A secure VPN connection will porotect your sensitive data

Is my money safe with an online broker?

Your long-term wealth and financial goals can be met when you start investing with a brokerage account. But if you are new to the investing and trading world, you might wonder, is your money safe with one? 

Honestly, there is a risk in investing. Even if you put your money in safe and stable assets like bonds, your money is still at risk. But as an investor, you get some basic protections when you put your money into a brokerage account.

Is your money safe in a brokerage account?

It is always good to check if your money is safe with your online broker. Source Active Trades
It is always good to check if your money is safe with your online broker. Source Active Trades

Many people have lost money in their brokerage accounts. But it mainly happens because they make poor investment choices. Or they make good choices that do not work in their favor. 

Let’s assume you have purchased 10 assets at $100 each. It makes your total investment $1,000. If you have left the stocks and the prices fall to $60, you face a loss of $400 on your investment. 

Now you have two options: let the shares stay in the market and wait for their value to increase. Or you can get impatient and cash those shares. In this situation, you will lose $400, which is your loss, not the broker’s account. 

But there is a chance that something might happen to your actual broker account. For instance, you will lose money if it shuts down for violating regulations. It will be your broker account’s fault and not yours. 

Fortunately, brokerage accounts have SIPC (Securities Investor Protection Corporation). It claims to offer up to $500,000 to each broker account with a cash limit of $250,000. So, if your broker account shuts down or faces any similar situation, you won’t lose money. 

The only time you lose money is when you make poor trading decisions or when you sell your assets after their value decreases.  

Assessing your risk

There are high and less volatile assets. It depends on the risk tolerance of the trader in which asset to invest
There are high and less volatile assets. It depends on the risk tolerance of the trader in which asset to invest

Not all the traders in the market have similar risk tolerance. Some have more, while others have less. Also, some assets are more volatile (riskier), while others are less volatile. So, risks for each trader on different assets are different. 

For example, cryptocurrency like Bitcoin is highly volatile and carries a lot of risks. If you don’t have a high-risk tolerance capacity, you might want to avoid trading cryptocurrencies. 

Before investing in a potential asset, always asset your appetite and compare it with the profit you can get as a reward. If you truly want to earn profit from trading, let your assets stay in the market for a long time

The trading market always rewards people who stick for the long haul. Plus, you also get SIPC protection, ensuring you won’t lose money.

Trade more than 3,000+ markets from 0.0 pips spread without commissions and professional platforms:

(Risk warning: 78.1% of retail CFD accounts lose money)

How to stay safe when trading online?

With the popularity of the trading market, many trading brokers have entered the trading world. This thing has made security one of the main worries. 

To trade without worries, you must ensure everything goes as planned. Every good trader needs to know how to stay safe while trading online

We have listed simple steps you can consider to make the trader safer:

1. Consider safe browsing

Before you start trading online, you need to consider your online security. For this, you can secure your PC, internet connection, and mobile devices. Avoid clicking on unsecured websites that could expose your device to malware.

2. Use a secure VPN connection

Many brokerage firms offer secure trading platforms to their traders, but as an alternative, you can invest in proper VPN service. With secure VPN connectivity on your side, you can rest assured about the safety of your money. 

Additionally, with a reliable VPN, you can trade from any place without getting hacked. VPN will protect your sensitive data even when you are using public place WiFi.

3. Choose a strong password

Combine special characters and numbers by setting up your online trading account password
Combine special characters and numbers by setting up your online trading account password

Not having a strong password can make you an easy target for hackers. That’s why you must have a strong password to ensure everything is safe and sound. 

The best thing to do is opt for password manager software to manage and remember passwords easily. Alternatively, you can create a password by combining special characters and numbers.

4. Beware of a stock scam

Lastly, you need to be aware of dangerous stock scams. Common internet frauds like “pump and dump” can steal away your money, leaving you with nothing. 

Here’s how you can avoid the stock scam:

  • Always check the source of the stock before making a trade
  • Verify the information instead of trusting everything that a company says
  • Check where the stock trades

Conclusion money safety with online brokers

Trading assets is an easy way to earn more money. But the popularity of trading platforms has increased the possibility of scams and risks in the market. 

Fortunately, trading brokers take numerous steps to ensure the safety of their registered clients. However, if you are not satisfied, you can use a reliable VPN connection, create a strong password, and consider safe browsing.

Trade more than 3,000+ markets from 0.0 pips spread without commissions and professional platforms:

(Risk warning: 78.1% of retail CFD accounts lose money)

Last Updated on June 4, 2023 by Yuriy Kunets