Every Forex trader hears foreign exchange being compared with gambling at least once. Given the profit potential this domain carries, the comparison is obvious. Much like a casino, Forex trading often rewards traders with hefty profits! And much like casinos, losing comes heavy on the wallet. Despite of the similarity, Forex trading is nothing like gambling. The latter relies heavily, sometimes solely, on luck. And the former always boils down to skill and their sharp implementation. We are here to discuss about how online trading differs from gambling and vice versa.
To further go in detail, here are the 4 ways in which Forex differs from gambling: ic markets discount
1) Forex Trading Requires A Plan : You seldom need a plan to gamble, it is predominantly luck that does the job, at most of the time. Forex exchange isn’t the same! If you’re going to trade currencies on volatile grounds, you will need the backing of strong strategies. Luck does play a part, but it is trivial. To make sure your trading capital doesn’t get drained on a bad trade, the assistance of a good Forex trading strategy is of paramount importance. Traders who think Forex can be approached like gambling, without a plan, often end up paying a hefty price in the end! A trade gone bad can leave you incurring losses greater than your account can manage.
2) Gambling Doesn’t Need Emotional Control : Most people who gamble typically, let their emotions run amok! But the same approach in Forex will only be detrimental. Forex trading is a very challenging field because if you get carried away, you will lose a good deal of money solely because of fear, over-confidence or other such emotions getting the better of you. Overtrading is done by traders out of fear, in an attempt to earn back lost money, they take trades without proper reasoning! Similarly, some traders get confident to the point where they start trading out of some blind hope that they’ll win it.
3) Forex Traders Have To Manage Risks : Gambling involves a good bit of risks in itself, but no management for the same. Forex trading demands that traders manage risks efficiently. In Forex, taking risks is what leads traders to realize big profits. Hence the need to take them. Failing to risk wisely however, will end in a loss. This is why Forex traders have to manage their capital and their risk efficiently, attaining a sort of balance between the two.
4) Lot Of Analysis Is Required In Forex : Forex trading requires a lot of in-depth market analysis. Without researching the markets, finding profitable trades will become close to impossible. Several new trends form every day and you will have to be aware of the economic, social and political happenings to stay ahead of the game.
Forex exchange is far different than gambling. A lot of skill goes into each trade, with huge risks accompanying each. Only with discipline and a good Forex broker can a trader expect to get through the difficult exchanges.