Red Flags in Online Financial Trading: Prospect and Challenges of Online Financial Traders in Oshodi Isola Local Government Area, Lagos State, Nigeria
DOI:
https://doi.org/10.56778/rss.v1i2.647Keywords:
online, Traders, digital, red, flagsAbstract
The rising incidence of online financial market fraud presents critical challenges to traders, investors, and regulatory bodies, particularly within Oshodi-Isolo Local Government Area of Lagos State, Nigeria. This study examined the prospects and challenges of identifying red flags in online financial trading among traders in the area. The research was anchored on Social Engineering Theory and Persuasion Theory, and it adopted a mixed-methods survey design. A total of 116 online traders were selected through multi-stage sampling to respond to structured questionnaires, while six respondents (four experienced traders and two investors) were purposively selected for in-depth interviews. Findings revealed that many participants engaged in online trading out of curiosity, driven by limited investment knowledge and speculative motives. Major challenges identified included the prevalence of fake brokers and trading platforms, hidden transaction fees, delayed withdrawals, poor customer support, and frequent exposure to phishing and hacking attempts. These issues reflect a trading environment marked by fraudulent activities, weak accountability, and elevated cyber risks. The study also found a general reluctance to report fraudulent experiences, leading to underreporting that hinders effective regulatory intervention. It was therefore recommended that stronger regulatory oversight, enhanced digital literacy, improved consumer protection frameworks, and simplified fraud reporting mechanisms are essential to safeguard traders and investors. Furthermore, regulatory agencies should prioritize building trust, curbing fraudulent practices, and promoting a safer digital trading ecosystem. Finally, emphasis should be placed on practical training to help traders recognize subtle red flags and to foster self-control and informed decision-making in financial transactions.
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