When people hear the word “gamble” what comes to their mind is going to a casino and betting on the outcome of an event. With lot of losses and winning, usually the outcome is determined by the “makers” –those who made the game.
In this article, I will try to differentiate between the two (Forex Trading and gambling) and try to clear the misconception between the two.
There a big difference between gambling and Forex Trading, though both require taking risk but there mode of operation differs. Most people think forex trading is all about getting a broker, installing a trading terminal and click either buy or sell but its more than that. But the truth is there is more to it than most people (Forex Trader) think.
Forex or Foreign Exchange Trading has to do with the medium on how different countries can trade and that medium is called a Currency.
So technically, forex has do with foreign currencies, many people who trade forex tend to misunderstand how it works.
Let me give an example on how it works.
In order to buy anything from another country you would need to exchange your country’s currency for that country’s own, other economic policy influences the currency Exchange Rate which in turn determines what forex traders see on their trading platform and you can speculate on the movement of the price of the currency.
Without proper analysis, calculation and risk/money management then we will just be “blind trading” that is without any guidance that is what I call “gambling”.
So Why Do People Refer To Forex Trading As Gambling?
Forex Trading is based on leveraging that is why almost everyone can trade it with little capital and because of that, in other to see a significate amount of profit one need to have to use a large lot size and that is where many fail, because the more lot size you use the more you expose your forex account to more risk.
One cannot use an account of $100 to make a profit of 40$ daily and people who tries that expose themselves to too much risk which can in turn hurt their account balance.
That’s what give people the impression that forex trading is related to gambling because when they make mistake due to their greed, they find who to blame.
In summary, there are many people who trade forex from financial institutions, hedge funds, banks down to investors all this various participant trade forex without calling it “gambling”. That’s why having the right mind set and perceptive towards forex is really important.
I always tell people to trade forex the same way they would handle their business which include planning, acquiring more knowledge and learn from where you made a mistake.
I for example, Trade Forex, there are sometimes I make loss just like any other person or business out there and other times I make profit, but the profit should always overcome the losses.
If you continue reading other articles on Forex Trading, you will have the right orientation concerning Forex Trading, if you find this article fascinating please comment below and share with your friends and family.