What’s With All the Trading Account Questions?
More and more traders join the financial market every day. Yet, just as many seem to be deterred exactly by what is meant to protect them, and their accounts – the authentication questionnaire. Which is why you need to read this article, before you open a trading account, or in case you were wondering, just like many other traders: ‘What’s with all the questions?’
We’re gonna discuss that (almost interminable) row of questions that you need to answer right before depositing into your account. And, what most of you don’t understand is that by doing so, you make sure no one else can access your account – or, what’s even more important – withdraw from it.
You wouldn’t go to the bank and open an account without proving who you are, where you live, or whether or not you can afford the activity you want to perform (like making a loan or applying for an investment account). So why wouldn’t you do the same when it comes to your trading account?
It’s actually pretty simple, and we get it. You’re concerned about the good intentions (or more likely not so good intentions) of the Company you’re applying to open an account with. But this shouldn’t be a cause of concern. And we’ll explain why you need to answer all of them below.
Safety is our number one priority
To better understand the intentions of the broker, you’ll first need to make sure it’s actually a serious company. If you’re not sure what to do, read the “Regulations and Account Verification” blog post to identify all the steps you need to take before opening a trading account (with a serious and regulated broker).
To respect the regulations, every company providing financial services over the internet needs to request these details from their clients. Unless you can’t find all the legal information about the company you want to open a trading account with, the presence of such questionnaires shouldn’t concern you, but rather their absence.
Money laundering, identity theft, credit card fraud, proper age and other such suspicions can all be settled by the provision of your personal information. And we couldn’t stress this enough, but you should also perform a very thorough screening of the broker you’re planning to trade with.
If you opened at least one trading account before, you should have noticed that the first part of the questionnaire is dedicated to your personal details, financial and educational status, and to what motivates you to enter this market.
Worldwide regulators came up with this set of questions in order to make sure that financial companies aren’t the instrument of any financial fraud schemes (from the outside or even inside of the firm), thus making them more secure for their clients and investors.
That is why all regulated trading companies will ask your personal identification details, in order to ensure you’re the sole user of the account, the card/bank account holder, and that you’re not trying to ‘hide’ money through the company. Keep in mind that the only way to secure our clients’ accounts is by making sure the company also stays safe.
What is the appropriateness test and why everyone has to pass it?
We’re however convinced that once you really sit and think about it, you’ll understand that it’s in your best interest to follow all the steps that regulators have implemented, in order to make the registration process as secure as it can get.
You might be more inclined to complete the quiz once you’ll find out that part of those questions are meant to protect you from the risk of entering the markets without any kind of information about what you’re getting into.
In fact, the second and third parts of the questionnaire you’re filling up make sure of it. Regulators and serious companies care about these things and obviously not intruding in your personal financial information. We need to make sure that you can afford to enter these markets, that, as you should know by now, carry high risks for traders (especially for the unprepared ones).
As a company that cares about its customers, we want to make sure that you can afford to invest the amount of money you’re planning to, and that you will only do it once you fully understand what the market is all about. That is why we ask how much you’re planning on investing, from how much you currently have, or might have within a year’s time.
To verify that you actually understand the markets, we ask a few basic questions that every trader that has at least read a trading eBook should have the ability to answer. And although it might seem otherwise, just know that we ask all of these questions to better understand you and how we could better assist.
And what if you fail?
Working together with regulators, brokers came up with effective ways to give traders a second chance if, for various reasons, they fail to pass the test. The best way is to take a cooling-off period during which, if you haven’t already devoured our educational material, you’ll be directed to improve your trading knowledge.
Obviously we’d rather enjoy all the opportunities with you from the start, which is why for your best interest you should take advantage of eXcentral’s Interactive Courses, Trading eBooks, Video-Tutorials and Live Webinars.
Don’t forget that each week, our outstanding Market Analyst, Michalis Efhtymiou, offers from his very precious time to his most passionate traders through the 1-on-1 sessions. Have you had yours yet? If not, contact your Account Manager, and ask to schedule it right away!