Cybersecurity Risks Worth Considering in Online Trading

17 May 2024

Advancing net worth is as easy as a click. Democratized online trading platforms have expanded portfolios while increasing the chances of cybersecurity breaches. These websites are more popular and accessible than ever — and threat actors know this.

Techies and investors with accounts on these sites must acknowledge the threat landscape. Hackers grow their skills and creativity daily, so cyber hygiene equates to financial stability.

Overview of Cybersecurity Risks in Online Trading

Moderators, administrators, and users alike must remain alert for signs of security compromises. Their frequency dictates the reputation of all trading platforms, reducing trust in investors. What are the most prominent cyberattack variants on online trading sites?

Server Misconfigurations

Most online traders are in service thanks to third-party cloud providers. External hosts own data centers, which are equally vulnerable to cyberattacks if unprotected. While outsourcing provides boons, trusting public vendors to maintain security standards is tricky.

One recent incident occurred on the Forex trading site, FBS. One server was left without encryption or passwords, leaving 20 terabytes of data open for the taking. Hackers may not need advanced techniques to compromise billions of users' information. They merely need to look around for negligent trading companies.

Social Engineering and Insider Threats

This is one of the most stealthy cyber intrusions because cybercriminals manipulate real people instead of digital assets. Brokers inside the firm may work alongside criminal outfits and be bribed or blackmailed into helping them. Alternatively, the insider threat may have been a double agent from the beginning of their employment. It gives immediate ingress behind cyber defenses that are hard to catch. This allows those under the influence of social engineering to manipulate the market or commit fraud from within.


It is common for hackers to resemble trusted sources, such as emails or websites. Transferring funds from a trading account is as simple as investors handing over the information.

Spear phishing is prevalent in high-profile environments. This tactic targets specific individuals or small groups. It could coincide with whaling, which jeopardizes individuals with high net worth or a lot to lose. People who don’t develop a risk management plan for their portfolio may feel the brunt of spear phishing more than others.

Malware and Ransomware

Threat actors will stop at nothing to take over trading software, records, servers, and systems. They do this with malware and ransomware because hackers know the people they are attacking have the funds on hand. The likelihood that criminals will receive payment for stolen information is high in fintech. Impulsive, emotional investing is already a risk for online trading volatility, and this phenomenon is worse with cyberthreats.

Vulnerabilities in Online Trading Platforms

Online trading organizations suffer from cyberattacks because of security oversights. Users and staff must recognize these solutions to the most notable red flags. The repercussions are drained funds and stolen identities, to name a few.

Inadequate Authentication Measures

These sites may not have as comprehensive verification as they could. This goes past login strategies, such as two-factor authentication or using biometrics. Authentication measures must occur while traders explore the platform. Is it set up to identify unusual account access attempts or allow transactions and communications to occur without encryption?

Poor Compliance Adherence

Many websites do not follow agency best practices. They need to adhere to cybersecurity frameworks, among others. This includes data protection policies and anti-money laundering legislation, and trading platforms must practice due diligence to prevent it. Spontaneous withdrawals of specific varieties should not be allowed in a secure program.

Insecure APIs

If communication between multiple components in online trading software is insecure, then the rest of the platform is, too. Compliance expert OWASP provides many suggestions for protecting APIs, such as reviewing unrestricted resource consumption or server-side request forgery.

Best Practices for Securing Online Trading Accounts

Everyone involved in online trading must adopt industry-leading habits to lessen attack severity. Easy-to-implement suggestions include:

  • Establishing two- or multifactor authentication with text, email, and biometric options
  • Using strong password guidelines
  • Automating updates for trading software to the most recent versions
  • Securing internet connections and servers
  • Updating firewalls
  • Setting up alerts for suspected malicious activity
  • Getting to know a reputable broker
  • Writing a cybersecurity incident response plan

However, the most beneficial way to secure websites is to educate and motivate employees for these trading sites. Disengagement and alert fatigue are rampant in cybersecurity circles. It makes most breaches a result of human error instead of a system fault.

Regulatory Frameworks and Compliance Standards Protecting Traders

Regulatory agencies work tirelessly to update and innovate on existing security standards. Fintech is vulnerable, so it requires special attention. Organizations and laws overseeing financial services and preventing brokerage fraud concerns include:

  • U.S. Securities and Exchange Commission (SEC)
  • Securities Investor Protection Corporation (SIPC)
  • Financial Industry Regulatory Authority (FINRA)
  • General Data Protection Regulation (GDPR)
  • Payment Card Industry Data Security Standard (PCI DSS)
  • International Organization for Standardization (ISO) 27001
  • Open Worldwide Application Security Project (OWASP)
  • Hypertext Transfer Protocol Secure (HTTPS)

The implications of noncompliance are severe for sites and traders, yet many are underperforming. Few requirements for transparency exist, and despite guidelines, not every platform is overseen by authorities.

Emerging Technologies for Enhancing Online Trading Security

Several strategies cybersecurity analysts employ to fight hackers have become antiquated. Advanced technologies are necessary to adapt to sneaky revolutions in the hacking world.

Blockchain is one of the most competitive options for increasing defenses. Its use of hashes and ledgers makes it one of digital spaces' most substantial verification measures. Tracking transactions has never been more transparent and certifiable. Blockchain is not a perfect technology, but enhancements are developing it into the cybersecurity behemoth the industry is begging for.

AI-driven solutions have the most growth potential. The technology still needs refining, but it could be the most versatile and effective at stopping cybercriminals from entering online trading sites.

It would use machine and deep learning to understand the most prominent risk variants on the site.  Designing isolation and remediation tactics with minimal human intervention would make it more proficient.

Wiser Online Trading to Beat Hackers

Breaches in any industry could be destructive, but online trading platforms have access to countless dollars and data points. They are enticing targets for experienced cybercriminals. Enforcing strict cybersecurity regulations is vital, regardless of upfront investments and complexity. Fintech cannot afford the losses, and neither can its customers. Private and governmental collaboration is necessary to combat threats in digital landscapes.