As a trader, calculating risk versus reward is something you automatically do with every trading decision. Yet today there’s something else you should be considering, and that’s cybersecurity.
In forex and crypto, virtually all trades are made through brokers and marketplaces — in other words, financial companies. With Forbes reporting that cybercriminals can hack into 93% of company networks, chances are that the companies you place your trust in as a trader are highly vulnerable.
To fully consider any possible risks in your trading decisions, this means you have to understand more about cybersecurity in forex and crypto. Read on to learn about how to continue keeping your trades safe in the Digital Age.
Cybersecurity risks in trading…
Forex trading is prone to many cybercrimes that anything online is also vulnerable to. Identity theft sees cybercriminals stealing credentials to forex trading accounts. This can be done by using malware to hack into a broker’s network or by using phishing emails to trick traders into giving their credentials.
Criminals can cyberstalk — or spy — on individuals with a high net worth to determine what their credentials and trading strategies are. They can also alter the values on a trading platform, causing you to place trades based on false data.
The end result is the same: compromised accounts are used to trade currencies, and cyber criminals take the profits afterward. Forex broker FXCM’s article Emergency Trading lists an exception: cyber warfare-spurred internet outages. Though not directly related to scamming forex traders, they can cause data bottlenecks — affecting the timeliness and profitability of placed trades.
Cryptocurrencies are more embedded in digital technologies than forex, so they are vulnerable to more than just the conventional cyberattacks mentioned above. The relative infancy of crypto means that the Internet abounds with many fake trading platforms, websites, and third-party software that trick users into divulging their personal information.
Since the blockchain allows users anonymity, the conventional cyberattacks that affect crypto are made harder to trace. This is exacerbated by the fact that crypto is not regulated by the government and financial authorities, unlike forex. This also makes it easier for hackers to pull off more complex scams like tax evasion and money laundering.
Finally, Cybersecurity Magazine suggests that crypto cyberattacks can happen simply because crypto is complex. The blockchain technology that powers crypto exchanges is not easy for everyone to understand. This ultimately means investors can make themselves vulnerable to cybercrime without realizing it.
Tips to more safely trade…
Choose brokers that prioritize cybersecurity
Go beyond simply choosing a regulated broker. Instead, look for brokers that use 254-bit SSL (or secure sockets layer) encryption, the same level of security used by banks and high-profile financial companies like PayPal. These brokers are also more likely to decentralize or disperse their data in different locations, so there is no central location cybercriminals can hack to access all of their client’s information in one go.
Look for secure trading platforms
The trading platform is where most of the action happens, making it a prime target for hackers looking to spy on your trades. The most popular trading platforms — like MetaTrader 4 and 5 — update constantly to introduce protections against the latest cyber threats. They also have features you can use to enhance security on your end, like know-your-customer and two-factor authentication procedures.
Do background checks on initial coin offerings (ICOs)
ICOs are great scams because they’re usually marketed toward beginner crypto traders. This makes it the perfect breeding ground for scams like Ponzi schemes and exit scams. Don’t fall for it! Jumpstart Magazine recommends avoiding anonymous founders — you can check this by Googling an ICO team’s credentials — and determining if its whitepaper is plagiarized.
Use a cold wallet
Storing all your tokens in one crypto exchange can be risky — if it gets hacked, all your holdings are gone. That’s why you should consider using a cold wallet. Generally speaking, there are hot and cold wallets in crypto. Using a cold wallet involves storing your tokens offline in a separate storage device. This makes it significantly less vulnerable to cyberattacks.
As modern technology makes our world more interconnected than ever, it’s important to consider cybersecurity concerns as you trade. Arming yourself with the information you need should help you keep your trades safe — and your returns high.
Want more crypto and forex advice? Head to our crypto category here on PhonesWiki.