If you know and understand how profit is earned on forex, you are less likely to fall for a scam that promises fast and huge profits. Photo: African News Agency (ANA)
If you know and understand how profit is earned on forex, you are less likely to fall for a scam that promises fast and huge profits. Photo: African News Agency (ANA)

A forex scam and a regulated trading partner … know the difference

By Sizwe Dlamini Time of article published Jul 13, 2020

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JOHANNESBURG – Have you received an increased amount of direct messages (DMs) on your social media accounts telling you about crypto trading or trading forex since the beginning of the Covid-19 lockdowns?

I certainly have seen a spike in such DMs. The question is what to do? To bite or not to bite? A quick Google search on forex comes with results such as: “Is forex a pyramid scheme? Is forex legal in South Africa? Is it worth it to trade forex?” among several other related questions.

The short answers: No forex is generally not a pyramid scheme. Yes it is legal to trade forex in South Africa, as long as you abide by financial laws that prevent money laundering and you declare your income tax. Forex may be an opportunity that enables you to invest some money to make more money.

Forex trading has emerged as a popular career, especially for people with a financial background, largely due to its high liquidity and easy accessibility. Forex trading, however, certainly has its disadvantages, such as high risk and volatility.

The Forex trading market has come a long way over the years and several brokers have established a strong and positive reputation. But there are numerous unreliable forex brokers in the market that traders need to be aware of and avoid.

Regenesis Markets chief executive Glen Howell shares some insight on how people can get scammed by unregulated forex brokers and how they can avoid that from happening. He says it is very important to identify brokers that are reliable and transparent when you’re looking to trade forex.

“The forex market is the largest financial market, leaving an opportunity for some scam artists who just want to steal money from people. The best way to ensure the safety of your investments is to trade over a secured platform which can only be provided by regulated brokers.

“In order to protect yourself from a forex scam, educate yourself on Forex trading, do thorough research on the broker you are wanting to partner with and know how to check a broker.  Most forex scammers get clients with ‘attractive’ offers that come with quick profits and no financial risks,” he says.

Howell says experienced and educated traders are unlikely to fall under the trap of scammers. The best way to protect yourself from being scammed is to constantly educate yourself on forex. If you know and understand how profit is earned on forex, you are less likely to fall for a scam that promises fast and huge profits.

“We are currently living in difficult times and if you are wanting to go into trading, it is important to make sure that your money is being handled by a reputable broker.  Forex brokers that are regulated prioritise providing their customers with high-quality customer service.  A credible broker stays updated as the knowledge of current developments contributes to a good reputation and the provision of great service.

“To avoid falling victim to a forex scam, make sure that you always use a regulated that has favourable reviews and a good reputation and is also 100 percent transparent.

Questions you need to ask before dealing with a forex broker:

  • Is it easy for you to contact the customer service?
  • Has there been any legal action taken against the company?
  • How quickly do they respond to your queries?
  • Is there a physical address for the broker?
  • Are there any complaints or bad reviews on the company?
  • Is there a proper binding contract in place?
  • Do the offerings seem too good to be true?
  • Are there any good reviews/articles on the company?

Howell says dealing with a broker that is in compliance with the Financial Services Conduct Authority (FSCA) ensures that despite whatever may happen in the trading market, you maintain final control of your money.

BUSINESS REPORT

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