Over the last 4 years, Forex brokers in South Africa have been rocked by scam allegations and the financial repercussions of the Covid-19 pandemic. But with a new regulatory regime firmly in place and the pandemic slowly fading, Forex brokers - along with the wider financial industry - have found a more stable footing.
But not all is well. Against this backdrop of industry confidence, new Forex traders still have to negotiate a minefield of scam brokers and inadequate educational support. While most brokers offer Forex-specific education, this comes with an obvious conflict of interest and is often part of a wider marketing strategy. Younger traders sometimes turn to social media, only to find legions of so-called “expert traders” with flashy cars charging hundreds of Rand for access to dubious trading strategies. Most come away disillusioned and considerably poorer.
A newly launched podcast from South Africa’s most trusted Forex education site may be a solution for many.
Let’s Talk Forex
The FXScouts Let’s Talk Forex podcast comes from the team behind TradeForexSA. Since 2012, TradeForexSA’s mission has been to provide high-quality, unbiased education to Forex traders in South Africa. The company’s new podcast discusses all aspects of Forex trading, from essential basics such as finance terminology and how to spot a scam, to more technical aspects such as risk management and what drives price movement in the Forex market.
The importance of freely accessible and unbiased education on these topics comes at a critical time. Risky financial behaviour is incredibly common in South Africa. A recent report by the Financial Sector Conduct Authority (FSCA) on financial literacy has found that extreme risk-taking and a lack of understanding of how the markets work are endemic amongst consumers. 25% of South Africans state that they commonly make risky financial decisions, and 37% agreed that taking risks was an important part of their life.
In an earlier study from 2020, TradeForexSA discovered that 50% of Forex trading scams started on social media. Giving money to a stranger you meet on the internet may be unthinkable for many, but it starts to make more sense when viewed through the prism of the FSCA’s own results.
Trade, don’t gamble
Risky behaviour does not have to result in a trading scam for it to be dangerous. South Africa is home to more than a few Forex brokers who market aggressively to the young and hopeful. These brokers keep minimum deposits at rock-bottom - often as low as 70 Rand - and provide trading services straight from mobile apps. This combination leads many South Africans to jump into trading without taking the time to treat it as anything other than gambling. And, as with all gambling, the house always wins.
But Forex trading is not gambling, and it is not a get-rich-quick scheme. If approached with intellectual rigour and caution, Forex trading is more akin to investing. Like investing, Forex trading requires a deep understanding of financial markets, including geo-political events and their economic impact, the ability to make educated and informed analysis, and a familiarity with financial terminology. These are not the kind of things one learns from “expert traders” on social media.
Listen and learn
Forex traders also have to know how to choose a trustworthy Forex broker, how trading platforms work, how to manage risk, how to create a trading strategy, and how their own psychology will impact their profits.
The Let’s Talk Forex podcast provides a solid grounding in these principles. The podcast hosts, Alison Heyerdahl and Chris Cammack, also discuss their experience working with different brokers, highlighting their strengths and weaknesses. Released weekly and available from all good podcast platforms, Let's Talk Forex helps new traders feel more comfortable with the trading environment before they spend a single Rand.
The FSCA says that a quarter of South Africans make risky financial decisions. Through education and common sense, the next generation of South African Forex traders can avoid becoming another statistic.
About Let’s Talk Forex
The FXScouts Let’s Talk Forex podcast is brought to you by TradeForexSA. TradeForexSA was established in 2012 and is a full member of the LEI, an international financial association dedicated to ensuring transparency in the international trading system. TradeForexSA’s team of independent Forex experts have written over 300,000 words reviewing 180+ of the world’s best (and worst) Forex brokers. Every year the team collects thousands of data points to provide the most accurate Forex reviews and educational content in the industry.