Is Forex Trading One Kind Of Gambling?
There is no doubt that Forex trading is becoming increasingly popular around the world. More and more people register at a Forex broker and try to trade with currencies.
Nowadays for many people Forex trading is nothing but glorified gambling. But is this really true?
Everyone should know that Forex trading carries a significant degree of risk and the people who say Forex is an easy way to make money are not telling the truth.
The answer on the question “Is Forex trading one kind of gambling?” is yes and no. Trading is what you make it.
What counts as gambling?
According to Webster’s Dictionary, there are three ways to define the word “gamble”:
1. To risk losing (an amount of money) in a game or bet
2. To play a game in which you can lose money or possessions
3. To risk losing (something valuable) in order to do or achieve something
Gambling is about desire and wanting a return on investment that is far in excess of the amount put into the act.
Forex trading becomes gambling when one treats the Forex market like a huge Jackpot machine or Roulette table where the hope of winning is dependent on nothing else but pure luck. Trading blindly in the Forex market with no plan or strategy will cause Forex gambler to lose money just like any game of chance.
On the other hand, when one treats Forex market like any other business or profession where opportunities can be seized and risks can be mitigated, the word “gambling” ceases to exist.
The business of forex trading
No other businesses and professions can beat the $5 trillion a day Forex market in size and the advantages and benefits of Forex trading.
The successful Forex trading is a highly skilled business. Traders have to function with a high level of planning and organization to mitigate risk and make a profit. While someone addicted to chance would argue that they always have a plan, a trader is working for a set of historical data and economic records that originate outside of what they want to happen.
Playing games of chances uses plans that only exist based on the personal desire for win.
From gambling to forex trading
The most famous card player who became trader is Blair Hull. He became options trader and made millions. He used to trade “high odds” trade setups.
Ed Thorpe, the author of the blackjack card counting book “Beat the dealer” has also achieved fame as a trader.
Mr. Thorp started his research into blackjack card counting by using $10,000 funded by Manny Kimmel, a known mob associate.
The test was successful and he won $11,000 in a weekend and could probably have won more, if he had not alerted security, who stopped him playing. He was successful at Blackjack, but became a financial trader and enjoyed even a greater success.
The bottom line
Forex traders can avoid acting like gamblers by making sure they are always analyzing the behavior of the spread against their profit plans to see where their planning may be weak.
This is done by keeping a detailed tracking record of profit and loss. With industry journals and third party performance analysis tracking, a trader avoids reacting to either profit or loss and acts based on the best rational plan.
Remember, forex trading is not about luck, it’s more about taking calculated risks.