Interactive checklist · Broker due diligence
Regulated forex broker checklist 2026
25 things to verify before you deposit with any forex or CFD broker. Tick each item as you confirm it — the progress bar tracks your due diligence completion.
Updated July 2026 · 25 checkpoints · Items marked CRITICAL are non-negotiable — do not deposit if you cannot confirm them
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1 — Regulation and legitimacy (4 items)
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Licence verified on the regulator's official register CRITICAL
Look up the broker directly on the CySEC register (cysec.gov.cy), FCA register (register.fca.org.uk), or the relevant authority's website. Do not rely solely on the broker's own "Regulated by" claim — verify it yourself. Confirm the licence is active (not suspended or revoked) and matches the entity you are opening an account with.
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Entity name on the licence matches the company you are contracting with CRITICAL
Many broker groups operate multiple legal entities under the same brand name. The EU-regulated entity (e.g., "eToro (Europe) Ltd") must match the entity shown in the account terms. Offshore "sister" entities under the same brand may not carry the same regulatory protections.
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Regulator is tier-1 (CySEC, FCA, ASIC, BaFin, AMF, or equivalent)
A tier-1 regulated broker is subject to MiFID II (for EU/EEA), strong capital requirements, and independent oversight. Regulators in offshore jurisdictions (SVG FSA, Vanuatu VFSC, Belize IFSC, etc.) have significantly weaker enforcement and investor protection frameworks.
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No FCA or CySEC warnings, alerts, or enforcement actions against the broker
Search the regulator's enforcement page and the FCA's Scamsmart warning list. Also search "broker name scam" and "broker name withdrawal problems" in a recent Google date filter. A single resolved complaint is different from a pattern of enforcement actions or multiple scam reports.
2 — Fund safety (4 items)
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Client funds held in segregated bank accounts CRITICAL
Segregated accounts means your deposited funds are legally held separately from the broker's operating capital. If the broker becomes insolvent, segregated funds should be returned to clients — they cannot be used to pay the broker's creditors. All CySEC and FCA-regulated brokers are required to maintain segregated client accounts for retail clients.
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Negative balance protection confirmed CRITICAL
Negative balance protection means you cannot lose more than your deposited balance. ESMA requires this for all EU retail clients. Confirm it explicitly in the broker's terms — some brokers only provide it for specific account types or apply it only to certain instruments.
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Investor Compensation Fund (ICF) or FSCS membership confirmed — cover amount noted
CySEC brokers participating in the ICF provide up to €20,000 per retail client if the broker becomes insolvent. FCA brokers in the FSCS provide up to £85,000. Note: this is insolvency protection only — it does not cover trading losses. Confirm participation and the coverage amount in the broker's regulatory disclosure.
✓
Broker holds sufficient regulatory capital CHECK
MiFID II requires regulated brokers to maintain minimum capital reserves (€730,000 for investment firms, higher for market makers). Publicly listed brokers (e.g. Plus500) publish annual reports disclosing capital adequacy. Private brokers should be able to confirm regulatory capital compliance on request.
3 — Trading costs and transparency (5 items)
✓
EUR/USD spread verified on the live platform (not just the marketing page)
Quoted spreads on marketing materials are often the tightest possible figure, shown during peak liquidity hours. Open a demo account and check the live spread at different times — during news events, Asian session, and pre-market. Compare the live spread to what was advertised.
✓
Commission structure understood — total cost per trade calculated
For ECN/raw accounts, the true cost = spread + commission (round-turn). A 0.0 pip spread with $7 commission = $7 per standard lot round-turn. Compare this against the all-in spread of a no-commission account. A "0.0 pip spread" account is not necessarily cheaper than a "1.0 pip spread" no-commission account depending on trade size.
✓
Swap / overnight rollover rates checked for instruments you plan to hold overnight
Swap rates (charged for holding leveraged positions overnight) can significantly erode returns on positions held for days or weeks. Check the swap rate for your target instruments directly in the trading platform (MT4: right-click symbol → Specification). For long-held positions, the cumulative swap cost can exceed the spread cost.
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Inactivity fees, deposit fees, and withdrawal fees reviewed
Some brokers charge monthly inactivity fees (typically $10–$25/month) after 3–12 months without trading. Some charge fees for wire transfer withdrawals. These fees are disclosed in the broker's terms and conditions — not always prominently. Read the fee schedule before depositing.
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No bonus conditions that lock deposited funds CAUTION
Deposit bonuses are banned for CySEC and FCA retail clients under ESMA rules. If you are being offered a bonus, verify you are dealing with the EU-regulated entity. Some offshore entities under the same brand may still offer bonuses with volume conditions attached that prevent withdrawal of deposited funds until trading requirements are met.
4 — Platform and execution (5 items)
✓
Demo account tested before depositing
Open a demo account and place test trades on the instruments you plan to trade. Check: order execution speed, slippage behaviour during news events (use economic calendar), stop-loss execution at your target levels, and whether the demo environment matches the live environment in terms of spreads and execution.
✓
Order execution model understood (Market Maker vs. STP vs. ECN)
Market makers take the other side of your trade (conflict of interest possible; managed by regulation). STP (Straight-Through Processing) and ECN (Electronic Communication Network) brokers route orders to external liquidity providers — no dealing desk. For active traders, ECN/STP execution typically means lower slippage and faster fills, especially during news events.
✓
Platform available on your preferred device (desktop, mobile, web)
Confirm the platform works on your primary device. Some brokers offer MT4 on desktop only, with limited mobile app functionality. If you plan to trade primarily from mobile, test the mobile app for the specific platform — not all MT4 mobile apps are equal in terms of chart tools and order management.
