Unfortunately, not before it’s too late for some, as shown by several discussions on this forum including this one.
First, it’s important to note how regulations vary from one jurisdiction to another.
As mentioned in our previous post, funds deposited with IIROC-regulated brokers are protected for up to $1 million by the CIPF. Funds with FCA-regulated brokers are protected for up to £50,000 per client by the FSCS. There are several historical examples of how these protections have worked for traders in the past.
If you can open an account with a broker regulated in these regions, that’s a great advantage. Note that most FCA-regulated brokers will accept applications from clients even if they live outside the UK, and the same protections apply: Broker Recommendations for beginners
Furthermore, while jurisdictions like the US and Australia might not have protection funds like the UK and Canada, they place other financial requirements on brokers. CFTC- and NFA-regulated brokers are required to maintain net capital of $20 million. By contrast, unregulated brokers have no such requirements or oversight.
Seat belts don’t prevent 100% of injuries and fatalities in car crashes. It’s still wise to use them. Similarly, it’s wise to use well-regulated brokers for trading.