Beware of dodgy brokers

Like many people, a few years ago I had an online poker account.

Robby P.

I recall my frustration when I couldn’t withdraw any of my winnings when I wanted to and, in the end, all I could do was gamble it away.

In its heyday these online casinos were popping up everywhere and it became nearly impossible to tell which was real and which was a scam.

Since then, con artists have become a lot smarter and have made the switch from online gambling to online trading.

It has become just as difficult to spot a fake FX broker as it once was to spot a fake online casino.

How do you know which brokers you can trust?

Knowing how to identify legitimate brokers is the most important step when considering things like forex trading accounts.

I mean, once they have your cash you need to be sure you can withdraw your money when you need to.

This is my public service announcement

When signing up for an offshore account or joining an offshore broker, it is imperative you find out who regulates them and their activities. Every day we are bombarded with “” and “discover binary options” adverts on the web from these supposedly reputable providers, promising massive returns in short periods of time.

But seriously, if it was that easy, why isn’t everyone with an internet connection a billionaire?

Which brokers are genuine?

The simplest way to tell the difference between good brokers and potentially shady ones is by the promises they make and the information they don’t give you.

South Africa is one of the best regulated financial services industries in the world and brokers have to adhere to a strict code of conduct and ethics.

It is illegal to promise massive returns unless they can guarantee it.

Regulated brokers also have to explain the risks in a visible and transparent manner.

They must be licensed to operate in South Africa.

Not all product providers are cloak and dagger scammers, but here’s a guide to help spot potential danger and to avoid being swindled out of your cash.

• Incentivise you to open an account (sign up bonuses)

• No real proof of massive returns

• No Financial Services Board number (FSB)

• No visible risk disclosure

• No physical address

• No landline number

• No conflict of interest policy

• No complaints procedure

• Accept credit payment to trade forex (this is illegal in SA)

• Short time in existence

As a rule of thumb, I would say that any broker who fails on three or more of the above check list should be avoided.

Forex is risky enough

Taking a bit of risk on the FX market can make you some good money in the short term and it’s really fun to trade.

Making sure you are dealing with a reputable broker should be the first step to ensuring that when you do make profits, they actually exist.

Unfortunately, I cannot help you if you have been caught by a charlatan broker, but I can help you avoid it happening.

Benoni resident Roberto Pietropaolo, or Robby P, as he is known in the financial markets, is committed to educate you on financial wellness, investing and general money matters. He works for Vunani Private Clients, as a trader, investor, mentor and tutor. He specialises in trading the short term derivatives market and longer term equity or share market.

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