How is my money protected by my online broker?
Trading requires that you put your money at risk. But what about the added risk of giving funds over to your broker?
As a trader, it’s important to know your account is securely protected, and your broker is financially stable.
What security measures are in place?
Online brokers and trading platforms incorporate a number of different security measures to protect the personal information and funds of users. The most reliable brokers will use high-end encryption, which makes it almost impossible for hackers to crack.
In basic terms, encryption is the process that scrambles data to make it readable solely by the intended receiver. The more detailed the algorithm is, the tighter the encryption will be. The highest level of security currently allowed by most legal systems globally is 128-bit encryption, which is used by most online brokers, including InterTrader.
Most brokers, again including InterTrader, require every user to have a unique username and password. Your personal information, including your sensitive financial data, will be hidden within this account.
How can I validate a security system?
You don’t have to be a computer wizard to find out if there are security systems working their magic in the background of your browser. In fact, there are some simple ways for you to determine that your session is being well guarded from hackers.
Depending on which browser you use, you may see a padlock or key icon beside the URL of the page you are visiting, which indicates how secure the page is. If you see the whole icon, often coloured green or accompanied by the word ‘secure’, you can rest assured that your transactions are being safely protected. In more technical terms, this means the page is encrypted.
How can I ensure my transactions stay safe?
Create a strong password: One of the best ways to protect your transactions and personal information is to have a strong password. We hear this advice all of the time, from social media to banking, and online trading is no different. Avoid using the same password for more than one website.
Keep an eye out for suspicious activity: Not only should you stay up-to-date with your InterTrader account activity, you should also keep an eye on your bank accounts. The minute you notice something suspicious, no matter how small, you should contact your broker. Often, the first signs of danger are phishing attempts, which try to uncover information from you. Even if you do not respond to fraudulent emails or phone calls pretending to be your broker, you should be sure to report them to your provider.
Be prepared: Make sure you are aware of our contact information so you can get in touch with us as soon as you notice anything suspicious. InterTrader offers 24-hour customer care, as well as an option to chat with us online.
Be aware of the customer agreement: Most trading is backed by a guarantee to return your funds if you are intercepted by hackers as the result of a weakness on the part of the trading platform system. InterTrader will refund any customer losses incurred as the result of third-party abuse through our own negligence, such as a failure to adequately secure our systems. All good brokers should have this written into their terms and conditions, so be sure to read through them.
Trade with a reliable broker
Aside from illegal security breaches, it is possible a company that holds your money can go out of business. You should check out what happens in this event. Are your funds covered by a compensation programme like the UK FSCS or the Gibraltar Investor Compensation Scheme?
First, consider the financial standing of your broker. Is it a listed company, like InterTrader, with substantial capital? Second, is your broker at financial risk if too many of its clients are successful? A market-neutral broker will not carry such risk. Finally, does your broker offer any extra protection for your trading funds? For instance, InterTrader provides all retail clients with a parental guarantee indemnifying all segregated client funds.
Whether through a parental guarantee or a compensation scheme, it’s important to know you are protected.
You should under no circumstances consider the information and comments provided as an offer or solicitation to invest. This is not investment advice. The information provided is believed to be accurate at the date the information is produced.