RCG markets. The latest South African Broker to join the ranks or another ticking time bomb?

If you have been trading in South Africa for any amount of time you would come to know how quickly brokers can turn to scams as the FSCA has shut down a considerable number of forex institutes. There are few local brokers you can trust as almost every day we encounter brokers with regulatory status and bad customer service. Today we look at the latest South African broker to join the industry and we will be looking to see if the broker is indeed reliable or not.

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RCG markets

This is a relatively new broker which rose up about 3 months ago. Their base of operations is in Randburg Gauteng. They offer three types of accounts, the RCG Classic account, with a spread of 1.5 pips and a leverage of 1;1000, the RCG Raw account with 0 pip spread and 1:500 leverage, and the RCG ECN account, which also offers a spread of 0 pips but charges a commission of $7. All these accounts have a minimum deposit of R50. They claim that their withdrawals should take 24 to 48 hours. They also claim to be regulated by the FSCA.

Pros

The offered accounts seem very generous in what they offer. They have such low spread and minimum deposits so their barriers to entry are considerably low. They are also easily accessible as Gauteng is one of the most populated provinces in South Africa so if you have a query with them at the very least you can go to their offices and enquire about further action to queries one can have.

Red Flags

One of the most worrying trends with this broker is its current marketing strategy. They are partnering with a number of traders to offer seminars and conferences and offering a month's worth of trading signals with the affiliated trader for a month after opening a R300 account with the broker. One example is their upcoming seminar featuring @Rea_sace. R1000 rands get you inside and for this, you get to be taught various aspects of trading. However, this package also includes the R300 deal added on top for those who choose to open an account with the broker

The issue is that brokers make money by taking it from losing traders. How are they going to make money if the signals of the affiliated trader are successful？ Thats exactly the issue here and the answer has to be that these signals are not meant to be successful. It's just meant to encourage them to deposit their money with the Broker and highly lightly lose their funds.

The rate at which they are pushing this type of partnership is actually alarming. This coupled with the suspiciously low barriers of entry one can wonder if indeed this is a reputable broker, or if they are simply trying to lure people into trading with them and then engaging in other broker tactics to swindle people out of their money. We will keep a skeptical eye on this broker and update you on any news concerning the newcomer.