Forex trading in developed countries has been strongly regulated and we are surprised to hear that some African countries are doing the same. The number of strong Forex traders in the African continent is estimated at 1.3 million with Nigeria, South Africa and Kenya leading the way. Although the number is low compared to other countries, it is increasing every day.
It should be noted that many forex traders in Africa face the problem of high losses and brokerage scams due to the lack of forex trading regulation in about 90% of African countries.
Currently, only three countries in Africa that have regulators monitoring the forex market are Kenya, South Africa and Mauritius.
The government does not regulate forex trading in Malawi so Malawian traders should be careful.
The Counterparty problem is the most serious problem that exists and it is the one that allows the other side of the counterparty to hold on to its counterparty rights. In the context of forex trading, your client acts as an adversary to you, regardless of where you do it.
This shows that forex traders trading in Malawi and other African countries without a settlement will be seen as a counterparty problem because there is no local regulatory body that can prosecute the case for you. if the lessee goes bankrupt and falls short of his rights.
If your tenant is on land under penalty, that’s a counterparty problem. For example, if your customer is out of a fight, your business could be in trouble. Because your money transfers will be monitored by Anti money laundering (AML) agencies to make sure it is not using money laundering.
Launch of African Retail Forex Brokers
Trade in Africa does not offer fair wages if things go wrong, as some developing countries have earned.
Karan from Safe Forex Brokers South Africa admits that traders from African countries where forex trading is not regulated are a big problem. He argued that if the tenant went bankrupt, it would be difficult to get money without government regulation.
He went on to say that many African traders who have been caught by fraudsters or bankrupt buyers eat slowly because they know it is a lot of work to get rid of fraud. their money without government support. He also said that these forex traders are not compensated in any way if they incur losses that need compensation.
This is especially true because the fund pays interest to investors who incur losses due to their innocence such as bankruptcy dispute, investor fraud, etc. lack of maintenance from the publisher, system problems, etc.
Due to the lack of regulation of forex traders trading between many countries in Africa, there is no provider of payment options for Forex traders. Even in South Africa, where forex trading is regulated, payrolls do not provide compensation in the case of misappropriation of funds by regulated brokers.
The Nigerian capital market regulator posted a statement on its website telling forex traders to do so at their own risk.
While it is interesting that the Nigerian market regulator came out to explain his position, other market regulators in Africa have avoided the ambiguity.
However, in other ways this is not the case. For example, Irish investors and forex traders were paid 20,000 Euros, and in the UK, the FSCS increased its fee to GBP 85,000 when it incurred losses as a result of the transaction. Absence of the tenant.
For example, Pepperstone broker which is regulated in the UK and Kenya, has a brokerage guarantee for traders in the UK of up to £ 85,000 when it enters liquidation, but does not. to have the same protection for traders established in Kenya.
Of course, there is a global payment system for Forex traders, called the Financial Commission that is set up to protect the interests of traders. But the profit is limited because only a few forex traders are members.
A haven for Scammers
Forex scammers have also moved the idea to Africa due to the lack of proper regulation in the country. Forex fraud is a fraudulent trading system that deceives you with the promise of not returning your investment with little and no hassle.
People who do this work more often with new investors, more people who enter the market with the idea of quick profits.
Forex Ponzi schemes are the promise that you will have a steady income with a small portfolio that is hurting in Africa. These scammers use low self -esteem and a low standard of living to promise greater returns and a better life just to end up cheating the victims.
Some fraudulent scammers can deceive the public with advertisements and malicious offers with questionable terms and conditions such as investing in forex. The problem of forex trading is an important part, so the investor says there is no problem it is a scam.
Many new traders in Africa go into forex trading with the misconception of getting quick profits and after losing a lot of their money, they find that they don’t make any money at all. forex trading.
This idea is growing in Africa because there is not enough / detailed advice to traders about trade.
for instance. on foreign broker sites, you will find a clear advice that tells you the percentage of traders who lose CFD money but this does not apply to these brokers in Africa.
Extensive coverage of the problem
African investors are also seen to be exacerbating the problem because there is no leverage limit due to the lack of regulation. This gives some brokers the highest leverage. Another, up to 1000: 1
Leverage can be defined as a loan given to you by your broker to earn more money than you have in your trading account.
Leverage is expressed in a ratio, such as 50: 1 so if your client gives you a leverage of 50: 1 and you only have $ 20 with you, that means the leverage is 50 times your deposit so you can open a $ 1,000 deposit.
Of course, leverage will give you market insight. It can greatly increase your losses. The more leverage on your capital, the more risk you will see.
If you’re not careful, especially by not using a rest order, high leverage can quickly wipe out your trading account.
In the UK for example, leverage is limited to 30: 1 and 2: 1 for CFDs and CFDs as instruments, depending on the volatility of the instrument. Currently, Kenya is the only country that has set its leveraging ratio at 400: 1 in Africa.
Looking for help
As the popularity of forex trading continues around the world, the increasing number of traders increases the demand.
Combined with the fact that Forex trading has become more competitive, traders have access to client -side services, where traders can communicate with a client’s client. beyond that brokerage profession.
However, different time zones of the world can limit your access to your brokerage firm’s client care, because the time you work is the time the client sleeps. customer care manager.
For example, Malawi is ahead of Denver, Colorado in the United States; at 8. If a forex trader in Malawi uses a brokerage firm in Denver and during a trading session in his home country, he wants to talk to the client manager at 11 am Malawi time, go to sleep the customer service manager in the US at that time. for it was 3am Denver, Colorado.
Problems with files and extraction
Forex traders in Africa are facing the challenge of depositing and abandoning foreign currencies. This is because some forex brokers do not have trading accounts secured in local currency and some do not allow withdrawals from local stocks.
Although international platforms such as PayPal can be used to get your money back, not all African countries are allowed on those sites.
In Africa for example, countries such as Cameroon, Libya, Ivory Coast, Equatorial Guinea, Sudan, and the Central African Republic among others, are banned from using PayPal, so it is difficult for online trading for Forex traders in such countries.
Even if you use other payment platforms such as Skrill, you will need to convert US currency to local currency, which can attract very high fees.
Calculation of costs
If you are deciding to join the company of Forex traders, the most important thing you need to keep in mind is that trading is not a financial machine that will allow you to make money overnight.
However, with the information provided to you, you need to manage your finances more effectively to minimize your exposure to problems and losses.