10 Things to Check Before Opening a Trading Account

How to choose a broker, or a crypto exchange, comes down to one principle: check the things that protect your money before the things that make trading pleasant. A slick app with low fees is worthless if the company behind it is unlicensed or cannot pay customers back. IonyxHub does not recommend or rank real firms. Instead, here are ten checks you can run on any candidate yourself, in the order we would run them.

1. Is the firm authorised where you live?

Every serious market has a regulator that keeps a public register of firms allowed to offer services to its residents. Examples include the Financial Conduct Authority in the UK, the Securities and Exchange Commission and FINRA in the United States, ASIC in Australia and national regulators across the EU. Look the firm up on that register by typing its name yourself; do not use a link supplied by the firm or an advert.

Check that the legal name, registered address and web address on the register match the site you are using. Fraudsters regularly set up clone firms that copy a genuine company's name and licence number. If the register lists approved websites and phone numbers, any that differ are a warning.

For crypto, authorisation regimes vary. Some countries license exchanges fully, some only register them for anti-money-laundering purposes, and some do neither. A registration is not the same as full supervision, and the register will usually say which applies.

2. Which company would you actually be dealing with?

Large groups often run several companies in different countries under one brand. The one you are signed up with decides which rules protect you. It is common for a group to hold a strict licence in one country and serve everyone else through an offshore subsidiary with far weaker protection. The account terms name the contracting company; read that line and check that company, not just the brand.

3. How are client money and assets held?

A regulated broker should keep client money in segregated accounts, separate from its own funds, so that creditors cannot claim it if the firm fails. Shares are usually held in a nominee structure for the same reason.

For a crypto exchange, ask:

• Are customer coins held separately from the company's own?
• What share is kept in offline (cold) storage?
• Does the exchange lend out or otherwise use customer assets?
• Does it publish any evidence of reserves, and does that evidence cover liabilities as well as assets?

A proof-of-reserves report that shows only assets tells you little, because it does not show what the exchange owes.

4. What happens if the firm fails?

Many countries run investor compensation schemes that cover customers of licensed brokers up to a limit when client assets are missing. Crypto held on an exchange is rarely covered by anything similar. Find out which scheme, if any, applies to your account and what it covers. Do not assume that the scheme covering a broker's share business also covers its crypto service.

5. The full cost, not the headline fee

Platforms advertise their most attractive number. Ask for the complete fee schedule and look for:

• Trading commission, and whether it differs for makers and takers.
• Spreads, including the extra margin on "instant buy" or "convert" buttons.
• Deposit charges, especially for cards.
• Currency conversion if your money is in a different currency.
• Overnight financing on leveraged positions.
• Withdrawal fees and network fees.
• Inactivity or account fees.

Small recurring charges add up. As an illustration, an inactivity fee of $10 a month costs $10 × 12 = $120 over a year. Our trading fees lesson explains each charge with examples.

6. Can you get your money out easily?

Read the withdrawal terms before depositing. Look for minimum withdrawal amounts, daily limits, processing times and any requirement to withdraw back to the same card or account you paid in from. A platform that makes deposits instant but withdrawals slow and conditional is telling you something. Genuine firms never ask you to pay a "tax" or "release fee" before you can withdraw; that is a hallmark of fraud, described in our scam lesson.

7. What leverage does it offer, and to whom?

In the UK and EU, retail clients trading CFDs can use at most 30:1 on major currency pairs, 20:1 on gold and major indices, 10:1 on other commodities and minor indices, 5:1 on individual shares and 2:1 on crypto, with negative balance protection and a margin close-out at 50%. In the US, retail forex leverage is capped at 50:1 on majors. The UK does not allow crypto derivatives to be sold to retail consumers at all.

A platform offering 500:1 on currencies or 100:1 on crypto to ordinary customers is almost certainly operating outside those regimes. High leverage is not a perk; it is a sign of weaker supervision. The margin calculator shows what leverage means in money.

8. Security features

At minimum, look for two-factor authentication through an authenticator app or hardware key rather than text message alone, withdrawal address allow-lists, alerts for new logins and a way to freeze your account quickly. For crypto, check which networks are supported for deposits and withdrawals, since sending on an unsupported network can lose funds; the USDT lesson explains why.

9. How complaints are handled

A regulated firm should publish a complaints procedure with time limits and tell you which independent dispute service you can escalate to if you are unhappy, such as a financial ombudsman. If the only route is a chat window and there is no mention of any outside body, you would have little leverage if something went wrong.

10. How does it behave towards you?

The final check is about conduct. Treat these as reasons to stop:

• Bonuses for depositing, which regulators in the UK, EU and Australia ban for retail CFD clients.
• An "account manager" who calls repeatedly and urges larger deposits.
• Promises of fixed or guaranteed returns.
• Pressure to act today, or to keep the relationship secret.
• Requests to install remote-access software or to share codes.

Putting the checks into practice

Write the ten headings down and fill in what you find for each platform you are considering, citing where you found it. Anything you cannot find is an answer in itself. Once the protective checks are satisfied, you can compare the practical ones: the range of markets, the quality of the tools, and whether practising first on a demo account is possible. For crypto specifically, our home page sets out a method for comparing crypto exchanges on cost for your own typical amount.

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