Nigerians urged to exercise due diligence in e-trading to prevent financial losses
The Regional Manager of Vantage Markets Africa, Mr. Ted Odigie, has advised Nigerians to acquire proper education and knowledge of e-trading before investing, stressing that ignorance often leads to avoidable financial losses.
Speaking at the “Trade Smarter” summit organised by Vantage Markets Africa in Ibadan, Oyo State, Odigie emphasised that understanding both the fundamentals and technical aspects of trading is crucial to long-term success in the sector.
He explained that fundamentals involve news, economic data, and financial or political developments, while technical analysis focuses on interpreting chart candlesticks and predicting price movements on trading platforms.
Odigie noted that many Nigerians fall victim to Ponzi schemes because they fail to ask basic but critical questions about platforms they invest in, such as licensing, legitimacy, regulation, country of origin, and investment strategy.
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He cautioned against joining platforms blindly without conducting thorough background checks.
“Our people don’t do the necessary checks. Once they hear someone is making money on a platform, they just dive in without verifying its authenticity. Unfortunately, many of these schemes collapse when the pyramid structure can no longer hold,” he said.
One of them, Seun Olukayode, a developer and Forex trader, commended the organisers, saying the knowledge gained would help people identify genuine e-trading platforms and avoid fraudulent ones.
Odigie further urged the government to introduce financial education into policies that would equip both civil servants and private sector workers with practical e-trading skills to prepare them for financial stability after retirement or job loss.
Identifying and avoiding ponzi schemes
Ponzi schemes are investment frauds that pay existing investors with funds collected from new investors, often promising high returns with little to no risk.
Despite warnings from regulatory bodies like the Securities and Exchange Commission (SEC), many investors continue to fall victim. Key characteristics of Ponzi schemes include:
High returns with little or no risk: This is a primary red flag, as legitimate investments always carry some level of risk.
Overly consistent returns: Investment returns naturally fluctuate with market conditions; consistent, unchanging returns are suspicious.
Unregistered investments/platforms: Most Ponzi schemes involve platforms or individuals not registered with the SEC or other appropriate regulatory bodies. In Nigeria, the Investment and Securities Act (ISA) mandates registration for securities of public companies and collective investment schemes.
Secretive and complex strategies: Promoters often make the investment strategy difficult to understand and lack transparency.
Discrepancies in documentation: Errors in account statements can indicate that funds are not being invested as promised.
Difficulty receiving ROI: Promoters may prevent investors from cashing out by offering higher returns to keep funds invested.
Requirement of referrals: Schemes that heavily rely on existing investors to recruit new ones for higher ROI are often Ponzi schemes.
