10 Things to Check Before Opening a Trading Account

Knowing how to choose a broker matters more than any strategy, because the firm you pick decides what protections apply if something goes wrong. The ten checks below apply to forex, CFD, share and multi-asset providers. They are ordered so that the fastest deal-breakers come first: if a provider fails check 1 or 2, you can stop there.

1. LicenceChecks 1–3: stop here if anything fails
2. CostChecks 4–6: add up a real trade
3. AccessChecks 7–8: withdrawals and tools
4. FitChecks 9–10: products and complaints

Checks 1 to 3: is the firm allowed to deal with you?

1. A licence you have verified yourself

Find the name of the regulator in the platform's footer, then go to that regulator's public register by typing its address yourself, not by clicking a link supplied by the platform. Search for the firm's legal name and registration number. The entry should list the activities it is permitted to carry out, such as dealing in investments as principal. Clone firms copy the name and number of a real authorised company, so check that the website address and phone numbers on the register match.

2. The legal entity that would hold your account

International groups often run several companies under one brand, each licensed in a different place. Your protections depend on which one you sign up with. A group may hold a strict European or Australian licence and still onboard overseas customers through an offshore subsidiary with looser rules and higher leverage. The client agreement names the entity; read that page.

3. Client money segregation and compensation

Regulated firms in major markets must keep client money in separate accounts from their own. Some countries add a compensation scheme if the firm fails and money is missing, up to a limit. Check whether your account would be covered and which scheme applies.

Checks 4 to 6: what does a trade really cost and how is it handled?

4. Loss limits and leverage

For retail clients in the UK and EU, leverage on CFDs is capped (30:1 on major currency pairs down to 2:1 on crypto), positions must be closed when margin falls to 50% of the requirement, and negative balance protection prevents your account going below zero. A provider offering 500:1 to retail customers is telling you it operates outside those rules.

5. Total cost at your trade size

Write down the charges for one realistic trade, not the advertised minimum spread.

Our trading fees guide works through a full example, and the pip calculator converts spreads into money.

6. Order execution

Every regulated firm publishes an order execution policy. It explains whether the firm acts as the counterparty to your trades or passes them to other liquidity providers, how it handles slippage, and whether price improvements are passed on as well as price disadvantages. You do not need to prefer one model, but you should know which one you are dealing with.

Checks 7 to 8: can you get your money out and use the tools?

7. Withdrawal terms

Look for processing times, fees, minimums and accepted methods, and whether withdrawals must go back to the card or account you deposited from (a normal anti-money-laundering rule). Red flags include a requirement to trade a certain volume before withdrawing, "taxes" payable to release funds, or a support team that becomes vague when asked about withdrawals.

8. Platform software and a demo account

Try the practice account on the device you will actually use. Check that stop-loss orders are easy to set and edit, that the contract specification for each instrument shows pip value and margin rate, and that the demo uses the same pricing as the live account. Third-party software such as MetaTrader is widely offered, but the software does not change who holds your money.

Checks 9 to 10: fit and fallback

9. Products that fit your plan

If you want to own shares for years, a CFD-only provider is the wrong tool, because you will pay financing every night and never own the share. If you want to learn forex with tiny positions, check the minimum trade size. Choose the product first, then the provider.

10. Complaints route

A regulated firm must have a complaints procedure and, in many countries, clients can escalate unresolved complaints to an independent ombudsman. An offshore firm may offer no external route at all. Find this page before you need it.

How to choose a broker with a scoring sheet

After checks 1 to 3 are passed, score the remaining items from 1 to 5. The weights below suit a cautious beginner; change them to reflect your priorities.

Multiply each score by its weight, add up and divide by 100 to get a result between 1 and 5. Check 9 is a yes-or-no question rather than a score. The homepage shows a filled-in example comparing two hypothetical platforms.

What a regulated firm will ask you

Expect a genuine provider to ask for proof of identity and address, details of your employment and the source of the money you plan to deposit. Many will also run an appropriateness test with questions about your trading knowledge and experience, and may warn you, or refuse to proceed, if the answers suggest leveraged products are unsuitable. These checks are required by anti-money-laundering and conduct rules. A platform that skips them entirely, or lets you deposit before any verification, is telling you something about the rules it follows.

Five questions to put to support before depositing

1. Which legal entity will my account be with, and which regulator supervises it?
2. Is my money held in segregated client accounts, and at which banks?
3. What are all the fees for withdrawing to my bank account, and how long does it take?
4. What is the typical spread on the instrument I plan to trade during my usual hours?
5. If I have a complaint you cannot resolve, where can I take it?

Clear, specific answers in writing are a good sign. Evasion, pressure to deposit before answering, or a switch to a messaging app are reasons to walk away.

Warning signs that end the search

• The firm contacted you first, by phone, social media or a messaging app.
• An "account manager" pushes you to deposit more or trade larger.
• Returns are promised or described as guaranteed.
• A deposit bonus is offered to a retail client in the UK, EU or Australia, where such inducements are banned for CFDs.
• You are asked to install remote-access software "to help you set up".

More patterns and what to do if you have already paid are in how to spot trading scams.

Sources

• UK Financial Conduct Authority, Financial Services Register and CFD rules
• European Securities and Markets Authority, CFD product intervention measures
• Australian Securities and Investments Commission, CFD product intervention order