conflicts

Some providers act as the counterparty to your trades (market makers); others pass orders to external liquidity providers or exchanges. Neither is automatically bad, but a counterparty model means the firm can profit when clients lose, so its order execution policy and conflict-of-interest disclosures matter. Look for how often orders are filled at prices different from those requested (slippage) and whether it works in both directions.

7. Deposits and withdrawals

Payments should go to and from an account in the firm's own legal name, through normal banking channels. Requests to pay a personal account, a different company name or a crypto address supplied by a "manager" are serious red flags. Check the withdrawal process and timeline before depositing; difficulty withdrawing is the most common complaint about unregulated firms.

What a register entry tells you, and what it doesn't

A register entry confirms that a firm is authorised and shows what it is permitted to do: dealing in investments, holding client money, arranging deals, and so on. Check that the permissions match the service being offered; a firm authorised only to give general introductions, for instance, should not be holding your money. Look also at the firm's status, since entries can show that authorisation has been cancelled or restricted, and at any trading names listed. What an entry cannot tell you is whether the firm is well run, whether its prices are competitive or whether a particular product suits you. Authorisation is the minimum, not a recommendation.

Tools, service and the way out

8. The platform and a demo account

A demo account lets you test the platform, order types and margin display without risk. Check that stop-loss orders, position sizing and margin warnings are clear. Platform software, whether a proprietary app or a widely used third-party terminal such as MetaTrader, tells you nothing about the firm's regulation on its own.

9. Product documents

Regulated providers in the EU and UK publish key information documents for their products and, for CFDs, a statement of the percentage of retail client accounts that lose money. Read them. They are required disclosures, not marketing.

10. Complaints and disputes

Find out how to complain and where a complaint can be escalated. In the UK, eligible complaints about authorised firms can go to the Financial Ombudsman Service; other countries have similar bodies. An offshore entity may offer no independent route at all.

Questions to put to a provider before depositing

A legitimate firm can answer all of these in writing, usually by pointing to a published document:

• Which legal entity will hold my account, and under which regulator's rules?
• Where is client money held, and how is it kept separate from the firm's own funds?
• What leverage applies to me, and at what margin level are positions closed?
• What is the full schedule of fees, including financing and withdrawals?
• Do you act as counterparty to my trades, and how do you manage that conflict?
• How long do withdrawals take, and to which accounts can they be paid?
• How do I complain, and to whom can I escalate?

Vague answers, answers only given by phone, or a push to "just start small and see" are reasons to stop.

Keep a paper trail

Save the client agreement, the cost schedule and key information documents as they stood when you signed, along with screenshots of the register entry you checked. Keep deposit and withdrawal confirmations. If a dispute ever arises, dated records make a complaint far easier to pursue, and the habit of collecting them tends to expose problems early.

Red flags that end the search

• Guaranteed or "risk-free" returns, or monthly return figures in the advert.
• Bonuses for depositing. Regulators in the UK, EU and Australia ban these for retail CFD clients.
• Pressure to decide today, or an "account manager" who calls repeatedly.
• Requests to install remote-access software or share passwords.
• A firm that found you, rather than one you found.

More warning signs, and what to do if you have already paid, are in our guide on how to spot trading scams.

Sources

• UK Financial Conduct Authority, Financial Services Register and warning list
• FINRA BrokerCheck; National Futures Association BASIC
• European Securities and Markets Authority, product intervention measures on CFDs
• Australian Securities and Investments Commission, CFD product intervention order