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Forex Trading vs Gambling
Written by: PaxForex analytics dept - Thursday, 19 January 2017 0 comments
Forex, the foreign currency exchange market, is available for online trading 24/5. The pace is fast and there appears to be little governing the boundaries of behavior, so does this make forex more similar to casinos than like other investment opportunities? Yes and no. Trading forex is what you make it. It can be a risk filled hobby as dangerous and luck driven as a casino game, or it can be a complex and highly orchestrated investment business with a minimum risk element and a high potential for profit.
Everyone knows that financial trading comes with a high degree of risk, but often forex trading is picked out as being more risky than other types of financial trading. In fact, if you take a browse around the internet you will find a number of people claiming that forex trading is nothing more than gambling. However many large financial institutions around the world, and indeed individual traders, make consistent profits from trading forex market, so you can be pretty sure that they are not gambling.
As a forex trader, how much profit you would make hinges largely on your skills, abilities, and understanding of how everything works in the foreign exchange market. It takes time to master all these, but
you will make more profit as you learn more. In forex trading, you can opt out of the market when market factors seem unfavorable. This is a good tactic to prevent huge losses. And you can as well enter the market again once market indicators show positive signals.
Gambling involves pursuing a return on investment that is well beyond the amount of effort put into the act. Although there may be some mathematical logic to it, price patterns and analysis are far less likely to play a role. Success in gambling is overwhelmingly based on luck and chance rather than skill, as games of chance rarely offer the opportunity to develop the skills needed to generate consistent returns.
In this regard, unsophisticated forex traders have a lot in common with the casual gambler. For example, the novice or not so savvy trader might start trading the forex market without ever having developed a well thought out trading plan. Basically, these traders make up the gamblers of the forex market that essentially just make bets on the direction of the forex market. Often, such traders will eventually wind up losing some or all of their trading funds as they pay for the entertainment of trading in the forex market.