✓
Stop-loss and take-profit orders available and work as expected in demo
Verify that stop-loss orders are available for all instruments you plan to trade, that they execute as market orders at or near the specified level, and that slippage during fast markets is within a reasonable range. Some brokers impose minimum distance requirements between entry price and stop-loss — check this for your typical trade setups.
✓
Margin call and stop-out levels confirmed
Know at what margin level the broker will issue a margin call alert and at what level positions will be automatically closed (stop-out). Common EU broker settings: margin call at 100%, stop-out at 50%. Check the broker's terms — stop-outs below 50% mean a larger portion of your account can be lost before the automatic close activates.
5 — Withdrawals and customer service (4 items)
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Withdrawal process tested before depositing a large amount CRITICAL
Make a small first deposit, complete a small trade, and process a withdrawal before depositing a significant amount. Confirm that: the withdrawal request processes within the stated timeframe, no unexpected fees are applied, and the process does not require excessive additional documentation beyond standard KYC. This is the most important test of broker reliability.
✓
Withdrawal processing time and method confirmed
Standard EU broker withdrawal timelines: e-wallets (Skrill, Neteller) 24 hours; debit/credit card 1–5 business days; bank wire 2–7 business days. Some brokers offer instant withdrawal (e.g. Exness). Confirm whether the withdrawal goes to the same payment method used for the deposit (many brokers require this for AML compliance).
✓
KYC (identity verification) completed before depositing
Complete the full KYC process (government ID + proof of address + appropriateness/suitability assessment) before your first deposit. A verified account means you will not encounter KYC-related withdrawal delays when you want to withdraw. Some brokers allow small deposits before full KYC is complete — this is a red flag for potential withdrawal friction later.
✓
Customer support tested — response time and quality assessed
Contact support via live chat with a specific question (e.g. "What is the minimum stop-loss distance on EUR/USD for a standard account?"). Assess: whether you reach a human or bot, response time, accuracy of the answer, and whether the agent was able to resolve the question. Support quality during normal hours predicts behaviour during urgent trading issues.
6 — Suitability and personal fit (3 items)
✓
Appropriateness / suitability questionnaire completed honestly
CySEC and FCA-regulated brokers are required to assess whether leveraged products are appropriate for your experience and knowledge. Answer accurately. A broker that lets you self-certify as experienced without asking any questions may be cutting compliance corners elsewhere — this is a minor red flag.
✓
Risk disclosure read and risk capital clearly defined
Before depositing, define: the maximum total amount you are willing to lose across all forex/CFD trading (your risk capital). This should be money you can afford to lose entirely. Do not deposit funds needed for living expenses, emergency reserves, or obligations with a fixed deadline. Read the broker's risk disclosure — it is a legal document that describes scenarios including total loss of deposited funds.
✓
Position sizing calculated — no single trade risks more than 1–2% of account
Position sizing is arguably the most important risk management decision in leveraged trading. A common rule: risk no more than 1–2% of your account balance on any single trade. Use a position sizing calculator to determine the correct lot size for your account balance, stop-loss in pips, and risk percentage before placing any live trade.
Use the CompareFX position sizing calculator →
Red flags — stop and reconsider if any of these apply
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Guaranteed profits — no broker can guarantee trading returns. Any promise of guaranteed income is a definitive scam signal.
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Pressure to deposit more — legitimate brokers do not contact clients with urgency to add funds or take advantage of a "limited offer".
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Withdrawal declined or delayed without clear reason — legitimate brokers process withdrawals within published timelines; unexplained delays are a serious warning sign.
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Offshore entity despite EU brand — a broker marketing to EU clients but routing accounts through an offshore entity is avoiding EU investor protections.
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No physical address or opaque ownership — regulated brokers must disclose legal entity name, registered address, and regulator. Anonymous operation is a red flag.
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Unlicensed "account manager" contacting you — unsolicited contact from an "account manager" or "trading advisor" claiming to be from a regulated broker is almost always a scam.
Ready to compare regulated brokers? Use the CompareFX CySEC broker comparison to compare spreads, platforms, and protections side by side.
Compare CySEC brokers →
Frequently asked questions
How many items do I need to tick before depositing?
The four CRITICAL items (red left border) are non-negotiable — do not deposit with a broker you cannot confirm on all four: verified licence, entity match, segregated funds, and negative balance protection. Beyond those, completing 20 of 25 items represents a thorough level of due diligence for a first deposit. The remaining items become more important as your deposit size increases.
Can a broker pass all 25 checks and still be a bad fit for me?
Yes. Passing the regulatory and safety checks means the broker is legitimate and client funds are protected within regulatory limits. It does not mean the broker's spreads, platform, or instrument range are optimal for your trading style. A broker that is ideal for a scalper (low commission, ECN execution) may be worse for a long-term swing trader than a broker with no commission but wider spreads. The checklist covers due diligence and safety — not suitability for your specific strategy.
Does CySEC regulation protect me fully if the broker goes bankrupt?
CySEC regulation provides two layers of insolvency protection: (1) segregated funds should be returned to clients as they are legally separate from the broker's assets; and (2) if segregated funds are insufficient, the ICF covers up to €20,000 per retail client. This is meaningful protection for smaller retail accounts. For accounts significantly above €20,000, the segregation of funds is the primary protection — the €20,000 ICF cap becomes a smaller proportion of your exposure. Diversifying across brokers is one risk management approach for larger account sizes.
Risk and editorial disclosures. Trading forex and CFDs involves significant risk of loss — between 74–89% of retail investor accounts lose money when trading CFDs with leverage. This checklist is for educational due diligence purposes only and does not constitute financial or legal advice. CompareFX editorial content is independent of affiliate relationships. Some links on this page are affiliate links.
Full affiliate disclosure. Michalvi Empire LTD (HE 493986), Cyprus.