One of the primary reasons why so many people compare foreign exchange trading to gambling is that both involve an element of chance. Because there are so many different aspects and elements to consider, it is highly unlikely that a single day of forex trading would pass without at least one decision that could have been better.
Trading foreign currencies, like gambling, entails placing wagers on events whose outcomes are unpredictable. And if you want to be successful at it, you’ll need a strategy for dealing with both the difficult situations in which you wonder, “What just happened?” and the way you react to such situations. Despite the superficial similarities, trading foreign exchange is not the same as gambling. If you spend any time reading through the vast amount of trading literature provided by a well-known foreign exchange trading company like iMarketsLive, you will notice that “informed gambles” are generally discouraged.
Forex gambling frequently results in a vicious cycle, which quickly places inexperienced investors in financial jeopardy. Before we look at some of the key differences between gambling and forex, let’s look at some of the similarities.
Foreign Exchange Trading and Gambling Comparisons
There is no such thing as a “correct way to play” in foreign exchange (Forex), as there is in gambling. In fact, any forex product that claims to provide a simple and top-secret method for consistently coming out on top is most likely not what it claims to be. It is a claim that is just as untrustworthy as someone claiming to know a simple method for consistently beating the house when gambling in a casino. That simply does not reflect reality.
There is no one product or strategy that is guaranteed to be successful in the foreign exchange market at all times. What works well this week may not work well the following week. Your level of expertise, knowledge, and mental makeup will all influence how you trade forex, just as they will influence how you play poker or blackjack. At least one aspect of foreign exchange on a deep and intuitive level, as this is the only way to consistently earn money from it. Perseverance, practice time, and focused attention are required.
Both are entire universes full of signals and clues
You don’t have to be an expert gambler to understand the rules of the game, but the ability to interpret signals and tells from other players is the most important skill you can learn if you want to be successful in a competitive game of chance. It is not just the cards your opponent is holding; it is also how your opponent reads and uses those cards. Similarly, being able to locate and comprehend market-related news is an important aspect of forex trading. Despite the fact that there are numerous methods for obtaining data, learning how to understand it is the key. In other words, trading foreign exchange is a lot like gambling in the sense that you’re looking for a twitch, tic, or tell. This refers to a minor, almost imperceptible change in the course of events that indicates the possibility of financial gain.
How Foreign Exchange Trading Isn’t the Same as Gambling
Working Hard in Forex Pays Off
Certain types of gamblers may be said to be the same, but in most cases, the gamblers in question are professionals who do not approach their game of choice as if it were gambling. The vast majority of gamblers and gambling games, on the other hand, are designed to reward random occurrences and lucky breaks. You must be ready to capitalize on such opportunities when they arise, but you have little control over when they do.
Unless our strategy differs significantly from that of the vast majority of professional investors, forex trading does not reward intuitive decision-making. It is a reward for hard work. To be successful in foreign exchange, you will need a routine, a methodical data collection strategy, and some boundaries that you must never cross. To accomplish all of this, a consistent regimen of strenuous and unrelenting labor is required.
Forex trading is rarely characterized by unexpected profits
The other side of the coin must also be considered. In contrast to gambling, forex trading rarely results in unexpected windfalls that can drastically alter one’s life. Despite the fact that it is possible to make a quick profit when trading forex, relying on those profits as your primary source of income is a losing strategy. This mindset invites errors into the conversation. It stands to reason that having unrealistic expectations is one of the quickest ways for new forex traders to become disillusioned. Even inexperienced traders are susceptible to the neurotic desire for the endorphin rush that comes with a large cash gain. Seeking the rush moment in foreign exchange can frequently lead to costly mistakes. Those who can profit from forex trading are those who can sit back and do nothing when the situation calls for it.
Why Is Foreign Exchange Often Likened to Gambling?
When it comes down to it, while there are some similarities, gambling attitudes and techniques have very little in common with forex trading, despite the similarities. The question then becomes, why is this analogy so frequently used?
It’s possible that a significant portion of this is due to the way trading forex feels.
To be successful, you must be able to recognize and overcome the euphoria that comes with a winning streak, as well as the despondency that comes with a string of losses. The deeper emotional game of forex, like gambling, involves tamping down both the rush of endorphins and the response of “fight or flight.”
Even if trading foreign exchange and “having a flutter” are two distinct intellectual activities, it’s possible that both types of gambling are motivated by the same basic emotions: the fear of losing money and the excitement of gaining something new.
