Beginner · Lesson 10 of 11 · 7 min read
Choosing a broker safely
Your broker holds your money and fills your trades, so who you choose matters more than almost any strategy. Here is what to check before you send them a penny.
Why it matters
A good broker keeps your money safe and separate from its own, shows fair prices and pays out when you ask. A bad one can widen spreads, delay withdrawals or simply disappear. BTM’s partner broker is TradeQuo, and UK traders can open an account with it through BTM’s link on the Join page. It is regulated outside the UK (its licences include Seychelles, South Africa and the UAE), not by the FCA, so the UK protections in this lesson do not apply to it. Use these checks on any broker, ours included, and choose the level of protection you are comfortable with.
Big leverage and deposit bonuses are usually a warning sign, not a perk. FCA-regulated brokers are not allowed to offer UK retail traders more than 30:1 leverage or cash incentives to trade CFDs.
Check 1: is it really authorised?
- Search for the firm on the FCA Register and check it is authorised for the service it offers you.
- Use the phone number, email and website shown on the Register, not the ones in an advert or message. Scam “clone firms” copy the names and reference numbers of real firms.
- Check the FCA Warning List for the name and any similar names.
Check 2: the protections you get
With an FCA-regulated broker, UK retail traders get leverage limits, negative balance protection (you cannot lose more than your account) and automatic close-out at 50% of margin. Client money must be kept separate from the firm’s own money. If an authorised investment firm fails, the FSCS may be able to pay eligible claims of up to £85,000 per person, per firm.
Check 3: what it really costs
| Cost | What to look for |
|---|---|
| Spread | The typical spread, not just the lowest advertised one, especially at busy times and around news |
| Commission | Some accounts have tighter spreads plus a commission per trade |
| Overnight financing (swap) | A daily charge or credit for holding trades past the end of the day |
| Other fees | Inactivity, withdrawal and currency conversion fees |
Check 4: platform, markets and service
Does it offer the markets you want to trade, a free demo account, and a platform you are happy with, such as MT5? Is there a choice of spread betting or CFD accounts? (The Advanced level explains the difference.) Can you reach a real person when something goes wrong?
An advert offers 500:1 leverage, a 100% deposit bonus and a “personal account manager”. The firm is based overseas and is not on the FCA Register. That is three red flags before you even look at the spreads.
A second broker is on the Register, with the same phone number as its website, offers 30:1, a demo account and clear fees. Open the demo first, then fund with a small amount and test a withdrawal early, before you deposit more.
Common mistakes
- Choosing a broker because of a bonus or huge leverage.
- Checking a firm’s reference number but using contact details from an advert.
- Comparing only the lowest advertised spread.
- Depositing a large amount before testing a small withdrawal.
Check yourself
1. Where should you get a broker’s phone number and website from?
The FCA Register, because clone firms copy the details of real firms.
2. A broker offers UK traders 500:1 leverage and a cash bonus. What does that suggest?
It is very likely not FCA-regulated for that business, so you lose the UK protections.
3. What should you test soon after funding a new account?
A small withdrawal.
Try it on BTM
For education only, not financial advice. Trading carries a high risk of losing money, especially with leverage. Only trade with money you can afford to lose.
For educational purposes only. Nothing here is financial advice. Past performance does not guarantee future results, and trading carries a high risk of losing money, so only trade with money you can afford to lose. Read the risk warning.