When trading the markets you are carrying out business transactions to create a profit and provide for yourself and your family. However, keep in mind the markets should not be used to gamble as this creates an entirely different problem. Forex vs Gambling. There is a very clear difference between trading the markets and gambling in the markets. Since you're winning or losing money, does that mean trading is the same as gambling? Nicholas answers this common question. THIS IS WHY YOU WILL LOSE AT TRADING (Becoming a professional forex.

To many outsiders, the forex market appears to be like a gambling market. Certainly, the forex market and the casino industry have a lot of things in common, such as the money involved, and the amount of risk involved. Certainly, one small mistake in both cases can lead to great financial losses to the person involved. But it would be harsh if one would label Forex trading as a form of gambling, due to many different reasons. There are many brokers who offer forex trading to South African citizens. It is necessary to know more about the best forex brokers in South Africa and their role in forex trading.

Forex is not Gambling

The opinion that forex trading is a form of gambling mainly comes from outsiders as well as a section of unsuccessful traders. They point to the high rate of failure in the forex market as a major proof of their claim. While no one can deny the rate of failure in the forex market, the reasons behind it can be many folds.

Common mistake novice traders make when they enter the forex market is to have a gambling mindset. The sheer size of the forex market may appear intimidating to many, causing them to take many hasty and wrong decisions.

Differences between Gambling and Forex Trading

A trader requires a definite degree of skill, knowledge and experience to execute profitable trades that could lead to consistent profit generation. Gambling, on the other hand, involves a large degree of luck. While there certainly are some similarities, Forex trading differs from gambling in the following ways.

  • In Forex trading, a trader can never lose more than what they have in their trading account, no matter what decisions they make. This concept is largely absent in the case of gambling.
  • The price movement in the Forex market is based on economic laws such as supply and demand, and are not random. Thus, for a trader to become successful, he/she has to analyse the market, predict the price behaviour and then take trading decisions accordingly. In the case of gambling, on the other hand, the casinos always tend to have an edge over the gambler.

Thus, trading in Forex has very little to do with gambling or luck. Rather, the success of a trader is based on the trader’s knowledge, the proper management of funds and creating an appropriate risk profile that prevents losses from being extravagant.

Trading Forex as a business

Not

Casino gambling is considered a form of gambling. However, certain individuals can turn this into a business. They participate only in certain casino games such as Blackjack. Similarly, a forex trader can also concentrate on a single or few currency pairs with a solid trading plan.

The trading plan in place should be implemented in a disciplined manner. Many traders who have perfected their trading plan can easily remove the risky elements in trading, such as emotionally driven decisions or trading with a gambling mindset. Thus, a trader with a sound trading strategy and plan has increased chances of turning a profit than his/her peers.

Conclusion

The forex market has the potential to make a trader rich in a very small period of time. Over the years, many people have likened it to a form of gambling. However, it is quite clear that success in forex trading involves a lot of other factors and not just luck. With the proper skills and technical know-how, any trader can turn a profit when trading forex.

Why do you trade forex?

Let me guess…

Because you want to make a crapload of money and be able to buy anything you wish?

While this is a perfectly valid reason, it will most likely lead to excessive greed and ultimately lead to your trading account’s destruction.

You might as well take your money to Vegas instead, and gamble it away. Once your money is all gone, at least it was entertaining.

You have to remember that what differentiates trading from gambling is being able to bend the odds in your favor.

That is why, as a trader, your mindset should be akin to that of the CASINO and NOT the gambler, who merely focuses on one event (or trade) at a time.

Casinos are profitable year, after year, after year, despite having a business where the outcome of each card laid down, dice roll, or slot pull is unknown each and every time.

They understand the concept of probabilities and create games that put the odds in their favor–in other words, “the house advantage.”

Is Forex Trading Same As Gambling Slots

While it is true that there will be some lucky ones that will win and walk away with millions of dollars, casinos know that if they get a large enough sample size, there will be more losing patrons than winners in the end.

Let’s take baccarat, a popular card game for high rollers, for example. The game is fairly simple. Cards are dealt to a “banker” and a “player,” and all you have to do is place a bet on either one.

Forex

Since you have equal access to both the banker and the player (you can even bet on a TIE if you want), it would seem like you essentially have a 50% chance of winning. But in reality, that’s not the case.

By tweaking the rules, like charging a very small commission or reducing the payout if the banker wins with a certain number, the odds are turned slightly in favor of the house.

It might be a very tiny advantage, anywhere from 1% to 5%, but it’s enough for the house to eventually come out on top when enough games are played.

To become consistently profitable, you have to trade like the HOUSE and play the advantage over a series of outcomes.

Is Forex Trading Gambling Reddit

You can do this in a couple of ways:

First, you need to learn the market behaviors, patterns, and tendencies that could be recognized in the future and turned into trading opportunities.

This comes from reviewing price action against a framework (support and resistance, mechanical indicators, economic events, etc.), recording your observations, and then devising statistics to keep track of the different kinds of patterns or setups.

Is Forex Trading Same As Gambling Poker

This is where keeping a trade journal becomes a necessity. Using the data from your journal, you can focus on the setups that have had higher probabilities of winning, rather than those setups that tend to lose.

Is Forex Trading Classed As Gambling

Is Forex Trading Same As Gambling

Secondly, you need solid risk management. You can tilt the odds of long-term success in your favor even more if you limit yourself to setting up or taking trades that have an attractive risk-management ratio (ie. average bigger wins than losses).

The better the reward-to-risk ratio, the less often you need to win a trade.

And lastly, you can look to other traders in addition to your own analysis. The web is loaded with free economic and technical analysis content. By getting a second opinion, you make sure that you don’t fall into the “confirmation bias” trap.

Of course, these aren’t the only ways to tilt the odds in your favor. But you should always remember that you don’t have to predict exactly where the market will go; you just have to figure out where price will likely go and make the best of it if the trade goes your way.