Is Forex Trading just gambling?
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RahmanSL
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With a mere 15+ months in forex, I am a semi-Newbie.
Forex is most definitely a form of gambling...as are more established, and "respectable", stock brokering, banking, etc. If we are correct in our assessments of the risks involved, we make money. But if we are wrong or some factors happen to affect our assessments, then we loss money or get completely screwed.
Everybody is in it with the hope & expectation of making some money back from their investment or speculation. Nothing more, and nothing less!
We can analyst the probable directions of currencies, commodities, stocks,metals, etc, but we cannot be 100% sure as there are just too many variables and unknowns which we cannot hope to cover or which has been completely left out, either variably or invariably, from our equation.
And then there are the "Big Boys" behind the scene. With their huge financial capability, they are the real movers & shakers of the financial industry.
I perceived most of our every day's activities as a form of gambling. Even simple things like crossing a busy street is a gamble that we will not be hit by a sudden fast moving vehicle. We purchase and eat food believing/trusting/gambling that it is safe to consume and that it has not been tempered with.
We joined a firm believing that our hard work and dedication will get us ahead to become the company's president. And, of course, politicians enter politics hoping to make huge gains through their newly acquired position and powers.
So, what else is trading forex? We analyst, assess, and then speculate!...though most of us would like to think that we are only taking calculated risk and place SL to limit our losses in any eventualities.
Forex is most definitely a form of gambling...as are more established, and "respectable", stock brokering, banking, etc. If we are correct in our assessments of the risks involved, we make money. But if we are wrong or some factors happen to affect our assessments, then we loss money or get completely screwed.
Everybody is in it with the hope & expectation of making some money back from their investment or speculation. Nothing more, and nothing less!
We can analyst the probable directions of currencies, commodities, stocks,metals, etc, but we cannot be 100% sure as there are just too many variables and unknowns which we cannot hope to cover or which has been completely left out, either variably or invariably, from our equation.
And then there are the "Big Boys" behind the scene. With their huge financial capability, they are the real movers & shakers of the financial industry.
I perceived most of our every day's activities as a form of gambling. Even simple things like crossing a busy street is a gamble that we will not be hit by a sudden fast moving vehicle. We purchase and eat food believing/trusting/gambling that it is safe to consume and that it has not been tempered with.
We joined a firm believing that our hard work and dedication will get us ahead to become the company's president. And, of course, politicians enter politics hoping to make huge gains through their newly acquired position and powers.
So, what else is trading forex? We analyst, assess, and then speculate!...though most of us would like to think that we are only taking calculated risk and place SL to limit our losses in any eventualities.
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MichelAnge21
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Very interesting question.
In my opinion, the similarities between gambling and trading are psychological in nature. Both gamblers and traders are willing to wager money by predicting a future event. The gambler looks, for example, at the ball in the roulette wheel and bets that it will fall in a red slot. The trader who goes short Eur-Usd just before NFP waits for the stats numbers with anxiety. Both are constantly torn between greed and the fear of losing. They have powerful emotions that might affect their gambling or their trading.
As a trader who occasionally visits our local casino in Montreal, I try to be an intelligent gambler ( but most gamblers act stupidly ). Being an intelligent gambler means that you understand the mathematical probabilities very well. It also means that you understand that there is no gambling strategy that can make you a consistant winner in the long run. Some people think a certain martingale will allow them to beat the casino. If such thing existed, all casinos would close their doors. Similarly, some traders think that a robot will give them a regular income for life: it s a delusion.
As a rational gambler, I use a stop loss and a take profit and I try to eliminate all emotions from my gambling strategy. I play blackjack knowing very well that the dealer has a certain edge of about 2% over my best play. Everything can be calculated with great precision. Emotive gamblers will ruin themselves pretty quick. You ll see people who already lost big, but cannot leave because they are desperate to recoup their losses. You ll also see people who won big and you ll think : " Now is the perfect time for you to stand up; throw negligently a 25 dollar chip toward the dealer saying: " Tip for the staff. Merci et bonsoir ". But greed makes them stay....
But what about trading ? The odds cannot be calculated mathematically. If you go short Eur-Usd before NFP as we said before, are the odds here 50/50 ? Certainly not. Either you ll be right or you ll be wrong in your prediction, but it is not a game of chance. Maybe you understood accurately the economic indicators or maybe you misjudged. It s not like the ball at the roulette wheel. You can STUDY and become a better trader. Studying the best blackjack play will take a couple evenings to the intelligent person. Studying to be a good trader will take years.
There is no possibility to make a living gambling ( if we dont count poker pros ): it s for fun. But some traders DO make a living trading....hmmm very important and fundamental difference. So, controlling your emotions is a requirement for both activities. Proper money management also. But, with trading, KNOWLEDGE definitely gives you an edge.
It s more like predicting the weather. You can study meteorology and observe the cloud patterns, barometric pressure etc. Then you come with a prediction like :" Tomorrow 40% chances of showers " So you take 40% of your umbrella with you before leaving home.....You d never call a meteorologist a gambler even if he calculates probabilities instead of having certainties about the immediate future. A good trader is a kind of meteorologist who puts his money where his mouth is.
