There is a direct correlation with the state of the economy and interest in Forex market. Demand for Forex trading is South Africa is a sound example of this, where desperate people seek opportunities while scammers take advantage of the environment. AtoZForex.com investigates Forex trading in South Africa
10 April, AtoZForex – There is a steep rise in retail Forex trading in South Africa for the past 3 years. This steep rise also attracts sharks into the continent as the region lacks sound understanding of financial markets. Though the sense of investment and risk is not something new for the rainbow nation, not knowing what they are doing causes thousands of South Africans lose their funds on daily basis.
Forex trading in South Africa
History of Forex trading in South Africa goes back to the mining era. However, such trade was never available for the working class. In the past 3 years Forex industry is becoming more and more popular among South Africans as it is giving most "the hope of becoming a millionaire over the night". I will come back to it in a bit.
Before talking about the industry, let's talk about the official currency of South Africa: - South African Rand (ZAR). Even though ZAR is not a very popular tradable instrument, sometimes it could even move majors.
The South African Rand has been a rather stable currency over the period of the past five years. However, the authorities have been very conservative when it comes to the offshore investment. Taxpayers over the age of 18 and that are natural persons can invest up to 4 million ZAR, which accounts to $300,000 in an “exchange-controlled approved offshore investment allowance.” Moreover, a tax clearance certificate is needed if you want to trade. Also, profit from your investment might remain offshore. This also attract many Forex Scammers in South Africa.
South Africa Forex regulations
The Financial Services Board (FSB) of South Africa is the regulatory body of the financial markets in this region. It is responsible for the monitoring and regulating all the non-bank financial mediators in the South African territory. The FSB has the authority to impose unlimited fines on fraudulent companies. Moreover, it administers a customer complaints service.
The Financial Services Board was established back in 1990. The mission of the regulator embraces the promotion of fair treatment of financial services’ consumers and products as well as the financial strength of financial institutions. Also, the FSB attempts to foster systematic stability of financial services sectors and the integrity of financial markets and institutions.
The South Africa license allows traders in the country to open domestic trading accounts, which are much in demand given the strict government limits on the amount of cash they can deposit in foreign accounts without incurring steep taxes.
However, FSB has not been strictly monitoring the Retail Forex industry in South Africa. Nowadays, there are hundreds if not thousands of unauthorized Forex Training Entities, unlicensed fund managers and many of those FSB regulated Forex brokers provide unreasonable execution.
South Africa Forex Training Scams
If you want to talk about South Africa Forex training, you need to talk about greed first. The country is full of self declared Forex trainers hungry for traders' money. One thing South Africa Forex Training Scammers understand is playing with people's greed.
Indeed, you can identify fake trainers from reliable ones by looking into their advertisement methods. The following is how you can distinguish reliable Forex trainers from scammers:
Do they use risk disclaimer? Scammers will tell you to "invest" $100 and make R1500 every day. While trusted Forex trainers will first talk about the risk first and make you sign a risk disclaimer form.
Do they tease you with money? Scammers will show a stack of money in their hand and tell you how much they made. However, trusted Forex trainers will only talk about the market.
Do they show up in Lamborghini? South Africa is a status country, scammers understand it very well. Scam South African Forex trainers often will show up in a Lamborghini (probably on lease) and talk about how great life is for them. However, will not end up teaching you anything.
Do they teach you what is MACD and give you certificate? Scam Forex trainers do not have a clue about the market. They often will try to pick something simple, MACD, and talk about it for 2 hours and give you certificate for it.
Do they teach you for 2 hours for R1000? Scam Forex trainers, only care about how many people they can fit in one room. They will get you there for 2 hours, will not serve you anything and charge you R1000 to be there. Trusted Forex training will never be just 2 hours.
Do they promote $25 welcome bonus? Scam Forex trainers will use a bait, offer $25 welcome bonuses or so to attract people in need. They will bring bus loads of innocent people and give them the hope that it is possible to turn $100 to a million. Once these traders join, scam trainers will ask them to open an account with $100 to $500. These scammers are not interested in education, they are interested in commission.
Do they tell you to open a position without looking at the price? Scam Forex trainers will try their best to make things look easy. However, one thing is sure that, you need to calculate to trade any kind of tradable instrument. You can not enter a position without knowing where the price is at.
How do reliable Forex trainers work?
Although it is very rare, some of the Forex trainers in South Africa are credible. These reliable South African Forex trainers will start with Risk Disclaimer, making you understand that trading on leverage carries a high level of risk.
Instead of talking how amazing it is to be a millionaire, they will talk about their vision. Often reliable Forex trainers charge high training fees and they will provide you success stories.
Lastly, reliable Forex trainers will be your guide. They understand that one strategy might not work for everyone. Therefore, reliable trainers will empower you with the tools so that you can also develop your own strategy.
South Africa Forex Brokers
It is still like the wild west down there. Some of the South Africa Forex Brokers operate in such ways that they would not survive a day elsewhere.
One thing I've noticed is that in South Africa you can say we have zero dealing desk and set up a white label with a 100% market maker broker. Another interesting fact about Forex trading in South Africa is that a lot of the brokers impose a limit on your deposit.
AtoZ Forex Approved Forex Broker Xtrade, has been awarded an operating license in South Africa, allowing them to add the regional Financial Services Board (FSB) to its list of approved regulators. Once again Xtrade is the only AtoZ Approved broker with an FSB license. (Please note this is not serving as an advertisement, AtoZForex is a neutral Global industry news portal)
South Africa Forex taxes
The South African Revenue Service (SARS) is the country's tax collecting body. According to SARS Forex income and losses need to be declared under the "foreign income" section as per South African legislation. The rate of tax would depend on the taxpayer's income. In order to determine the right rate, one should use SARS tax tables, which can be found on the official website of the tax collector.
What would you add to this South Africa Forex industry review? Let us know in the comments below.