Is Forex Trading Gambling? | Trading Forex: Gambling or Analysis?

Is Forex Trading Gambling? | Trading Forex: Gambling or Analysis?

Successful forex traders are surrounded by an aura of mystery which makes them appear like magicians to some people. High leverage, high volatility, and poor understanding of the forex market’s internal dynamics lead many to believe that forex trading is just another way of gambling. This is partly reinforced by the extravagant claims in some brokers’ advertisements: Limitless riches are just around the corner, and if you dare to peek around, your life will be changed forever by what you discover.

Such esoteric claims aside, forex is neither a way of gambling, nor a chance game, but it appears so to many because of the frivolous attitude of many traders to currency trading. We must all understand that the only place where a legitimate promise of unlimited riches for no work can be made is a casino. Otherwise, wealth for no sweat is an empty dream that will never come true. Failure to realize this fact lies behind the many crushed dreams, shattered hopes that forex traders have to endure before they have any chance of success.

Yes many traders are ruined by high leverage, but who tells them to use it? There are many brokers who offer sensible levels of leverage for sensible traders. Yes forex is volatile, but the amplitude of the fluctuations is quite low. Even on one of the most volatile days of trading, the total movement in a currency pair is unlikely to go much beyond five percent, hardly a level that can wipe out an unleveraged account. And even if leverage is used, proper use of a stop-loss order can often prevent large losses from materializing. Finally, although many traders fail due to ignorance and lack of knowledge, they have only themselves to blame. If forex is a business, and business activity requires knowledge and insight to be successful, what prevents the trader from spending enough time on learning about market mechanisms, and the drivers of market action?

So traders must study, understand, and analyze. Only successful analysis can grant traders the powers of prediction and foresight which will lead to consistent and meaningful profits. But while this is the beginning of the journey to riches, there are still many problems, and obstacles to be overcome before a good grasp of forex market is attained. What is the first one of those hindrances? Choosing the right sources among the myriad offerings online, determining which of the gurus is even a credible teacher, is the first problem encountered by a trader with the correct attitude.

The distinction between gambling and trading is only one: analysis. Gamblers apply money management methods too, and some of them are quite successful with that. The depth and sophistication of the forex market, however, does not allow money management methods to be successful by themselves alone, unless they are coupled to a thorough and in-depth analysis of the market action. It is up to you to find the best online resources for forex analysis. Regardless of your choice, you and you alone will bear its consequences.