10 Things to Check Before Opening a Trading Account

Knowing how to choose a broker is the step most beginners skip. It is also the one that protects you from the costliest failures, the ones where the money is simply not there when you ask for it back. The ten checks below apply equally to forex and CFD brokers, stockbrokers and crypto exchanges. FeroxTrader is not a broker and does not rank or recommend any firm, so this entry only gives you the method.

Checks 1 to 3: who the firm really is

1. Find it on a regulator's register yourself

Go to the public register of the financial regulator in your country, for example the Financial Conduct Authority in the UK, and search for the firm by name. Do not use a link from the firm's own website or an advert. Note the authorisation number, the permitted activities and the registered address.

2. Make sure the details match exactly

Scammers often clone real firms, copying their name and authorisation number but using a different website, email domain or phone number. If anything on the register differs from what you have been given, treat it as a clone until proven otherwise. Many regulators also publish warning lists of unauthorised firms; check those too.

3. Check which entity you would actually sign with

Large groups often run several companies in different countries. The brand may be regulated in a strict jurisdiction while new customers from your country are onboarded by an offshore affiliate with far weaker rules. The client agreement names the company you are dealing with; read that line.

Checks 4 to 6: where your money would sit

4. Client money segregation

Regulated brokers must hold client funds separately from their own. Look for a clear statement of which banks hold client money and under which rules. For crypto platforms, look for how customer assets are held, whether they are kept apart from the company's own assets, and whether any published reserve reports also show liabilities.

5. Compensation and dispute routes

Some countries run compensation schemes for clients of failed firms, up to a limit, and ombudsman services for complaints. Find out whether either applies to the entity you would use. For most crypto platforms, neither exists.

6. Leverage and protections

In the UK and EU, retail clients face leverage caps (30:1 on major currency pairs, 2:1 on crypto CFDs), automatic close-out at a 50% margin level and negative balance protection. A firm that offers retail clients from those regions leverage of several hundred to one is usually doing so from outside those rules. High leverage is a selling point for the firm, not a benefit to you.

Checks 7 and 8: what it will really cost

7. The total cost of a round trip

Every provider advertises its best number. Your cost is the sum of everything: the spread, any commission, overnight financing, currency conversion, deposit and withdrawal fees, and inactivity charges. The trading fees entry explains each line.

Searching for the lowest spread forex broker is a natural instinct, but spread alone can mislead. An illustrative comparison on one standard lot of EUR/USD:

Account B is slightly cheaper here, but only while its spread stays tight. Advertised spreads are often minimums, and they can widen sharply around news and the daily rollover.

8. What the costs look like in practice

Ask for, or look up, typical spreads at different times of day rather than the best one. Check the swap rates for the markets you are interested in, and whether withdrawals carry a fee. On crypto exchanges, look at the withdrawal fee for each network you might use.

Checks 9 and 10: how the firm behaves

9. Test a small withdrawal early

Before putting in any serious amount, deposit a small sum and withdraw part of it. A legitimate firm will need identity checks, but once those are done the withdrawal should arrive within its stated time, without surprise charges. Delays, new "tax" or "unlock" fees, or pressure to deposit more before you can withdraw are classic signs of a fraudulent platform.

10. Listen to how they sell

Regulated firms in many countries cannot offer retail CFD clients bonuses or similar inducements, and they must show risk warnings. Be wary of:

• unsolicited calls or messages, especially through social media or dating apps;
• an "account manager" who urges you to deposit more or trade bigger;
• promises of fixed or guaranteed returns;
• requests to install remote-access software "to help you set up".

Any one of these is a reason to stop. The scams entry explains the patterns behind them.

Putting the ten checks together

1. On the regulator's register, found independently
2. Contact details match the register exactly
3. You know which legal entity you would sign with
4. Client money or assets held separately
5. Compensation or complaint route identified, or its absence understood
6. Leverage and protections consistent with your country's rules
7. Round-trip cost calculated
8. Typical, not best-case, costs checked
9. Small withdrawal tested
10. No pressure, bonuses or guarantees in the sales approach

A firm that passes all ten is not guaranteed to be a good fit, but a firm that fails any of the first six or the ninth should not get your money.

Write down what you find as you go: the register entry, the legal entity, the fee schedule and the date you checked. Registrations can lapse and fee schedules change, so a note you can compare against later is more useful than a memory of having checked once. If a firm later contacts you with new terms, a new website or a new payment address, go back to the register before doing anything.

If you are choosing a crypto exchange

The ten checks apply to crypto platforms too, but a few questions deserve extra weight there because protections are thinner.

• Registration or licence: many countries now require crypto service providers to register or hold a licence. Check the regulator's list for your country, and note that a registration for anti-money-laundering purposes is not the same as full supervision.
• Reserves and liabilities: some exchanges publish evidence that they hold customer assets. A report showing assets without matching liabilities only tells half the story.
• Networks supported: if you plan to move USDT or other tokens, confirm the deposit and withdrawal networks and what each one costs.
• Limits and holds: read the rules on daily withdrawal limits and any holding period after card deposits before you need the money.
• Security options: app-based two-factor authentication, withdrawal address allow-lists and anti-phishing codes all reduce the risk of an account takeover.
• Derivatives access: in some countries, including the UK, crypto derivatives cannot be sold to retail consumers. A platform offering them to you anyway is operating outside those rules.

Past collapses of large crypto platforms had a common thread: customer assets were not kept apart from the company's own, and customers had no clear legal claim to them. Asking where your coins sit, and on whose balance sheet, is not paranoia. It is the main lesson of the last decade.

Trading platforms and software

Many forex and CFD brokers let clients trade through third-party software such as MetaTrader. Using well-known software does not make a broker trustworthy; the software is licensed to many firms of very different quality. The MetaTrader 5 entry explains how to tell the platform apart from the company behind it.

Sources

• UK Financial Conduct Authority, Financial Services Register and Warning List
• European Securities and Markets Authority, product intervention measures on CFDs