Identifying Fake Forex Brokers in Nigeria

It is vital to research how legit your platform is before depositing money to trade. For Nigerian traders, here's what you should do to avoid fake forex brokers.

It is no secret that there is a high level of liquidity and volatility in the forex market along with constant activity, which has opened a way for unscrupulous individuals to take advantage of naive investors. These unscrupulous individuals commonly referred to as scammers are very active in the forex market and exist across different locations in the world. However, it's worth noting that their activities are prevalent in some areas more than others.

A good example of such is Nigeria, which is an African country that is already popular for scamming activities by some of its citizens. The forex market only offers such citizens another avenue to utilize their scamming skills that have been perfected over the years and deceive unsuspecting investors or traders.

Fake forex brokers are on the rise in Nigeria, and while people are getting wiser to deal with the problematic ones, scammers are relentless as they are always looking for innovations and new ideas to trap people and rob them of their money. It is almost like a game of chess between potential investors and these fake brokers with each party watching the other trying to gain an edge.

Being a broker in the forex market does not strictly require a physical office since the trading activities are mostly done online, which means having a website is mostly the only crucial part to offer brokerage services. Setting up a website capable of accommodating forex traders requires intensive capital and expertise which makes execution of trade orders easy as well as the implementation of different trading strategies. Since these fake forex brokers do not have anything genuine to offer, they put little to no effort into the website. They just try to make it look real and flashy so that it can attract innocent traders who have no idea that it is all a lie. Once the trader is sucked in, they just keep draining them until they have nothing left or eventually wise up but by then, they might have lost a lot of money already.

Knowing the fake brokers in Nigeria by recognizing a few indications may help traders to avoid such schemes. And this article will be lending a helping hand by trying to provide a comprehensive list of fake brokers in Nigeria so traders can easily spot them.

However, before getting into the list, we will examine some important aspects that will serve as background knowledge for traders that will help them to easily identify these fake forex brokers.

The Legality of Forex Trading in Nigeria

The first question to ask is: Is forex trading legal in Nigeria? Yes, it is. The follow-up question should now be: is forex trading highly regulated in Nigeria? No, it is not. Forex trading is a legal and acceptable form of financial activity in Nigeria with brokers operating in the country expected to abide by the guidelines and regulations imposed by the federal government.

However, compared to other countries with bigger economies like the UK, the regulation of forex trading is not of a high degree in Nigeria. But it can no longer be denied that forex trading is becoming more popular among the citizens of Nigeria, so the onus rests on the government to put more restrictive legislation and regulations in place to protect the citizens and filter out fraudulent forex brokers.

Generally, the Central Bank of Nigeria is in charge of regulating forex trading in Nigeria since it is the de facto highest financial regulatory authority in the country. And for brokers to operate, they are expected to meet certain criteria before they can be granted a license.

However, because the rules are not stringent enough, scam brokers in Nigeria skirt around these rules and simply do not follow any regulations laid down by the Central Bank of Nigeria, which makes it easy for them to cheat people out of their money.

Despite the rising popularity of forex trading in Nigeria, people still have limited knowledge about it because, despite the ostensible support of the government for it, there is no defined or reliable structure that can allow interested citizens to fully maximize the opportunities in forex trading.

This is something that fake brokers capitalize on by promising people free knowledge and advice that will help them make profitable trades. Also, since traders look for platforms that are convenient for executing trades, these scamming brokers design their websites in such a way that it appears to provide the illusion of being the best brokerages.

This is why traders need to be careful and carry out extensive research about potential brokers before investing their money. The forex market does guarantee profits but you do not need to have a broker who is just waiting to take all your money from you.

Generally, there are five major factors to consider when choosing a broker and they are:

1. Level of regulation: You need to know if the broker is subject to the regulations of the Central Bank of Nigeria and if they operate accordingly. A lack of regulation should be a red flag and set off alarm bells in your mind.
2. Trading platform: How does the trading platform look? Is there a registration number on the website that can be verified? Is a demo account available where you can test strategies and other account features? The answers to these questions will give you a clue as to the kind of broker you are about to deal with.
3. Currency pairs being offered: What kind of currency pairs does the broker have on offer? Is it just the minor pairs or exotic pairs which have low liquidity? Are major pairs that have high liquidity and are more profitable available?
4. Account features: how are charges and commissions deducted and what are the percentages? What kind of leverage and margin accounts are offered? And what are the terms of deposit and withdrawal? There should be clear answers to these questions.
5. Customer service: Is the customer service reliable? Can they provide succinct answers to your inquiries?

Taking the above factors into consideration will ensure you choose the most suitable broker as well as a legal one that will indeed be helpful in your trading journey.

Signs to Look Out for

No matter how deceitful a person is or a group of people are, there are ways in which their cheats and tricks can be identified, but that is only if you know what you are looking for.

As human beings, we are creatures of habit and we cannot always resist the urge not to follow a certain formula or specific pattern once it begins to produce consistent results. The people offering fake forex brokerage services are not different too as there are certain patterns that they follow and it will enable you to identify them and their operations. Some of these signs include:

1. Lack of History

A legitimate forex broker is bound to have valid background information and history to show credibility to potential investors or traders. On the other hand, scam brokers are unable to provide that because they do not have any. Background data or transaction history about their company and any information provided to back up any claim they make tends to be fake.

Whatever statements or screenshots of earnings or trader reviews they provide are all formulated and manipulated with no truth to them. This is why if you were to ask such a broker for any live trading info that yields a huge return, the broker will not be able to provide any. Therefore, any broker you come across that lacks background history or information is likely out to rip you off.

2. Aggressive Marketing

Another common characteristic of fake brokers in Nigeria is the tendency for unsolicited or unwanted marketing since they are always looking for more people to scam. Once they can identify a potential victim, they try to push the person into accepting their offer. They do this by applying pressure and hurrying the person to decide so that there is little time left to think about the offer.

If you should come across a broker that displays that level of aggression in marketing, then you are better off staying away. Avoid such a level of urgency and do not fall for the scam.

3. Offer of Guaranteed Success

While it is true that the forex market holds enormous profit potential, there is also an equally massive potential for losses which is why success cannot be guaranteed. I mean, if we are being honest, nothing is guaranteed in this life except for death and taxes. So, any broker promising unrealistic success in the form of consistently high returns is looking to scam you of your trading capital.

The volatility of the forex market means that price is constantly moving and you can only trust your trading strategy, tools, and a bit of luck to earn profits. If a broker in Nigeria is then offering a guarantee to success, you should know they are lying through their teeth and only trying to set you up to be scammed. Even if the broker claims to be regulated but still insists on guaranteed profits, that should tell you it is actually a fake broker.

List of Fake Forex Brokers in Nigeria

Despite many good forex brokers in Nigeria, there are numerous frauds that scatter around the country. Now let us examine a list of some of the fake brokers in Nigeria with their names and website.

While this is not the complete list, a lot of the brokers on the list are among the common ones that traders in Nigeria usually come across. Once you see these brokers, it will be beneficial for you to avoid them.

With more research, you will find more fake brokers in Nigeria. Even if you do not get more brokers listed, you just need to observe their behaviors such as aggressive marketing, the promise of guaranteed returns, as well as lack of background information.

Avoid trading with relatively new or unknown brokers while also checking for reviews about different brokers from professional sites that carry out such reviews regularly. Unless the new broker you are interested in can show that they are duly regulated with solid proof, avoid dealing with such a broker. Assuming you're already tricked by your broker, don't be scared as there is always a way to recover from them.