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Forex Trading is Not a Gambling
Written by: PaxForex analytics dept - Tuesday, 29 August 2017 0 comments
Forex trading is becoming increasingly popular around the world. More and more people register at a forex brokers and try to trade currencies. But, it is more like testing their luck when they start trading because most new traders actually gamble and don’t trade seriously. They open positions due to emotions or feelings just like a Roulette player thinks that the next number will be 21. A forex trader without enough knowledge and experience just acts like that.
To the uneducated person or the inexperienced forex trader, it would appear to be very easy to arrive at this conclusion, particularly if you start watching the chart of any currency pair and observe how it moves in a seemingly random fashion. However, many large financial institutions around the world, and indeed individual traders, make consistent profits from trading forex markets, so you can be pretty sure that they are not gambling away huge amounts of money every day at random.
Some people may not even have an interest in trading or investing in the financial markets, but social pressure induces them to trade or invest anyway. This is especially common when large numbers of people are talking about investing in the markets. People feel pressured to conform with their social circle. Thus they invest so as not to disrespect or disregard others' beliefs or feel left out. Making some trades to appease social forces is not gambling in and of itself
if people actually know what they are doing. But entering into a financial transaction without a solid investment understanding is gambling.
There are a number of forex traders who are able make consistent returns from trading. While this group is relatively small estimated to be between 10-20% of the total forex trading population, this suggests that skilled traders may be able to turn a profit from forex trading. Gambling typically precludes gamblers from being winners in the long run, due to the fact that most games have a built in advantage for the house. With forex, there are numerous instances where traders have been able to remain consistently profitable over the long-run, which suggests for skilled traders forex is not akin to gambling.
While it is true that on a very short-term basis, there is an element of randomness in the markets, if you look at the longer-term charts and use technical analysis to analyze the markets and make trading decisions, you can place the odds of winning firmly in your favor. Therefore to answer the original question I would say that forex trading is definitely not another form of gambling because with a bit of education you can become an accomplished technical analyst and determine high probability trading positions where you win far more than you lose.