If you want to trade forex, you need to know which brokers are reputable and which aren’t before you invest any money. Regulation regarding an approved Over-the-Counter (OTC) licence is by far the most important criterion.
A series of steps must be taken before depositing large amounts of money with a broker to distinguish the strong from the weak and reputable brokers from those with questionable dealings.
Making a profit in trading is difficult enough without having to contend with a broker’s tactics that work against the trader’s interests.
Why it is important to research brokers?
It is ideal if you can keep yourself safe from dishonest brokers in the first place. Look up customer feedback across the internet. From what a general internet search can reveal, it is possible to determine whether negative comments are the work of a disgruntled trader.
Do your due diligence to ensure that no one complains about not having access to his or her money. If there are, try to get in touch with the user to get their take on the situation.
Check the licensing and regulation of the broker in question. To operate in SA, brokers must now hold an OTC licence from the Financial Sector Conduct Authority (FSCA). You can see approved brokers on the FSCA website here.
For example, Khwezi Trade is a reputable South African broker which is regulated by the FSCA. You will be able to find Khwezi Trade’s license number and their listing on the official site of the FSCA. Khwezi is an authorised FSP (44816) and licenced Over-the-Counter Derivatives Provider (ODP).
A mini account or a small capital account can be opened if you are satisfied with your research on a particular broker. Trade through it for at least a month before trying to withdraw your money.
Depositing more money should be relatively safe if everything has gone according to plan. If you have a problem, try to talk to the broker about it. Post a detailed description of your experience online so that others can benefit from it if that fails.
Avoid brokers who use pushy marketing tactics
When a broker or advisor from a company you have never done business with contacts you without your permission, be cautious. Don’t be fooled by invitations to investment seminars that promise free lunches or other gifts aimed at getting you to lower your guard and invest blindly.
Callers using high-pressure sales tactics, announcing opportunities that will only come around once in a lifetime, or refusing to send written information about investment should be avoided at all costs. Also, stay away from affiliate sites marketing unlicenced brokers on their top-10 lists. These unregulated brokers pay these affiliate sites large sums of money to be listed.
Pay attention to your withdrawals
If you receive your statements electronically or in print, you should carefully review them to see if there are any errors or omissions. If your investment returns aren’t what you expected, or if your portfolio’s composition changes unexpectedly, don’t be afraid to ask questions.
Don’t be fooled by promises you don’t fully understand. Ask to speak to a higher authority if you can’t get a straight answer. Never be concerned that you’ll come across as oblivious or obnoxious.
Final Thoughts
Unlicensed Forex brokers pose a huge threat of Forex scams and massive financial losses. To this end, you should thoroughly research any prospective broker and check their licensing on the official FSCA website. If you can’t reach your broker telephonically, this is a major red flag!
Following this, keep a close eye on your accounts. There may be legitimate reasons why a trading platform does not perform as well as anticipated.
But don’t be afraid to take your money out if you’re not satisfied with the level of service or have other concerns that the broker isn’t responding to quickly and appropriately.
