Mawas outlines a checklist that will help prospective traders not to fall victim to scammers
LONDON, United Kingdom: “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 (www.INFINOX.com), a leading global CFD trading broker which recently launched its IX Social mobile app in 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 help prospective traders not to fall victim to scammers:
Do your research: As a new investor, trying to find the 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 as well as insights from other clients.
Ensure the broker is regulated: Brokers are required to register with a regulator in the countries they operate. As such, it is vital to ensure that the broker you choose is regulated with an authority. Examples of respected regulatory bodies include South Africa’s Financial Sector Conduct Authority (FSCA) or the United Kingdom’s Financial Conduct Authority (FCA).
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. One such method is by making it clear, as a percentage level, the amount of traders that have lost money with that broker.
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 (https://bit.ly/3fzK6cj) uncovered scams that use social media platforms such as Facebook and Instagram to seek out their 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 one of the most 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.
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.
The writer, Dany Mawas is Regional Director at INFINOX