Broker Safety · 4 min read
Every year, traders lose money not to the market, but to brokers that were never properly regulated. A five-minute check before you deposit can save you from a five-figure loss later — and it’s a habit worth building before you ever fund an account, not after something goes wrong.
01Verify the license
02Confirm where your money sits
03Check the published loss rate
01
Look up the license, not the logo
A polished website means nothing on its own. Search the broker’s name directly on the regulator’s official register (FCA, CySEC, ASIC, etc.) and confirm the license number matches exactly what’s listed on their site — scammers frequently copy real firms’ branding and even their license numbers.
Cross-check the registered company name too, since clone firms often borrow a legitimate entity’s license number while operating under a slightly different corporate name.
✓ License number matches the register
✓ Company name matches exactly
02
Ask where your money actually sits
Legitimate, regulated brokers are required to hold client funds in segregated accounts under rules like the FCA’s CASS regime, separate from the company’s own operating capital, and to offer negative balance protection so a client can never lose more than they’ve deposited. If a broker can’t clearly explain this, treat it as a serious warning sign.
Two questions to ask
1. Which bank holds the segregated client funds?
2. Does the broker undergo independent audits?
A legitimate firm will answer both without hesitation.
03
Know the real numbers behind retail losses
Regulatory analysis across EU jurisdictions, cited by ESMA and the FCA, found that most retail CFD accounts lose money.
That’s exactly why regulators now require brokers to publish the percentage of their own retail accounts that lose money — a figure worth checking before you deposit with any specific broker. A broker refusing to disclose this figure, or burying it far from its main site, is itself a signal worth noting.
Conclusion
Regulation isn’t paperwork — it’s the only real barrier between your capital and a broker that disappears overnight. Verify the license, confirm fund segregation, and check the published loss statistics before you ever click deposit. None of this takes more than a few minutes, and none of it is optional if you’re serious about protecting your capital.
Verify the license. Confirm segregation. Check the loss rate. Then deposit.
This article is for educational purposes only and does not constitute investment advice. Trading CFDs and other leveraged products carries a high level of risk and may not be suitable for all investors.
