Is Forex trading gambling?

Our colleague Tung covers one of the most talked-about and evident subjects in forex trading in our new piece. Should one gamble or not? He encountered a wide range of people with different perspectives on trading during his professional career. He could estimate what the majority had to say. Indeed, most traders lose money or give up quickly, and the general public views trading as nothing more than a casino. Do you believe that there could be a connection? Perhaps.

The World’s Biggest Casino – Forex

When I brought up Forex trading because I had mentioned that I am very interested in it, a professional investor I once met with some decent academic background and experience in the financial industry said right away that Forex is a casino and he uses it only for “Diversification.”

Later on, I came to understand that trading and investing are two entirely different professions. While they share the same basic idea—approaching the financial markets with the goal of making a capital gain—their methods and approaches are very different, which led me to conclude that an investor is not the same as a trader.

You can read my post about the distinctions between trading and investing if it piques your curiosity.

Returning to the primary subject of this piece, I have to admit that I was devastated to learn the investor’s opinion.

I thought that trading was just a fancy word for gambling, and I felt as though my hopes of becoming a professional trader had just been dashed. I now laugh at how ignorant and uninformed I was back then, every time I remember back to those days.

However, in this article, we’ll talk about how much trading resembles gambling, how exactly gambling and Forex trading differ from one another, as well as the key differences between the two and how trading can ultimately result in financial gain.

Is Forex Trading gambling?

We will dissect the main elements of Forex trading that are similar to gambling in this part. From a novice’s perspective, we may observe that, on the whole, the fundamental procedures are rather similar:

Money
This is simple and easy to understand. In each scenario, starting capital is required. To execute your first transaction or put your first wager, you must have capital, which is why I have likened Forex to the largest casino in the world due to the huge fluctuations in both markets. Both sectors deal with substantial amounts of money on a daily basis; while the quantity handled in casinos is not nearly as high as that in Forex markets, it is still a substantial sum.

Risk
The market or the roulette spinning table acts on its own as the game progresses, and the result determines whether you win or lose money. This is referred to as risk since no one can accurately forecast how the market or a game will perform, therefore there is always some degree of uncertainty because no one can foresee the outcome in advance.

Gain/Loss
Losing and winning are inherent to the game. Since traders and gamers join the market or the casino with the only goal of making money, this portion is uncomplicated and obvious. A tiny minority of people claim to trade or play only for enjoyment, but we all know that these people are short lived since ultimately emotions take over and things start to go wrong.

Emotions
There are many different emotions at play throughout the transaction or game, as well as in the result.

When you win money, you experience ecstasy, your heart races, and the profit’s unmistakable joy is so loud. Conversely, when you lose money, despair, annoyance, and fear take hold.

As we already know, fear and greed are two of the greatest emotions that can cause these feelings, and they are so powerful that a novice trader finds it difficult to control them.

These are the clear reasons why forex trading is so similar to gambling, and most traders end up on the gambling side of things because they approach trading like gambling and then blame it for their loss of money and control.

But the good news is, that’s all there is to it for us real traders.

The only parallels are these. With this perspective, we may educate ourselves and investigate the fact that trading is more than simply gambling, just as gambling is more than just gambling.

Why is Forex trading more than gambling?

Let’s start by talking about math.

Due to their statistical advantage over players, casinos can guarantee that the house will always prevail.

Using roulette as the traditional example, which you may have already seen online, the roulette table has 36 numbers that are colored black and red.

You may believe that your chances of winning or losing are equal each time you wager on the color red or black.

But, casinos sneak in the green zero number—or, depending on where you live, the green double zero—into the roulette table. As a result, the probability of winning is no longer 50/50 but rather around 47/53, which is the statistical advantage over an extended period of time. In other words, throughout the course of a hundred wagers, you will only earn 47 and the casino will get 53.

Trading has the advantage of being able to trade like a casino. If you assume that every deal has the same number of lots, you can have 53 successful trades over 47 lost trades. It all relies on your method, mentality, and risk management, and ultimately, you want to be profitable.

Read more about trading with a statistical advantage.

Second, you are free to employ any techniques and improvements that will enable you to regularly make money from your trade.

You have two options for trading tools: either you may imitate the trades of a professional trader, or you can use a team of expert advisors to trade on your behalf, relieving you of the emotional burden associated with a trade.

You can also utilize indicators for technical analysis to improve your trading by studying an instrument’s features and gaining an advantage over other traders. With the current developments in technology, trading offers many benefits.

In addition to the improvements and innovations in technology, you can utilize a human mentor for your trading. If you wanted to count the cards in a Blackjack game, could you bring a mathematician with you to the casino floor? There are very few restrictions on your trading style, tool selection, or behavior when using a funded FX account. In addition, you will undoubtedly run into a lot of professionals and financial gurus along your trading adventure. These kinds of social gatherings will only serve to educate you, which I’m confident will advance both your job and your life.

Still, there is financial gain to be had from gaming. As I previously stated, you can learn how to win at blackjack by counting the cards or how to build a statistical edge to win at horse races, but ultimately, the casino always comes out on top. Even if you manage to find a flaw in those casino games, you run the risk of being expelled from the establishment and being banned from all casinos.

The final note

Finally, if you approach forex trading like gambling, it may be considered gambling. You are trading against the big boys, thus the result will always be a loss if you approach the market with no plan, strategy, or methodical approach and just depend on chance. The large folks I’m referring to here are the huge banks. These guys not only have an insight of the market as a whole, but they also understand how the general public behaves. Thus, you have to think like the big guys if you want to win those large guys over. To be able to accept the large gains and ultimately guarantee long-term profitability, you must be prepared to accept the little losses.

Consistent long-term profitability is a lonely journey that requires a great deal of discipline, perseverance, and commitment. As with any other job or career, being the greatest trader requires a great deal of sweat, blood, and tears in order to master psychological control, risk management, planning, testing, re-strategizing, and other related skills.

The good news is that you have access to all the tools, resources, people, and firms that will help you along the way; the length of the process is up to you.