A trading account is an online investment account which you can use to trade (buy or sell) securities like stocks, trade currencies, commodities, indices etc. The overwhelming surge in the number of new retail traders in the UK has further created a wider opportunity for scammers. In 2021, it was reported that more than £1.3b was lost to scams in the UK.
Most scammers target traders by hacking their accounts, especially MT4 accounts because of its popularity. They also create fake copies of MT4 software or send fraudulent emails with malicious links to get their victims.
Most of these scam victims are beginner traders, but there are also some professional traders who failed to take precautions.Although in some cases, it could be possible for you to recover all or a part of your money if you were scammed. The chances of this are however very slim and not guaranteed.
Most brokerage companies do not take responsibility for clients’ losses which are cybercrime related. Nonetheless, UK agencies such as Action Fraud, and National Crime Agency keep educating citizens on how to detect and protect themselves from scammers. In some cases, National Trading Standard Bureaucan track down scammers and prosecute them. If possible, they also help fraud victims to recover what they have lost.
Has My Trading Account Been Hacked?
1. Check If Your Broker Is FCA Certified
One of the very first things to do to protect your trading account from scammers is to check if your broker is regulated by the Financial Conduct Authority (FCA) thatregulates both the United Kingdom’s financial services and financial market.
If your broker is not regulated by the FCA, you are likely to be dealing with a scammer, and you are prone to losses. In the instance where you are scammed while dealing with an unauthorized broker, it will be hard for government agencies to help you with recovery.
Depending on the securities & instrument that you want to trade, you should check if your broker is regulated to offer that instrument legally.
There are licenses issued to brokers for forex trading, CFDs, equities trading etc. & you should search for a relevant broker & verify their license.
For example, with some basic research you can find that there are only a few licensed brokers with apps for forex trading in the UK which are regulated with the FCA. But there are 100s of apps listed on App stores for forex trading, mostly by unlicensed forex brokers. Only when you do your due diligence & trade via a licensed dealercan you be assured that your funds are safe & you will be able to get regulatory protection in case of a dispute.
2. Check Your Account History Regularly
Your trading account’s history contains all the trade operations you undertake on your trading account. It shows you all your executed trades, charges and fees.
If you regularly check your trading history, this will alert you of any error or misconduct by your brokerage firm. Checking your trading history will also help you to discover if there has been overcharging, or any unauthorized trading on your account.
You should immediately report any discrepancy in the accuracy of your trading history to your broker, and relevant regulatory agencies.
You should also watch out for future and option contracts in your account history for the accuracy of your transaction. If a scammer accesses your trading account, he can buy futures contract which can obligate you to buy worthless stock at a premium from the scammer at a future date, or to sell your own stock at a discount to the scammer at future date. If you don’t detect it on time you are bound to abide by the terms of the contract.
3. Inability to Login to your Trading App
It could be a man-in-the-middle (MITM) attack if you are experiencing some difficulties logging into your account.
MITM attack is a sort of eavesdropping attack where attackers will interrupt an ongoing conversation, or data transfer. MITM attacks are often difficult to detect. However one common attack involves DNS poisoning.
When you type the name of a domain say ‘www.pepperstone.com’ it goes straight to a Domain Name Server (DNS) which converts what you typed, into the IP address for pepperstone servers. This then takes you to the pepperstone server for you to login.
However In a DNS poisoning MITM attack, the scammer ‘poisons’ the DNS server causing it to convert what you typed, into the IP address of the scammers rogue server which hosts a copycat pepperstone page.
When you attempt to login, it may take a while, or go blank and during this time, your login details are recorded and sent to the scammer.
We also have DNS spoofing which is another word for impersonation. In this case the scammer convinces your computer that he is the DNS server, and simultaneously convinces your DNS server that he is your computer. By doing this, all your data passes through him and he can see what you are doing.
This is why when you have difficulty logging in, it may be a sign something is wrong.
4. Suspicious Alerts
You should watch out for important notifications such as suspicious log-in activities, suspicious transaction alerts, failed transactions and 2FA verification code alerts.
If you find any suspicious activity that involves your trading account or you receive notification of any suspicious activity on your account, you should quickly reach out to your broker.
Oftentimes, these suspicious activities are malicious and they can cause you to lose ownership of your trading account. A recent study showed that 43% of online login attempts are malicious.
You are likely to get notification of unusual activity on your account. Notifications to look out for include: log-in from another device, unusual location, failed transaction or password change.You can also further protect your account by using a suspicious log-in detection solution.
5. SIM Swap
Ordinarily, a SIM swap is when youcontact your network provider to move your phone number and profile to a newly purchased sim card, because you lost or damaged the old one. SIM swap fraud is however when this is being done without your knowledge to undertake fraudulent activities.
Although, a significant number of trading applications use two-factor authentication (2FA) to protect their customers against fraudsters, scammers however use sim swap fraud to gain access to victims’ trading accounts.
After getting hold of your trading account password, fraudsters will attempt to get a new sim card issued against your registered mobile number. After this, they can get the One Time Password (OTP) they need to beat 2FA.
Many celebrities have fallen victim to sim swap fraud. Prominent among the celebrity victim was the former chief executive officer of Twitter, Jack Dorsey. In 2021, the British police also arrested eight suspects who used sim swapping attack to steal over $100M from celebrities.
To protect yourself from sim swap fraud, if you lost your sim or it was stolen, you should contact your network provider immediately to block that sim for you. You should also call your broker or bank to block any transaction on your account. You can thereafter apply for a sim replacement.
6. Check If Copy Trading Has Been Activated
Copy trading is the process of directly copying the trade position taken by another trader. It is marketed to those who do not have time to watch the market, and want to follow other traders.
You choose the master trader you want to copy,and your trade direction will automatically follow that of the master trader. You can stop the copy, and add or remove funds at any time.
However, if you do not trade often, a scammer can do this on your account without your knowledge. After gaining access to your trading account, scammers can use your account for pump and dump to their benefit.
If you however check your copy trading account often even when you do not trade, you could notice strange activities earlier. This will allow you to stop your account from further loss if it has already been hacked by scammers.
7. Stop Loss Hunting
Stop loss hunting is a strategy often used by big players and some brokers to force some traders out of their position by driving the price of an asset to a level where many traders have set their stop loss order.
If the stop loss hunting is successful, it will trigger many stop losses at once. It will create huge volatility and gives a rare trading opportunity for the big players also known as ‘Institutional players or Whales’. Some brokers also participate in stop loss hunting.
In every stop loss hunting, there is always the hunters and the prey. The hunters are the big players while the preys are the retail traders. Stop loss hunting force the retail traders out of their position while it gives the big players trade momentum.
The volatility can make the hunters to double their trading accounts or increase it aggressively in record time.Stop loss hunting is a sort of market cheat that can cause you significant damage. If you notice stop loss hunting while trading, it is very likely that your broker is a scam.
Genuine and reputable brokers do not just stay away from stop loss hunting, they also prevent their brokerage platform from being used for stop loss hunting.
