Trading and gambling have often been looked at from the same lens many times since both involve risks and benefits and involve money. The investment is also based on a similar construct of “Outcomes”, whether it is a poker hand or forex news. We all have gambling tendencies that we use at different times in our lives, with or without money. It is the hope that we put on chances which give us an adrenaline rush of making the right prediction. In the forex market, it is much more than chances and depends a lot of the progress of the economy of currency and other international factors.
According to the definition of the word “gamble”, it is the risk of losing in a game or bet to achieve something. When we consider this definition, both forex and gambling involve risks and losses. At some point, you are meant to face losses in forex as it is a part of this business.
Even after so many similarities, the forex professionals still want to convince us that forex is not gambling at all. The only people who will try to convince you that forex is not gambling are the ones who want to sell you’re their products while promising up to 98% success rate. The truth is that even the large banks and hedge funds gamble all the time when they trade. But there is a big difference how they and the 99.9% of the retail forex traders gamble. Their luck depends entirely on probabilities. It is a calculated gamble that can pay better than casino games and sports bets.
How do probabilities work?
The probabilities in forex trades depend on the odds of the market that are in your favour. Traders invest their money on the trades which offer higher odds of winnings. It is also known as stacking the odds in your favour. The more confluence you have in your favour for any trade, the higher chances you will have to make money from that trade.
Is forex trading gambling?
Yes, forex is one of the most played forms of gambling. The only difference is that we can get to review past price action before investing money. It is similar to seeing the dealer’s hand before making a bet in blackjack. This advantage will only work when you know how to use it to your advantage. The key to knowing this is to find the right confluence factors that can stack the odds for you. There are plenty of factors that influence the odds, such as trends, moving averages, resistance, and economy of the currency.
The goal for a forex trader should be to learn trading like the casino operator runs his business. Both casino owners and forex traders should know that they will lose money to some customers or trades, but it is the cost of doing business. With the best odds stacked in their favour, sooner or later they both will experience profits.