Trading Forex in South Africa: How to Avoid Scams and Benefit from Reputable Brokers
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Investing in Forex can seem lucrative when searching for online opportunities, but there are some factors to consider before you start investing.
Although it is true that many people have found success when trading in Forex, there are just as many who have fallen victim to online scams and nefarious traders. This is often the case among those looking for reliable and reputable South African Forex traders.
Many websites and traders in South Africa offer a reliable and professional service while conforming to FSCA regulations. Unfortunately, those wanting to scam individuals online will know how to spoof these websites, and present visitors with a website that looks genuine.
As such, those wanting to invest in Forex will often be wary of South African Forex brokers. Fortunately, there are reputable Forex brokers in South Africa, but it is essential to know about the potential fraudulent sites many fall victim to.
What Type of Forex Scams Are There in South Africa?
There are several types of scams online, and although many are present in South Africa, it’s not rare to find them in other parts of the world. Fraudulent sites often promise a lot but deliver very little regardless of where the website is hosted.
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For example, some may advise you can earn a small fortune in minutes if you make a large investment. Similarly, other platforms offer automatic trading that can double, triple, or even quadruple your investment.
However, it is not only websites that lure in victims, as social media has been used to take advantage of those unfamiliar with Forex, often proving fake evidence of success. Those using social media for Forex fraud will offer to trade on your behalf and pay back your initial investment plus any returns.
Unfortunately, like some fake Forex websites, it is unlikely investors will see their money again, and some can pressure people for more money to make an investment stable.
Signs of a Fraudulent Website and Fake Social Media Accounts
Knowing what to look out for can be difficult, given how much effort goes into a fraudulent website. However, those wanting to invest in Forex shouldn’t take websites and social media accounts at face value, and carry out some additional research.
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The following is an overview of some things to look out for when checking whether a South African Forex broker is genuine.
Does The Broker Only Accept Cryptocurrency?
Although there are plenty of websites and brokers that accept cryptocurrency like Bitcoin, those who only accept cryptocurrency should be reviewed further. Despite the benefits of digital currency, it is almost impossible to reverse a payment once it has been sent.
Furthermore, payments are completely anonymous, so finding out where your money has gone will be almost impossible.
Brokers in South Africa that accept cryptocurrency are not necessarily fraudulent. But carrying out some additional research before parting with your money is advisable.
Is There Training Material Available?
Although people can make money when investing in Forex, this is rarely the case for those with experience. As such, traders should refrain from websites promising fortunes but offering little in the way of training material.
A professional Forex broker in South Africa will not make hollow promises, but will provide education and training for beginners and seasoned investors.
Investing is not the get-rich-quick scheme that fraudulent websites and social media users promote but can be lucrative once investors understand how markets work and the different types of Forex available to online investors.
Be Aware of Ponzi and Pyramid Schemes That Give The Illusion of Being Genuine
Despite websites that do not pay users, others will pay investors, but this doesn’t mean the website is genuine. Sometimes, a website will employ a High Yield Investment Program that asks users to invest and then share the returns accordingly.
Initial payouts are generally gained from new users to pay to existing ones to instil trust in users, which means they often invest more money in the hopes of more significant returns.
Unfortunately, many find that the payments soon stop, and investors lose much more than they initially invested.
Is The Forex Broker Regulated?
Maintaining financial regulations in South Africa has been difficult in the past, but this is improving. The Financial Sector Conduct Authority (FSCA) was established in 2018 to safeguard investors and users of financial instruments.
Although those wanting to invest in Forex should still carry out additional checks to ensure the broker is the right fit for them, knowing a Forex website is regulated can provide peace of mind for first-time investors and be trusted by experienced traders.
There is no denying that fraud is present when trading in South Africa. Still, it is essential that all brokers aren’t tarnished, especially those making efforts to offer traders a positive experience.
Bjorn Michels, CEO of TradeForexSA, is only too aware of the issues that have blighted the Forex market in South Africa, stating, “Unfortunately – and despite the FSCA’s proactive stance – there are still a lot of Forex scams and greedy brokers in South Africa.
There’s a lot of interest in Forex trading, but so many beginners are put off by what they read in the news or on social media. We find the best way to deal with this credibility gap and keep traders safe is to focus on education and only work with the best Forex brokers in South Africa.”
As with any form of investing, trading in Forex can be risky, so there is rarely a guaranteed return. However, education and familiarity will allow traders to become well-versed in the options available and carry out some research to ensure they’re using the right Forex broker in South Africa.
In addition to aiding you find the right Forex broker in South Africa, the tips listed can be used to verify other broker websites. Although there are many fraudulent websites in South Africa, it is not the only country where traders fall victim to scams, so carrying out research is always advisable, regardless of the website location.
