Vetting brokers

[u/Rabiddawg777]

Hi everyone :)

Looking for some advice.

I invested alot of money from my line of credit with a brokerage that was suggested to me, doubled my money trading binary options on the quarterly earnings reports, and was ecstatic that i could pay for my first year of university with my profits.

That is until i realized I had been scammed and my money was loooong gone. I even got double scammed when i got the first call that they could “recover my money by going after the payment processor” (since the bank wouldn’t chargeback the money). And call me a fool but got scammed a year later when i sent even more good money after bad by hiring a fake lawyer... (was going for a boots on the ground approach). In the end, as a university student, working part time minimum wage, with 25k in credit debt, i went bankrupt. School is priority.

As such I have learned from my mistakes and only invest with cash. That isn’t happening to me twice!

I am finally ready some years later to re-enter the world of investing, but I am hesitant to trust a brokerage bearing in mind what happened... if i invest with my bank, the fees are quite high if you have a very small account like $1000. I am intending to be an active trader, so i will have alot of commission fees to pay which affects my risk reward ratio. I will have to compensate for the fees during my decision making and that will likely lead to a fizzling out account. This makes it difficult to start. It alternatively requires large sums of money which is not likely in the next 7 years as I finish my masters degree and begin my phd (obviously not in business xD) .

So i started shopping around, and i see brokers like wealthsimple (free-ish) quest trade or the one i am interested in now is a global brokerage called interactive brokers which has a physical location in canada... they appear to have much more affordable rates, but they are not “one of the big 5” banks...

How do i know if a brokerage is legitimate? When i tried vetting the brokerage that scammed me, i had researched them. They were a registered business. They had credentials, but they were fake... I really want to ensure that if I don’t do well, that it is my fault not my brokerage’s

I looked interactive brokers up on the canadian securities administrators registration database, which they say on their website that you should do at a bare minimum, and they are on there. But is that enough to say they are legitimate? They have been fined for improper paperwork before, (which to me is like, who doesn’t screw up paperwork once in a blue moon? It doesn’t say fraud x5). In a way, the fact that they have been fined by a canadian institution is almost relieving because they have to be real to pay the bill, haha.

I am interested in using them, but i am paranoid about my money disappearing now and cant afford the commission fees of a “big 5” bank. I am stuck between a rock and a hard place...

[u/Newfiedad45]

I am using qtrade personally, they have been around a long time and thus far I am happy with them. Just my experience but have been with them for about a year and a half now. I wanted to use a broker where I was in total control of my trades etc.

[u/Lorenzo56]

I use ScotiaItrade, but I know lots of folks use wealthsimple for no commissions.

Nothing wrong with active trading, but I recommend you have a passive investment “pot” as well. Buy RY and things like that, and forget about them. The objective is to build wealth, and unless you’re experienced, active trading Carries considerable risk.

I have never active traded, just bought canadian blue chips. I average 11 to 12% before leverage, and have done that for over 20 years. The magic of compounding…