With COVID-19 causing unprecedented economic challenges and uncertainty, people are looking to online trading as a potential earner. Since the outbreak of COVID-19, we have seen forex trading’s popularity increase significantly.
This presents an opportunity for cyber criminals, with the finance industry facing more and more malicious attacks. During the first three months of the pandemic, Australia’s regulator (ASIC) reported a 20 per cent increase in investment scams.
With scammers and hackers looking to take advantage of opportunities caused by COVID-19, financial regulators around the world are asking traders and brokers to be vigilant online. FXCM’s data breach in January 2021 shows that regulated brokers can still be hacked, however, there is a stark difference between how unregulated and reputable brokers handle cyber security threats.
Traders can directly or indirectly be a victim of cyber-crime. Hackers can target traders directly by attempting to gain access to the traders' trading accounts via passwords, where they can transfer funds between accounts or they can target the broker. Brokers have records of clients' personal data, which can present major concerns to their clients.
While there are no brokers that can guarantee traders won't be a victim of cyber-attacks, there are several measures that will add protection when trading online. Beyond the standard measures anyone using the internet should take to protect their data – such as a secure password, firewalls, anti-malware software and not using a public server – the CompareForexBrokers team outline below three other overlooked considerations for protecting forex accounts.
1. Choose a regulated forex broker
Highly regulated brokers show far more diligence when handling the fallout from a cyber security threat. When Pepperstone’s database was compromised in 2020, the broker was quick to acknowledge, respond and reassure clients that their trading accounts and funds were secure. This level of transparency is less common with smaller brokerage firms and software providers, which may not inform traders when a breach has occurred.
Broker’s licensed by tier-1 regulators such as Australian Securities Investment Commissions (ASIC) are required to incorporate adequate risk management systems to strengthen cyber-resilience and to report issues when they occur. These brokers are expected to detect breaches, protect client data and accounts, respond to cyber-attacks and continually evolve to meet emerging threats.
Additionally, it’s expected that brokers are insured and keep funds to one side in case financial issues arise. View a list of the top ASIC regulated forex brokers in Australia.
2. Choose a broker with a reliable trading platform
As well as trading with a regulated broker, using popular mainstream trading platforms may reduce the likelihood of personal or sensitive information being leaked. Less popular platforms and even proprietary platforms may not have the funds or resources to regularly update and maintain their platforms with the latest security techniques.
For example, MetaQuotes Software, MetaTrader 5 (MT5), makes multiple releases each year and utilises rigid security protocols such as data encryption, extended authentication, server authentication, protection of configuration files and protection of passwords to ensure trading platforms and databases are protected against malicious attacks. MetaQuotes original trading platform, MetaTrader 4 (MT4), is also considered a safe option as it encrypts data between the trader and server, supports the use of RSA signatures and conceals a user’s IP address when they are making trades.
3. Utilise trading account security features
Post COVID-19, brokers and trading platforms are introducing further security measures to counteract the rise in malicious attacks. To deter hackers from accessing trading accounts, KYC (know your customer) and 2FA (two factor authentication) procedures are becoming common practice while brokers are incorporating security information as part of their forex education library to enhance overall cyber security.
KYC is a common requirement for regulated brokers that require an individual to satisfy a strict verification process before they can open a forex account, while 2FA reduces the risk of trading accounts being breached with secure log-in processes. Increased security education helps make traders aware of what they can do to protect their trading accounts.
By using a tier-1 regulated broker and proven trading platform and choosing the right broker, you can help yourself by reducing the likelihood of being a victim of cyber-crime. Cyber criminals are continuing to take advantage of the chaos caused by COVID-19, so it is worth taking the time to prioritise cyber-resilience of your account to counteract security threats when trading forex.