Abstract：One of the biggest risks faced being scammed by a broker. Forex broker often scam their clients legally, so there is little that can be done about it. WikiFX is a forex broker inquiry app. It allows traders to review brokers before using them. WikiFX is decreasing the number of scams by providing traders ith adequate information about their broker.
One of the biggest risks faced being scammed by a broker. Forex broker often scam their clients legally, so there is little that can be done about it. WikiFX is a forex broker inquiry app. It allows traders to review brokers before using them. WikiFX is decreasing the number of scams by providing traders ith adequate information about their broker.
Losses & Uncertain Regulations
In industrialized countries, retail forex trading is strictly regulated, thus it is nevertheless astonishing that this is the case today.
Many African nations have not yet followed suit. There are around active Forex traders in the continent of Africa.
expected to be 1.3 million, with Kenya, Nigeria, and South Africa leading the way. even if it would be less if
In comparison to other continents, it continues to grow constantly.
It should be highlighted that several African forex traders run the danger of enormous losses and brokerage scams as a result of. In nearly 90% of African nations, there is no regulation of retail FX trading.
Kenya, South Africa, and Mauritius are the only three nations in Africa at the moment that have authorities in charge of overseeing retail forex trading. Malawian merchants should use caution because the government does not regulate retail forex trading in Malawi. The likelihood that the other party in a trading transaction may breach its contractual commitments is known as counterparty risk, and it is the most significant risk that must be considered. No matter where it is based, your broker acts as your counterparty when dealing in foreign exchange.
This indicates that unregulated retail forex traders in Malawi and other African nations are subject to counterparty risk because there is no local regulatory agency that can represent them in the event that a broker defaults on its obligations or goes bankrupt.
Counterparty risk also exists if your broker is located in a nation that is subject to sanctions. Your trading may suffer, for example, if your broker is from a region that is experiencing turmoil. This is because international anti-money laundering (AML) organizations will carefully examine your money transactions to make sure they aren't being used to finance terrorists.
Defaming African Forex retail traders
Similar to how some industrialized nations have compensation funds, trading in Africa does not offer appropriate compensation should something go wrong.
The danger is high for traders from African nations where forex trading is unregulated, according to Karan from Safe Forex Brokers South Africa. He stated that without government arbitration, it would be impossible to recover cash if a broker declared bankruptcy.
He continued by saying that many African merchants who had lost money to dishonest or insolvent brokers had been forced to quietly accept the loss because they knew getting their money back would be an impossible undertaking without government assistance. Additionally, he said that these small-time forex traders receive zero compensation for losses that call for it.
This is accurate since a compensation fund provides monetary compensation to investors who experience financial losses due to no fault of their own, such as a broker going out of business, being dishonest, being careless due to broker system flaws, etc.
There is no provision for compensation funds for Forex dealers because retail forex trading is not regulated in many African nations. even in South Africa, where brokers are subject to regulation for retail forex trading. On its website, the Nigerian capital market authority even posted a disclaimer informing forex traders that they do so at their own risk. While it is excellent that the Nigerian market authority clarified its stance, other African capital market authorities have resisted being unambiguous.
However, that is not the case in several other climates. as an example. When they incur losses owing to the broker's incompetence, investors and forex traders in Ireland are rewarded with 20,000 Euros, while in the UK, the FSCS has increased its payout to GBP 85,000.
For instance, traders in the UK have up to £85.000 in investor protection with Pepperstone Broker, which is licensed in both the UK and Kenya. Nevertheless, traders residing in Kenya do not have access to the same protection.
However, there is a privately organized, worldwide compensation program for Forex traders called the Financial
created a commission to safeguard the interests of consumers However, the benefit is restricted as not many forex brokers are members.
A sanctuary for con artists
Due to the absence of sufficient regulation on the continent, forex fraudsters have also turned their attention to Africa.
A deceptive trading technique designed to entice you with the promise of irrational returns on your investment with little to no risk is known as a forex scam. Most of the time, novice traders who enter the market with the mindset of rapid money are the ones who fall victim to the offenders of this conduct.
Africa is also plagued by Forex Ponzi scams, which claim to give you set monthly earnings for a little payment. These con artists use the poor investor knowledge and low level of living as an excuse to deceive their victims by promising them large profits and a better life.
Some fraudulent brokers may entice the ignorant public with outlandish advertisements and offers that include dubious terms and circumstances, such as risk-free forex investments. A broker that claims an investment is risk-free is deceiving you because risk is an inherent aspect of forex trading.
Many new traders in Africa enter the market with the false expectation of becoming wealthy quickly, and after losing a sizeable portion of their capital, they realize there are no guarantees of gains. This idea is especially prevalent in Africa since potential merchants are not adequately or thoroughly warned about the risks involved in the transaction.
For instance, you may see a visible risk warning on the websites of international brokers that details the proportion of traders who lose money while trading CFDs, but this does not apply to the brokers in Africa.
excessive risk exposure
Due to a lack of regulation, African traders are also more susceptible to the risks associated with leverage. Since they can provide such large leverage, several brokers do so. a few up to 1000
A loan from your broker that allows you to have access to more capital than what is in your trading account is known as leverage.
If your broker gives you a leverage of 50:1 and you only have $20 on hand, this implies the leverage is 50 times your deposit, allowing you to place a deal for $1,000.
However, using leverage would increase your market exposure. It may potentially dramatically increase your losses. Your exposure to risk increases as the leverage on your money increases.
High leverage may swiftly wipe out your trading account if you are not careful, especially if you don't use a stop loss order.
According to the instrument's volatility, the leverage for CFDs and CFD-like products in the UK is restricted to 30:1 and 2:1, respectively. Only Kenya has limited its leverage ratio in Africa to 400:1 thus far.
The rate at which the number of traders is growing has made them more demanding as awareness of forex trading spreads around the globe.
Along with the fact that forex trading has grown more competitive, brokers now offer customer care channels via which traders may get in touch with a brokerage business representative.
However, because customer service representatives may be asleep when you are active, different time zones throughout the world may restrict your ability to contact them. For instance, Denver, Colorado in the United States is 8 hours ahead of Malawi. Suppose a forex trader in
He wants to talk with the customer service agent at 11 a.m. Malawi time during a trading session in his nation since Malawi uses a brokerage business in Denver.
The difficulty of making deposits and withdrawals in foreign currencies is a problem for forex dealers in Africa. This is due to some forex brokers do not provide local currency trading accounts, and some do not allow withdrawals to local bank accounts.
Although you may withdraw money from worldwide platforms like PayPal, not all African nations are permitted to utilize those systems. For instance, the Ivory Coast, Equatorial Guinea, Sudan, Cameroon, Libya, and Central African Republic are all
PayPal is now prohibited from operating in some countries, including as the African Republic, making internet transactions challenging for Förex dealers there.
Even if you use another payment system, like as Skill, you will still need to convert US dollars to local currency, which might result in very expensive costs.
Making a Cost Analysis
The most crucial thing you should keep in mind when you make the decision to join the league of Forex traders is that the trade is not a money-making machine that can make you wealthy over night.
To minimize your exposure to risk and losses, you should manage your investment wisely using the information that has been provided.
The best way to minimise losses is by downloading the WikiFX. The app is available on the PlaySTore and the Appstoe. Stop the Scammers today!
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