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Goldman Academy
Academy › Level 1 · Beginner

Choosing a broker safely: regulation, red flags and scams

Beginner⏱ 9 min readUpdated 31 Oct 2026
GC
Written by
Goldman Academy
F
Reviewed by
Faisal
In this lesson you'll learn
  • Why regulation matters and how to check it
  • The questions to ask before depositing
  • The warning signs of a scam broker

Your broker holds your money

Before strategy, before platform, there's one question: is your money safe with this company? A great strategy is worthless if the broker refuses withdrawals.

Check the regulation yourself

Strong regulators include the FCA (UK), ASIC (Australia), CySEC and other EU regulators, and CFTC/NFA (US). Many African and Asian countries have their own (for example the FSCA in South Africa, the CMA in Kenya and Uganda). Offshore licences (some island jurisdictions) offer much weaker protection.

  1. Find the licence number on the broker's website footer.
  2. Search it on the regulator's own website, not via a link the broker gives you.
  3. Check that the website address and company name match the register entry. Scammers copy real brokers' licence numbers ("clone firms").
  4. Check which entity your account would be with: many groups have a strong licence for one region and an offshore one for others.

What good regulation gives you

  • Segregated client funds: your money is kept apart from the company's.
  • Negative balance protection (EU, UK, Australia): you can't lose more than you deposited.
  • A compensation scheme in some countries if the broker fails.
  • A complaints body that can force the broker to act.

Red flags

  • Unsolicited calls or messages, and an "account manager" pushing you to deposit more.
  • Bonuses that lock your money until you trade huge volumes.
  • Withdrawals delayed, refused, or requiring a new "tax" or "fee" first.
  • Only crypto deposits to a personal wallet.
  • Promises of guaranteed profits.

Test any new broker with a small deposit and a small withdrawal before sending more.

Common mistakes
  • Trusting a licence logo without checking the regulator's register.
  • Accepting a deposit bonus without reading the withdrawal conditions.
  • Depositing everything before testing a withdrawal.

Check yourself

1. Where should you verify a broker's licence?
2. What does negative balance protection mean?
3. A broker asks for a "release fee" before paying your withdrawal. This is…

Key takeaways
  • Check the licence on the regulator's own register, and which entity you'd be with.
  • Segregated funds and negative balance protection matter.
  • Test with a small deposit and withdrawal before trusting a broker.
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Education, not advice. Goldman Academy teaches how markets and tools work. Nothing here is a recommendation to buy or sell, and no lesson promises profits. Trading leveraged products carries a high risk of losing money; only trade money you can afford to lose. · Written by Goldman Academy, reviewed by Faisal