Before you scroll
- Start with the regulator's own register, and check that the contact details there match the website you are using.
- Look at who holds your money, what leverage and protections apply, and what it really costs to trade and to withdraw.
- Pressure, promised returns and payment by crypto transfer to a person are reasons to walk away, whatever the licence page says.
How to choose a broker safely is not about finding the one with the flashiest app or the biggest bonus. It is about confirming that a firm is who it says it is, is allowed to serve you, looks after your money properly and lets you take it out again. DravoTrader does not rank or recommend firms, so this page gives you the checks rather than a shortlist. Run them in order: the first three rule out most frauds.
Checks 1 to 3: identity and authorisation
1. Is the firm on the regulator's register?
Every serious market has a public register of authorised firms. Examples include the Financial Conduct Authority's register in the UK, the SEC and FINRA's BrokerCheck in the US, ASIC's professional register in Australia and national registers in each EU country. Search the register yourself, from the regulator's own website, rather than following a link or a licence number the firm gives you. A regulator's logo on a website proves nothing.
2. Does the register entry match the firm you are dealing with?
Clone firms copy the name, address and registration number of a genuine company and then use their own website, phone number and email. The register usually lists the firm's official contact details and approved web addresses. If the domain or phone number you have been given is not there, contact the firm using the details on the register and ask.
3. Is the firm authorised for you, and for this product?
Many groups run several companies: one licensed in a strict jurisdiction and another offshore. Check which entity your account would actually be with. It will be named in the client agreement and often at the bottom of the website. If you live in the UK but would be signed up to an offshore affiliate, the UK protections will not apply. Also check the firm is permitted to offer the product you want, whether that is shares, CFDs or crypto.
Checks 4 to 6: your money and your downside
4. Where is client money held?
Regulated brokers must usually keep client money in segregated accounts, separate from the firm's own funds, so that it is not used to pay the firm's creditors. Some countries add a compensation scheme if a firm fails and money is missing, up to a limit. Find the section on client money in the terms and check what applies to your account.
5. What leverage and protections apply?
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 are closed when the margin level falls to 50%, and negative balance protection means you cannot lose more than your account balance. An offer of 500:1 to a retail customer in those regions tells you the firm, or the entity you would be dealing with, is outside those rules. Bonuses and deposit incentives are also banned for retail CFD clients in the UK, EU and Australia, so a deposit bonus is itself a warning sign there. The margin calculator shows what different ratios mean in money.
6. Does the firm publish its risk warning?
In the UK and EU, CFD providers must display the percentage of their retail accounts that lose money. It is a blunt figure, but its absence on a site aimed at those markets is telling.
Checks 7 and 8: costs and platforms
7. What does it really cost?
Look past the headline spread. Find the typical (not minimum) spread on the markets you would trade, any commission per lot or per trade, the overnight financing rates, currency conversion charges, deposit and withdrawal fees, and inactivity fees. Our trading fees guide shows how these combine into a real cost per trade.
8. Is the trading platform genuine, and whose server does it connect to?
Download apps only from official app stores or the firm's verified website, and check the developer name. If a firm offers MetaTrader, remember that the software is made by a third party, while the trade server your app connects to belongs to the broker. A real MetaTrader app can still be pointed at a fraudulent firm's server. MetaTrader explained covers this in more detail.
Checks 9 and 10: getting out, and how you are treated
9. Can you withdraw easily?
Read the withdrawal terms before you deposit. How long do withdrawals take? Are there fees? Must money return to the same card or account it came from (a normal anti-money-laundering rule)? A useful practical test is to deposit a small amount, then withdraw part of it before committing more. A genuine firm will pay you, and you will learn how the process works.
10. How does the firm behave?
Watch for pressure. Legitimate firms send risk warnings; they do not phone you repeatedly to raise your deposit, promise returns, tell you a price is about to surge or suggest you borrow. If someone you met online introduced you to the broker, or an "account manager" wants you to trade on their calls, treat the whole arrangement as suspect.
A printable summary
- Found on the regulator's register, searched independently.
- Website, phone and email match the register entry.
- The contracting entity is authorised where you live, for this product.
- Client money is segregated; compensation cover understood.
- Leverage, margin close-out and negative balance protection match local rules.
- Risk warning displayed where required.
- Full costs found: spread, commission, swaps, conversion, account fees.
- Platform downloaded from an official source; server belongs to the firm you checked.
- Withdrawal terms read and tested with a small amount.
- No pressure, promised returns, bonuses or unsolicited contact.
Walk away immediately if you are asked to pay by crypto transfer to a personal wallet, by gift card, or into a bank account in a private individual's name, or if you are told that withdrawals require an upfront "tax" or "release fee". See how to spot trading scams.
What these checks cannot tell you
Passing all ten checks means a firm is probably who it says it is and is subject to rules that protect your money from the firm. It does not protect your money from the market. A fully authorised broker will still let you open positions that lose most of your deposit in a day, and its obligation is to warn you and to follow the rules, not to stop you. The checks also cannot judge whether a product suits you: that depends on your finances, experience and how much you can afford to lose.
Finally, the checks are a snapshot. Firms change ownership, lose licences and move clients between group companies. If you receive a notice that your account is being transferred to a different entity, run the checks again on the new one.
If something has already gone wrong
Stop sending money, including any fees to "unlock" a withdrawal. Contact your bank or card provider straight away, report the firm to your national regulator and to the police, and keep every message, receipt and screenshot. Ignore anyone who contacts you afterwards promising to recover the money for a fee: recovery scams deliberately target people who have just lost money.
Readers also ask
Is a licence from any regulator enough?
No. Regulators differ widely in how strictly they supervise firms and what protections they give clients. What matters is whether the specific entity you contract with is authorised where you live, and what that authorisation means for your money.
How can I tell whether a website is a clone of a real broker?
Look up the firm on the regulator's register using the regulator's own website, then compare the web address, phone numbers and email domain with the ones listed there. Clone firms rely on people checking the name but not the contact details.
Should I choose a broker because a friend or online contact recommends it?
A recommendation is not a check. Many investment frauds spread through personal contacts and social media, sometimes by people who are themselves being deceived. Run the same checks on every firm, however you heard of it.
Sources
- UK Financial Conduct Authority, Financial Services Register and warning list
- FINRA BrokerCheck
- Australian Securities and Investments Commission, professional registers and CFD product intervention order
- European Securities and Markets Authority, CFD product intervention measures