[Oak2Smoke]

Yo, I’m kinda new to day trading and tryna to get my head around how to figure out if a broker is dodgy or legit. Like how do I know if theyre a proper provider I can trust and not some scammer out to rob my cash? What kinda stuff should I be checkin for and is there any dead giveaways?

Cheers!

Reply

Topic

[Steve]

Apply common sense by asking yourself:

• Are they regulated by well known bodies like the FCA or SEC?
• Does their website look professional or hastily put together?
• Are they well reviewed online by experts and other traders?

 

Reply

[Oak2Smoke]

Righto, cheers.

So does a firm like Interactive Brokers meet all those criteria?

Reply

[James Barra]

Hi Oak2Smoke,

Start by reading our Regulation & Trust Rating, we cover the hallmarks of a ‘legit’ broker.

The most important thing to look for is authorization from a trusted regulator, preferably where you’re based if you reside in a well-regulated region.

Why? Regulated brokers are required to follow various measures designed to protect retail investors like day traders, from restrictions on leverage trading to mitigate large losses to investor protection covering your balance should your broker become insolvent (available in some countries).

In the link above, we’ve categorized all the main regulators in the online trading space so you know which ones you can rely on and which ones you can’t.

Reply

[Oak2Smoke]

I’ve read this now, cheers.

So if I reside in France I should choose a company registered with our AFM?

Reply

[James Barra]

Hi Oak2Smoke,

Choosing a broker regulated by the French AMF is sensible. See our pick of the top AMF-regulated brokers.

Alternatively, you could choose a broker authorized by another comparable European regulator, such as the BaFin (Germany) or CySEC (Cyprus).

These regulators operate under the framework of the Markets in Financial Instruments Directive (MiFID II), which ensures a high standard of investor protection, transparency, and financial stability across the European Economic Area (EEA).

By selecting a trading platform regulated by one of these authorities, you can still benefit from passporting rights, which allow financial services firms authorized in one EU member state to operate freely across others, this case France.

Reply

[Oak2Smoke]

Ahh I didn’t even know about this EU rule, but yeah makes total sense lol. Appreciate it JHames!

Reply

[Author]

Replies