Given everything that’s happened with GameStop recently and the pandemic before that, many people are now looking at investing in stocks and shares online.
Depending on how someone decides to handle their money, investments can yield good returns or be a risky gamble. But just like with most other things in life, research and due diligence will go a long way.
Instead of talking about how to minimize financial risks when investing, since there’s a lot of information available out there already, let’s look at security risks instead.
Because most people tend to invest via online apps and platforms these days, cybersecurity has become an essential part of investing.
Why is Security Important When Trading?
This question is probably pretty self-explanatory, but let’s explore this for a moment. Given how much money people tend to put into the different shares or ETFs they invest in, having that money stolen would be a major blow.
Like with internet banking, having strong security measures in place is essential to keeping an online trading account/portfolio safe. If hackers get access to a person’s device or accounts, they could:
- Sell their shares and take the money,
- Commit fraud or identity theft,
- Get access to their bank accounts, or
- Steal the money someone is investing while in transit.
How to Trade Safely Online
Here are a couple of things everyone should focus on when trading to avoid falling victim to cyber threats.
Vet the Platform or App Before Signing On
Properly research a trading app or platform before using it to make sure its services are legitimate. Also, make sure to look at any clauses and conditions to root out hidden fees.
Reviews can be a big help here since they tend to go into detail and unpack everything there is to know about a platform. Just keep in mind that a trading platform may work for one person but not for another, so be sure to shop around a bit.
Be Wary of Scams
When it comes to investments, scams and fraud abound. It’s one of the most persistent threats that any trader has to deal with. Don’t think this is just targeted at newbies either – even experienced investors fall victim to well-hidden insidious scams.
Be skeptical of anyone offering an opportunity to invest, especially if they make it seem too good to be true. There’s usually also a host of promises involved and a sense of urgency to make the investor feel like if they don’t act quickly, then they’ll miss out.
This is especially true for cryptocurrency scams; remember, a crypto investment will never yield any sort of guaranteed or regular returns.
Use a VPN to Secure the Connection
Most home networks aren’t incredibly secure, and public networks (such as at a restaurant) are entirely unsafe. People tend to visit unsecured websites as well, which increases their risks of getting hacked.
The solution is to use a VPN, and not just when trading either. What is a VPN? It’s a virtual private network (usually in the form of an app) that encrypts a device’s internet connection.
This encryption acts as a secure tunnel that encircles the data traveling to and from the device, preventing outsiders from accessing it.
Without a VPN, traders are vulnerable to man-in-the-middle attacks, SSL stripping, and many other threats. Read more about what a VPN is here.
Set Up Strong Passwords and Practice Password Hygiene
Passwords are still one of the most important mechanisms for keeping an account safe. Since trading portfolios are linked to online accounts, keeping these passwords safe becomes crucial.
The problem with passwords is that people tend to choose simple, easy to guess passwords in addition to reusing them for different accounts.
This gives hackers leverage to use brute force and dictionary attacks to guess passwords and to use password stuffing to get into a person’s various accounts. So not only is it important to apply good password hygiene to the trading account, but every other online account as well.
On top of that, it’s never a good idea to save passwords onto a browser for multiple reasons, so use a proper password manager instead. Setting up two-factor authentication for every account, but especially email and any trading accounts is smart too.
Make Sure the Device is Secure
Securing the device – or devices – being used for trading is just as important as securing the network connection. Besides using reputable antivirus and firewall software (for computers), it’s important to establish and keep good safety habits.
Yes, habits, because keeping a device secure doesn’t come down to downloading an app, and that’s that. It takes consistent and conscious choices.
Two big parts of keeping devices secure are sticking to reputable websites and vetting apps or software before installing them. Malware is hidden in many crafty ways and can infect devices without anyone ever realizing it.
Also, make sure to set up a pin to lock the device and keep any peeping toms or thieves out who might get access to the trading account.
The Bottom Line
There are many risks involved with online trading – volatile markets, stock spamming, and inflation. But cybersecurity shouldn’t be one of them. Follow these tips and stick to safe trading practices to make the whole investment process a lot less stressful. Buying stocks and shares has become a lot more accessible and clear-cut than it was in the past, so be sure to take advantage of that!