How to identify scams in forex trading

 Forex trading is no longer a new venture for many Nigerians, especially with the emergence of apps and various online

platforms making it easier to trade. As more people move into this market, scammers are also upping their games with a series of tactics to defraud unsuspecting traders.

This is why the industry experts are insisting that participating, in the forex market, requires deeper knowledge and putting in place safety measures in order not to fall victim to scammers.

Recent research in Nigeria by a leading forex trading platform, OctaFX, also confirmed this with data revealing a preponderance of scams in forex trading in the country. According to the research, a staggering 82.4% of respondents admitted to having fallen for one form of scam or the other. This is even as it established that the increase in forex scams is threatening the participation of many Nigerians in the market.

While the country has seen immense growth in both the number of traders and trading activities in recent years as a result of the emergence of online trading, which paved the way for more participation beyond the traditional alternative which has existed for several decades, the OctaFX research established that various threats associated with the fast-growing financial market continue to act as barriers to widespread adoption.

The report titled: ‘The Rising Trend of Online Forex Trading in Nigeria’ highlighted key threats to forex trading in Nigeria and suggest measures to mitigate their impacts in other to encourage more Nigerians to participate in the market.

From the data collected by OctaFX via its research which surveyed 1,2254 respondents comprising 410 females and 844 males, it was established that Nigerians are falling for forex trading scams for different reasons, but the most common is those who fall as a result of the expectation of easy money. This goes to buttress the saying that nothing good comes easy, not even in forex trading.

Key findings

• An analysis of the research by OctaFX on the experience of forex scams by respondents shows that the majority (824%) had experienced at least one of several types of forex
• it was also discovered that a significant proportion (41.9%) of the respondents fell prey to scammers due to their expectation of easy money.
• In comparison, only a few proportions (11.2%) experienced scams due to incorrect/confusing copy trading mechanisms, while a much fewer proportion (0.1%) experienced scams due to ‘failed promises of large returns. This, however, implies that most Nigerian forex traders lack adequate trading knowledge.”
• The analysis of data showed that gender and number of years trading forex has a significant impact on the traders’ likelihood to fall victim to scram. It was inferred that the male respondents are more susceptible to

Emphasising the importance of knowledge, the research also established that losing money to scammers in trading forex is inevitable when the trader does not have adequate knowledge of the market. 

From the findings of the research, the majority (69.7%) of the respondents surveyed affirmed that they have been scammed of money between N5.100 and N50.000. While only a few (2.5%) have been scammed to the tune of N150.100 and above.

In contrast, only a few proportions (17.1%) of the respondents have never experienced any form of scam in their years of trading forex. This also goes to show that despite profound likeness for making ’easy money,’ most Nigerian traders are cautious of the amount they trade on forex platforms.

Protective measures

Prevention, they say, is better than cure. Losing to scammers definitely has no cure other than to accept one’s fate, learn the bitter lesson, and move on. This is why putting in place anti-scam measures is very important for all traders.

While noting that Forex scams will be around for as long as the Forex market exists OctaFX in the report noted that improving knowledge of online security and the safety of funds has now become critical in online forex trading. It added that the forex traders will need to put safety measures to avoid being scammed while trading.

“Broadly, the factors that can guarantee the safety of personal intonation and financial protection in Forex trading include the use of VPN/proxy server, antivirus software, backup data and complex password. The survey showed that applying multiple protection methods while trading on Forex trading platforms is common among users.  The use of a singular protection method was perceived as extremely risky by the respondents as evident in the proportion who adopted only the use of antivirus softwareand VPN/Proxy server use respectively during a trading session on a forex platform,”it said.

Conclusion

As a trader, the rule of thumb is to take your time to understand as much as possible about online forex trading before committing to investing. While the position of knowledge and deeper understanding of forex trading cannot be overemphasized for traders, it is very essential to select a credible platform to trade.  Most importantly, from the findings in the OctaFX research is a need for traders to eschew greed and know that there is no easy money in trading. Adhering to security and safety measures as highlighted in the report will also go a long way in preventing losses to scams.