“One of the major obstacles that prevent people from exploring opportunities in online trading are concerns about the security and safety of personal funds and data. Rightly so, as stories of online trading scams have been on the rise since the onset of COVID-19”, says Dany Mawas, regional director at INFINOX, a leading global CFD trading broker which recently launched its IX Social mobile app in South Africa.
“Unfortunately many people that fall victim to trading scams are beginner traders, elderly or those struggling financially,” he adds.
To prevent this from happening, Mawas outlines a checklist that will assist prospective traders to ensure they won’t fall victim to scammers:
Do your research: As a new investor finding an ideal broker can be a daunting task. Doing generic internet searches, reading over customer reviews and media reports will give you a better sense of the broker you are dealing with and insights into the experiences of others.
Ensure the broker is regulated: Brokers are required to register with a regulator in the countries in which they operate. As such, it is vital to ensure that the broker is regulated with authorities such as South Africa’s Financial Sector Conduct Authority (FSCA) or the United Kingdom’s Financial Conduct Authority (FCA), for example.
Check the brokers website: Another plus side about the broker being regulated is that they have to be transparent to ensure that traders can make the most informed decisions. This means they have to include the percentage of risk that traders may be faced with when trading.
It is also important to check that the broker has a physical address listed. Although brokers run their businesses online, including a physical location is an indication of their commitment to their business, their teams, and ultimately to their clients.
If it sounds too good to be true, it probably is: Be wary of brokers where it is too easy to open an account, too easy to deposit, too easy to trade, and too easy to make money.
Be vigilant on social media: A recent TradeForexSA report uncovered scams are utilising social media platforms such as Facebook and Instagram to find their newest victims. TradeForexSA’s report suggests that 50 percent of scams find their victims on social media platforms. As such, it is vital to ensure that any entity found on social media is regulated.
Are there protective measures in place: Withdrawal and deposits are amongst the important aspects of a broker. You should be able to perform these actions simply and safely. Generally, the scammers follow the same patterns of high minimum deposits, and low withdrawal limits.
However, traders should be able to deposit and withdraw funds easily via a client portal. This comes by brokers partnering with trusted payment providers with low fees and fast transactions. Being able to access your funds at any point you choose is vital.
It’s also important that client funds are segregated from operational funds and other forms of investment. Furthermore, brokers should have an insurance policy in place to protect their clients.
South Africa is fast becoming one of the primary destinations for traders of all financial assets, says Mawas. “As such, it is essential for traders to be wary of online trading scams and ensure they remain vigilant and do not fall victim,” he concludes.
How To Grow South Africa’s Hydrogen Economy
Could Load Shedding And Energy Uncertainty Herald The Workplace’s Next Big Shift?
Partnership Programmes Could Be Key To Business Growth During Tough Economic Times
To Survive Load Shedding Your Businesses May Need To Reconsider Work Flexibility
More Needs To Be Done To Support Female Entrepreneurship In South Africa
Blockchain Innovators Flock To Joburg
Key Factors To Consider In The Retrenchment Of Employees
Coastal Property Is Still Booming According To Estate Agents
Come Meet The Game Changers
How Tech Education Is A Driver Of Equality For Both Businesses And Consumers
Africa’s WhatsApp Economy Is On The Rise
Alstom Has Supported Over 9,000 Jobs In South Africa, According To EY Report