Does SIPC protect me from losing money on a bad trade?

No. SIPC covers broker failure, not market losses, bad advice, or losses from trades you authorized yourself.

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Is my trading account balance protected if my broker fails?

Q: Is my trading account balance protected if my broker fails?

Most U.S. brokers are SIPC members, which protects customer securities and cash up to a standard coverage schedule if the broker fails financially. It does not protect against investment losses.

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Check What You Know

Check every statement that is currently true for your account and your own knowledge of how it is protected.

My brokerage is a member of the Securities Investor Protection Corporation (SIPC).
I know SIPC protects against my broker's failure, not against my investments losing value.
My combined securities and cash at this one broker fall under the standard SIPC coverage schedule (as of writing, $500,000 total per customer per separate capacity, including up to $250,000 for cash).
If my balance is large, I have considered spreading funds across more than one broker, or across separate account titles such as individual, joint, or IRA, since each separate capacity gets its own coverage limit.
I know whether uninvested cash in my account sits in a bank cash-sweep program (often FDIC-insured) or in a money market fund (typically SIPC-covered as a security) instead of raw broker cash.
I have checked whether my broker carries any additional private insurance above the standard SIPC limit.
I keep my own copies of statements and trade confirmations outside the broker's platform.
I understand SIPC does not cover investment losses, bad advice, or fraud losses from trades I authorized myself.

Your Result

Check the statements that apply and click Check My Protection to see your result.

How this is calculated

Each checked box adds one point, out of 8 possible points, toward how well you understand and have positioned your account's protection.
A score of 7 to 8 reads as Well Protected. A score of 4 to 6 reads as Some Gaps. A score of 0 to 3 reads as Check This Now.
SIPC coverage protects customers if a member brokerage fails financially and customer securities or cash cannot be fully recovered. It does not protect against a stock, option, or fund losing value, and it is not the same as FDIC bank deposit insurance.
The standard SIPC coverage schedule has been $500,000 per customer per separate capacity, including up to $250,000 for cash, for a long stretch of years. Confirm the current figure directly with SIPC, since the schedule can be updated.
This checklist covers general awareness, not a review of your specific broker's financial condition or your account documents.

Risk & liability disclaimer: This tool is an educational self-check checklist only. It is not financial, legal, or investment advice, and it does not verify your specific broker's SIPC membership, insurance coverage, or financial condition. Trading Habits is not a broker-dealer, registered investment adviser, or insurance professional, and is not affiliated with SIPC, FDIC, or any broker, exchange, or data provider. Confirm current coverage details directly with SIPC (sipc.org) and your broker.

Is my trading account balance protected if my broker fails?

Check What You Know

Your Result

How this is calculated

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