The broker decision is more important than any single trade. A bad broker can cost you the entire account through withdrawal denial, manipulated execution, or simple disappearance. Here is the 10-minute due-diligence framework.
Step 1 — Identify the legal entity
The broker website footer should name the company that will hold your account. Note the entity name and the regulator listed.
Step 2 — Verify the regulator
Go to the regulator's official website directly. Do not trust the link from the broker. Search the regulator's public register for the license number. Confirm the entity name matches.
Step 3 — Check enforcement history
Most regulators publish enforcement actions and warnings. Search for the broker name in the regulator's warning section.
Step 4 — Confirm country availability
Find the broker's "restricted countries" or terms-of-service section. Confirm your country is not restricted.
Step 5 — Read the cost structure
Spread, commission, swap, inactivity fee, withdrawal fee. All of them. The headline spread is usually the least relevant number.
Step 6 — Test deposit and withdrawal
Deposit a small amount you can afford to lose. Trade a few small lots. Request a withdrawal. The withdrawal process is the truest test of the broker.
Step 7 — Read recent independent reviews
Focus on reviews from the last 90 days. Look specifically at withdrawal experience.
Red flags
- License number that doesn't match the regulator register.
- "Guaranteed return" marketing.
- Crypto-only deposits at a "regulated" broker.
- Aggressive bonus promotions tied to volume requirements.
- Withdrawal complaints in recent independent reviews.
Next steps on ShaFX
- Free trading calculators — position size, pip value, margin, risk/reward, drawdown.
- Take a quiz on this topic and see what you missed.
- Glossary — precise definitions for every term used here.
- Compare brokers using our methodology.