Is forex trading like gambling

The foreign exchange market is the largest in the world in terms of forex trading volume. It is a creative, active and dynamic financial marketplace. Arguments that forex is gambling lead to unfair and needless confusion.

When someone gambles, they never know when they will win. It is impossible to predict or analyse the next combination on a slot machine or in a blackjack card game.

In contrast, dedicated forex traders investigate, develop, and evaluate a range of trading strategies that improve their chances of success. They open a position by using a variety of analysis tools to identify market trends and take advantage of them.

It cannot be emphasised enough that the first steps towards creating a profitable overall position are conducting thorough research, taking “risk management” seriously, and gathering pertinent knowledge. Successful trading patterns usually result from this type of instruction and training.

Let’s examine a few of the most typical worries and clarify the key distinctions between forex trading and the world of gambling.

About the forex market

Forex is a dynamic global exchange that consists of a basket of different currencies. The process of exchanging one currency for another is what “Foreign exchange” is all about. By its nature, the foreign exchange market is decentralised. It is entirely virtual and covers a wide range of nations, currencies, and commodities.

The broker, who offers trading services, and its clients, who are average people who use these services, are the primary players in the forex market. Additionally, brokers serve as the intermediaries that traders need in order to access the foreign exchange market and provide the most precise value estimate for the currencies that are traded.

About gambling

Gamblers place bets on events that they find incredibly difficult to predict. Therefore, the most common methods they can rely on are chance, luck, and good fortune. Undoubtedly, a small percentage of players are proficient in the technique known as “card counting.” Using this game strategy, the player keeps track of the cards that are revealed all the time and adjusts his or her bets accordingly.

Key aspects of forex trading that look like gambling

Funds

This is simple and easy to understand. In each scenario, starting capital is required. To execute your first trade or place the first bet, you must have capital. Both sectors deal with substantial amounts of money on a daily basis. While the amount handled in casinos is not nearly as large as that in forex markets, it is still a substantial amount.

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 because no one can accurately forecast how the market or a game will perform, so there is always some degree of uncertainty because nobody is able to foresee the result in advance.

Gain/Loss

Losing and winning are part of the process. This is pretty straightforward since although traders and players join the market or the casino with the sole goal of making money, there are some cases in which emotions or other factors take over and things start to go wrong.

Emotions

There are many different emotions evoked by trading or gambling, as well as by the result. When you win money, you experience euphoria, your heart races, and the profit’s unmistakable joy is so loud. Conversely, when you lose money, despair, annoyance, and fear take over.

As we already know, fear and greed are two of the strongest emotions that can cause these feelings, and they are so powerful that a novice trader finds it difficult to control them. These are clear explanations for why forex trading and gambling are easily confused.

Forex Trading VS gambling

There still seems to be a lot of confusion between the more established and mature financial field of forex and the gambling industry. To be clear, forex is not some kind of gambling. It is true that there are risks associated with trading. The fine print and street banners make it very evident that there is no secret involved.

It is simply impossible to “count cards” when trading forex. You can choose from a variety of acceptable approaches, plans, and methods to assist you in making the most profitable trading choices. Trading execution calls for a thorough understanding of trading tools, expert use of data and analysis, and sufficient self-control to suppress irrational thoughts or ideas that might negatively influence decisions otherwise.

On the other hand, gambling typically encourages bad judgment, mathematical errors, and frequently the priority to have fun for a short period of time.

Discipline, psychology, and behaviour are what separate them. Some would say that trading may be considered gambling if a trader places a greater emphasis on instinct than on logical analysis. A lot relies on how forex is used in practice.

Why forex trading isn’t gambling

In contrast to gambling, forex trading does not have a “house.” A different trader with their own interests is your rival in the market. Furthermore, not every player in the market is motivated to make enormous gains. Commercial banks, central banks, institutional and retail traders, authorities, large companies, and others are among the list of participants in the currency exchange market. When exchanging currencies, multinational corporations don’t focus on losing money. Since they operate in several nations and require a variety of currencies, they trade currencies out of necessity.

Psychological elements have the potential to seriously affect your forex trading performance. The likelihood of losing money is very high if you don’t have a plan that you follow through on. As already mentioned, when trading forex, it’s critical to have specific goals and expectations in order to prevent overleveraging and taking too much risk. Understanding your level of risk tolerance is also very beneficial.

The key distinction between forex and gambling is that traders are active participants in the process. The market does not intentionally place them in a worse position. Traders can increase their trading balance and turn the odds in their favour by employing a variety of tactics and tools to stay ahead of the market.

Institutional activity is a further significant difference between trading in forex and gambling. A pension fund, for instance, is not likely to hire professional poker players in order to generate income, but they do employ forex traders in order to succeed in the market. Professional gamblers do not have the same privileges as forex traders. Instead, proprietary trading firms fund them.

Final thoughts

In response to the initial query, I would state that forex trading is unquestionably not gambling. If you treat forex trading like gambling, it can be considered gambling. If you approach the market with no plan, strategy, or systematic approach and just depend on luck then the outcome will not always be favourable.

To be able to generate revenue and ultimately aim for 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, dedication, and commitment. To become a successful trader, you must be prepared to learn how to control your psychology, manage risk, plan, test, and re-strategise just like you would in any other job or profession.

It is up to you how much of yourself you are willing to dedicate, but the good news is that you have all the tools, resources, and people who will support you along the way.

Disclaimer:
This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked in this communication.