In my opinion, the similarities between gambling and trading are psychological in nature. Both gamblers and traders are willing to wager money by predicting a future event. The gambler looks, for example, at the ball in the roulette wheel and bets that it will fall in a red slot. The trader who goes short Eur-Usd just before NFP waits for the stats numbers with anxiety. Both are constantly torn between greed and the fear of losing. They have powerful emotions that might affect their gambling or their trading.
As a trader who occasionally visits our local casino in Montreal, I try to be an intelligent gambler ( but most gamblers act stupidly ). Being an intelligent gambler means that you understand the mathematical probabilities very well. It also means that you understand that there is no gambling strategy that can make you a consistant winner in the long run. Some people think a certain martingale will allow them to beat the casino. If such thing existed, all casinos would close their doors. Similarly, some traders think that a robot will give them a regular income for life: it s a delusion.
As a rational gambler, I use a stop loss and a take profit and I try to eliminate all emotions from my gambling strategy. I play blackjack knowing very well that the dealer has a certain edge of about 2% over my best play. Everything can be calculated with great precision. Emotive gamblers will ruin themselves pretty quick. You ll see people who already lost big, but cannot leave because they are desperate to recoup their losses. You ll also see people who won big and you ll think : " Now is the perfect time for you to stand up; throw negligently a 25 dollar chip toward the dealer saying: " Tip for the staff. Merci et bonsoir ". But greed makes them stay....
But what about trading ? The odds cannot be calculated mathematically. If you go short Eur-Usd before NFP as we said before, are the odds here 50/50 ? Certainly not. Either you ll be right or you ll be wrong in your prediction, but it is not a game of chance. Maybe you understood accurately the economic indicators or maybe you misjudged. It s not like the ball at the roulette wheel. You can STUDY and become a better trader. Studying the best blackjack play will take a couple evenings to the intelligent person. Studying to be a good trader will take years.
There is no possibility to make a living gambling ( if we dont count poker pros ): it s for fun. But some traders DO make a living trading....hmmm very important and fundamental difference. So, controlling your emotions is a requirement for both activities. Proper money management also. But, with trading, KNOWLEDGE definitely gives you an edge.
It s more like predicting the weather. You can study meteorology and observe the cloud patterns, barometric pressure etc. Then you come with a prediction like :" Tomorrow 40% chances of showers " So you take 40% of your umbrella with you before leaving home.....You d never call a meteorologist a gambler even if he calculates probabilities instead of having certainties about the immediate future. A good trader is a kind of meteorologist who puts his money where his mouth is.
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Wow... in my opinion:
The first year I've trade like a gambler. Thought forex is a gambling - no more or less!
The second year, I felt it maybe a gambling. I win and lose every month and thought it's lucky when I win...
From the third year, I've improve my system and didn't think it's a gambling at all! I trade with good management and make profit every quarter (3 months).
For now on I try to make profit every month and I am sure forex is not gambling!
Cheers,
The first year I've trade like a gambler. Thought forex is a gambling - no more or less!
The second year, I felt it maybe a gambling. I win and lose every month and thought it's lucky when I win...
From the third year, I've improve my system and didn't think it's a gambling at all! I trade with good management and make profit every quarter (3 months).
For now on I try to make profit every month and I am sure forex is not gambling!
Cheers,
jpadventure
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Poker is not gambling, there is a given probability with each hand. If you know the odds, you can bet sensibly. Able to see if you have a 1 in 5 chance or if you have the best possible hand (of course the other person may also have the best hand at the same time).
Like wise, if you've tested your particular method, you'll know the probabilities of winning and losing. Gambling is then a case of "have you followed your method or not".
Like wise, if you've tested your particular method, you'll know the probabilities of winning and losing. Gambling is then a case of "have you followed your method or not".
I agree that gambling is a different mindset, or more accurately, less rational and based in examination of the facts of numbers.
I'm new to the study of Forex trading which appears to be a challenging scientific discipline. There is a stack of research required to even begin to do this profitably. Leaving it to robots looks closer to gambling to my mind.
I'd add Real Estate investment/construction to the "gambling" list. It is massively stressful working within all the variables: competition, cash flow, interest rates on borrowings, supply chain, mistakes by trades, time constraints, quality requirements, compliance with regulations and laws, unions, workplace accidents, the weather... and old fashioned master-slave mindset enshrined in industrial legislation that sheets home all responsibility for this to the licenced builder up to 6 yrs 9 months after the date of completion. No wonder the two most important tools for an Australian builder are his or her solicitor and his accountant.
I'm new to the study of Forex trading which appears to be a challenging scientific discipline. There is a stack of research required to even begin to do this profitably. Leaving it to robots looks closer to gambling to my mind.
I'd add Real Estate investment/construction to the "gambling" list. It is massively stressful working within all the variables: competition, cash flow, interest rates on borrowings, supply chain, mistakes by trades, time constraints, quality requirements, compliance with regulations and laws, unions, workplace accidents, the weather... and old fashioned master-slave mindset enshrined in industrial legislation that sheets home all responsibility for this to the licenced builder up to 6 yrs 9 months after the date of completion. No wonder the two most important tools for an Australian builder are his or her solicitor and his accountant.
