An aperçu on forex trading |18 February 2021
If I had a dollar for every time a friend or social media acquaintance talked to me about trading forex, well, I would be trading forex.
The ‘new’ method for people to make money, from the comforts of one’s home, is often laughed off in Twitter memes or simply ignored by most, but die-hard stans of foreign exchange (forex) trading are adamant that anyone can turn a profit by trading.
Forex trading by individuals is seemingly on the increase in Seychelles, with a significant number of Seychellois posting their new stream of income on social media, asking other interested individuals to join the “game-changing” forex market, through the academies.
These academies promise to teach you how to trade forex and make a profit doing it.
But the question that many have been asking is whether this is a legitimate way of making money or a scam.
Unfortunately, some of the Seychellois who were further up on the forex trading academy ladders were not responsive to our queries and I ended up seeking the insight of a friend in Mauritius, who heads his own private academy, ‘Trade Like Alphas’.
Twenty-two-year-old Tayob Surtie, an entrepreneurship and marketing undergrad at Curtin Mauritius, explained that he averages a profit of US $1500-2000 per month for himself by trading.
“The daily goal is around US $100-150 but it’s an unpredictable market so bad months can see a much lower profit,” Tayob explained.
But what exactly is forex trading?
“I am a foreign exchange day trader and this entails trading one currency for another currency. If you have travelled the world, you have most likely traded forex. For example, let’s say the country where you are from uses US dollars and you travel to South Africa where people use rand – we already know that a dollar to the rand is 17; the moment you travel to South Africa and convert your dollar to rand at Western Union or wherever, that is seen as a forex trading,” Tayob explained through WhatsApp voice notes.
Trading forex is not at all new and banks trade foreign exchange on the daily, Tayob added.
“The main appeal behind foreign trading is that the foreign exchange market is quite similar to the stock exchange market but also very different at the same time. With forex you deal with currencies, while stock you are dealing with the actual businesses and the IPOs which have been put on the markets. The foreign exchange market however is the largest market in the world, generating around US $3 trillion a day compared to the stock market which generated about US $500 billion a day. So the other appeal to the forex market is that it is a little bit easier depending on your style; it is open 24/5 instead of 24/7, meaning it’s open from Monday to Friday and on weekends it’s closed.”
“When you are trading forex you are usually trading currencies in pairs because you are trading one currency against another. The whole idea of trading however remains the same; it’s about risk management, finding entry and exit points, and having different strategies.”
The benefits of forex trading academies that a handful of Seychellois have joined is that they teach individuals, who have no prior knowledge of this market, about these strategies, instead of them having to learn it from scratch.
Another friend – who five years ago advised me to invest in crypto currencies and who is also trading – highlighted the fact that prospective forex traders do not have to join an academy.
“There are plenty of videos on YouTube to help you get started. There also plenty of books, and you can Google any information you want but all of these take time and effort to learn, so that is why some people opt to join the academies,” he explained.
When asked if some of these forex academies operate like a pyramid scheme however, he claims that they are not.
Back in Seychelles, I got in contact with a young Seychellois forex trader who recently joined an academy but who preferred to remain anonymous.
She stated that her overall experience with trading has been positive so far.
“It all started with a friend who was sending all of these forex promos on WhatsApp. I enquired about it and then chose to register in December 2020. The motivation to continue trading comes from those higher up in the academy and the fact that you are making money in minutes. Your 9 to 5 employer is not even paying you that much money in a day,” she said.
“I personally do not know anything about trading. I joined the academy that is here to help and guide me,” she said.
On the other end of the spectrum is another young Seychellois woman whose foray into the world of forex academies left much to be desired.
She observed that the academies usually target the under-30s with promises that “you can make good cash from trading”.
“After joining, you feel pressured because you have registered to pay US $199 monthly. When you get three persons to join you become a platinum 150 (P150), and that is when you lose your 2infree and you pay US $174 monthly again and US $16 to upgrade your menu. Now, you have to struggle to reach Platinum 600 (P600) so that you won’t have to pay the US $174 monthly. For this to happen, you must have 12 people in the team under you and your direct recruits must also have reached P150,” she explained.
Evening meetings via Zoom calls and other platforms are held on a regular basis, wherein guest speakers are invited to speak on forex trading but she said that most of the time these speeches are scripted.
The goal of the academy she was in was to climb the ranks and gain more people on one’s team, and our interviewee observed that “they focus too much on their pyramid than on actually teaching you how to trade”.
She said that not a day goes by without some sort of promotion and offer.
Nonetheless, she added that trading is “really fun” when done right, and when not under pressure.
No authority has come forward thus far to explain whether these forex trading academies are pyramid schemes.
With the unfortunate combination of Covid-19, job losses, low barrier of entry into these academies and their incessant marketing, this has created the perfect environment for the get-rich forex trading academies to thrive.
When questioned on the matter, the Central Bank of Seychelles (CBS) noted that it continues to caution the public against different types of scams that exist, how to detect them and the need to remain vigilant.
“We have seen other authorities, such as the Fair Trading Commission (FTC), that are also joining the education efforts and intensifying awareness targeting the general public on such matters. From the CBS standpoint, our message has always been and remains for people to always be on the lookout, to do their research if they receive any messages from any entity enticing them to invest money in any financial schemes,” CBS explains in its statement.
“Most importantly, people should refrain from communicating or sending personal information or money to any individual or organisation they do not know. Investing in scams means losing money, which unfortunately in the majority of cases is impossible to recover, as most of these schemes originate from outside Seychelles,” the statement continues.
“Financial-related scams are also common during times of crisis, with fraudsters using such uncertain times to target people. As we face the current crisis, times are hard for everyone. CBS would like to once again advise each and every individual and businesses alike, that fraudsters are always on the lookout for vulnerable and unsuspecting persons to scam and rob them of their hard-earned money or savings.”
CBS noted that it does not have sufficient information to confirm if the forex trading transactions are being conducted through authorised dealers, and whether these transactions are on the increase.