Five Reasons Why Forex Trading is Not Gambling

After doing my Forex trading for a long time already (where is my veteran’s medal by the way? I have been often facing the dilemma – should we, the traders, treat Forex market as Trading or Gambling?

No, we should not at any case, would be my short announcement for the reasons I put below. However, there is something to that question whilst opening up Forex positions carries a reasonable portion of uncertainty towards its trading success. Like betting on “red” can either make you richer or a poor mouse it’s “black.”

Myself, I met no Forex expert who could use his magic ball and, therefore, predict the certain trading outcomes. What to say! No one knows which way the USD is willing to go today and so forth.

Anyway, hoping for luck is one of the major reasons why more than 90% of Forex traders end up with more losses than gains. That is why I strongly recommend you to use money that you are ok to lose when opening your trading account.  You might lose it anyway so get morally prepared.

While the matter of comparing the Forex gambling and Forex trading is not totally groundless, it is also not precise, and below is a list of five attributes that distinguish the two industries.

1.  Numbers

I am sorry for being straight here, but considering the estimated money turnover for FX trading and gambling industry, I will say – “Gambling sucks!” Although the actual gambling numbers are hard for me to get, compared to the Forex market info where between two and five trillion dollars are traded daily. I am quite sure that these are the unbeatable numbers.

2.  Players

As the biggest market in the world, Forex uses a powerful and authoritative back-up by the most important financial institutions of the world.  As retailers, we should be quite calmed by the fact of such high-legitimacy support. Rather can gambling boast the same? Dealing with one-handed “bandits” has always caused the challenges on the legal front, but Forex is as legitimate as stocks or commodities, for instance. So why not put your money into the industry which is supported by law and morals?

3.   Tools

Considering that trading Forex remains a risky venture, we are not totally in the dark when opening our positions. There exist multiple FX schools that put their time and resources to eliminating as much of trading risk as possible. Whether you are a follower of technical analysis or a “Forex-news warrior” (e.g. trading NFP or FOMC reports) since you are sure that fundamental analysis is the right thing, Forex trading means no luck. By the way, if you want to trade with success, you certainly need to know best hours for Forex trading.

Each position we may open then has a considerable thinking and analysis behind it. I don’t think gambling has something like that to care for the return of your hard-earned.

4.  Emotions

Gambling grows the addiction – it’s the common fact to admit. Why is that happening? Because the emotions get control over people. If we think about an addicted casino gambler, he is unlikely to stop if he is winning a game by game. Greed rules the ball… In the end, this could lead to losing all of gambler’s money. So he bets and bets again.

However, in Forex the first rule for us to know is no emotions applied to trading. We must trade objectively, set our goals and stick to them. This simple truth prevents overcompensating with trades (when we lose money) or letting our greed to take over when we are profiting. The actual cure for defeating our emotions is my next point. Use trading strategies.

5.  Strategies

Sticking to FX trading strategies, which we develop for ourselves, kills two birds with one stone: it creates the base for fighting our emotions and richens our decision-making experience.  Never should we open a position randomly without having a clear vision on our goals and possible development of a trade.

Speaking of that, we can implement our strategy using our trading platforms. We use Stop Losses to get out of a trade when the plan says so, and we set Take Profits to close a trade in spite of greed’s telling us to get the more of it. We should stop our losses and take the profits because of trading strategies chosen. Weak human emotions must be left overboard.

So these are just five reasons why Forex trading and gambling will not ever “live” together. If you may some other things to ad you are kindly welcome. Anyway, we are the passengers of same Forex liner.

Provided by Alex Collins, senior developer at Forexeasystems.

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One Response to “Five Reasons Why Forex Trading is Not Gambling”

  1. Branson Says:

    Trading Forex is hard for beginners. Any small mistakes might caused them to burn their bank account. So rely on your online forex broker is the best bet. I’ve personally tried online broker of Mffx and found that they’re pretty reliable. Not to forget I’ve gain a lot of knowledge from them too!