Trading Insurance Loss Coverage: Who Insures Your Investments?
In any trading or investing activity, trading insurance loss coverage should be considered as an important component of your risk profile.
Whether you are regularly trading the markets from swing or day trading definitions, or investing by buying and holding as a long-term strategy, you always want to be made aware of the tools a broker offers in order to protect yourself.
In this article, we will cover the most common questions around trading insurance loss coverage, and more importantly, how does Admirals protect its users in this respect.
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Who Insures Your Investments When Trading and Investing?
As you may be aware, when you are a client of a traditional brick and mortar bank, your funds are always insured up to a certain amount.
Very generally speaking, within the EU, this amount is usually up to €100.000 under the European deposit insurance scheme (EDIS). Often when a client's funds exceed this amount, the traditional bank will require you to contract additional bank protection products.
In recent years, many retail traders and investors are looking outside of the banks they became so accustomed to when looking to trade and invest. To put it simply, traditional banks are not keeping up with the changing demand and activity of the everyday individual and their financial activity.
Hence why online brokers and financial hubs (such as Admirals) become a more attractive option for those who want better control of their financial health and future.
When dealing with an online broker, it would be wise to choose a broker which provides trading insurance loss coverage. You can always inquire directly with the customer support, before registering an account with the online broker.
If the broker has a good general reputation (including a high TrustPilot score) and is registered with more than one regulatory body, there is a good chance that they will offer you some form of trading insurance loss coverage.
As you may know, at Admirals we are authorised and regulated by the Cyprus Securities and Exchange Commission (CySEC), the Jordan Securities Commission (JSC), the Financial Conduct Authority (FCA), and hold an Australian Financial Services Licence (AFSL) to carry out financial services.
As part of our commitment to serving our users in the best way possible, we always encourage you to first register with a demo account before using real capital in our trading and investment activity. You can sign up for a free demo account by clicking the banner, below:
Are Investment and Trading Losses Insured?
As we previously mentioned, as long as you are working with a reputable and regulated broker, you will likely have some form of trading insurance loss coverage on stocks and investments. It is important to check this before depositing any real funds, or even before registering an account with a broker.
Any type of investment vehicle and its return will be reflective of its risk profile. As the expression goes, the higher the risk, the higher the potential reward.
As a trader or investor, you must also understand and accept that there are always barriers and limitations to coverage provided. Investing and trading incurs risk, so any trading insurance loss coverage will only apply to certain requirements.
Are Brokers Insured Against Bankruptcy?
For quite a few decades now, since the business model of online financial brokers has come into existence, there has inevitably been the need for brokers to have some form of insurance from the regulatory body they are associated with.
This, along with many other reasons, is why it's so important for users to make sure the broker they join is regulated, ideally within multiple jurisdictions.
While, of course, the rules and insurance protection depend on the geographical location, all standard jurisdictions will provide broker insurance coverage, which in turn protect the clients of the brokerage.
For example, the Cyprus Securities and Exchange Commission (CySEC) has in place the Investor Compensation Fund (ICF). Currently, this covers up to €20.000 per eligible client within the jurisdiction.
It is also important to note, client funds are always protected via segregated client money accounts.
You can read more about financial security for your chosen jurisdiction, as to be optimally informed.
How Does Admirals Protect Client Funds?
Admirals has recently increased client trading insurance loss coverage to up to €100.000 for Admiral Markets Cyprus Ltd clients, and up to $100.000 for Admiral Markets AS Jordan Ltd clients.
Below, we will summarize how we work to achieve as much protection for our clients as possible:
- Trading Insurance Loss Coverage (Admiral Markets AS Jordan Ltd and Admiral Markets Cyprus Ltd): Up to $/€100.000 in funds protection, in case of an insolvency of the company. This covers all eligible cash and securities in your account.
In addition to the above insurance coverage, Admirals users also have access to:
- Volatility Protection: Limit maximum price slippage and losses on both market and stoop orders.
- Negative Account Balance Protection: Coverage for Professional client accounts concerning a negative balance with CFD trading.
Feel free to also compare our offers to see which account type work best for your needs as a trader and investor.
If you're new to Admirals, or to the trading and investment world overall, we encourage you always to first register a free demo account, before putting any capital at risk:
Other articles you may find interesting:
- How to Start Forex Trading Guide 2023
- Use MetaTrader Like a Pro With MT4 & MT5 Shortcuts
- How to Pick Stocks to Invest in
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.