This may seem like a simple question to answer, but many factors set forex trading and gambling apart. The individuals who participate in these two markets rely on different attributes and skills to make money.
Below, we take a look at some of the differences and similarities between forex trading and gambling before making a final verdict.
One of the most significant similarities between forex trading and gambling is the uncertainty of making a return on the money invested. The forex market is dynamic, making it impossible to ever make a guarantee. Even with all the analysis tools and comparing historical data, there is always risk and uncertainty. The uncertainty that comes with navigating the market is one of the main reasons people view it as another form of gambling.
Differences in How Money is Made
Most people who make money by investing in the forex market or by gambling do it for the possibility of making large sums of money fast. Individuals can make a good investment by placing a bet or taking a good market position. However, the amounts of money circulating in these two industries are very different.
The forex market sees millions of dollars circulating every day from traders worldwide. The sums of money gamblers see regularly is nothing in comparison.
The Types of People in the Industry
There are major and minor participants in both industries. A majority of the traders in the forex market are retail traders. They are individual investors worldwide who have developed strategies to perform well in the market. Many people have a background working in large financial institutions or hedge funds. This type of legitimacy helps ensure these platforms are legal.
Gambling faces many legal difficulties because there are many parts of the world where it is prohibited. Gamblers are often confined to illegal, underground spaces that make these practices questionable.
The Tools Used
Forex trading comes with uncertainty, but educational resources help traders stay informed. The tools used depend on an individual’s favored strategy and analysis method. Market trends can be monitored for weeks with different fundamental and analysis tools. This prevents the concept of a lucky trade since all decisions can be made through research.
Tools like this are not available in gambling. There are no trends or markets to watch before making a decision. This leaves all moves up to chance and intuition, which doesn’t always end up with a move in the player’s favor.
Gambling has an association with addiction because of the emotions involved in the process. The primary aim is to make money, but gambling relies on luck rather than a strategy and an arsenal of tools to help make the best-informed decisions. This makes it easier to make decisions on a whim and lose large sums of money. This pushes people to keep gambling until they find a lucky streak that leaves them satisfied in the end.
Forex trading is different because traders have access to educational resources that inform them of their odds. The training process helps traders learn how to think strategically and without emotions. Making profitable decisions requires letting go of fear and greed. This helps traders walk away when it’s the right time.
Some traders follow the belief that forex trading and gambling are the same things, which sometimes causes them to be stuck in a losing streak for weeks or months. Making trades with a proper strategy and evaluating the market can help traders achieve long-term goals. Traders do this by analyzing the position they are considering before committing. Trying out various strategies and tools can help traders make the most informed decisions.
Gambling doesn’t allow for the development of solid strategies. Gamblers have to trust their instincts and luck that their moves give them a favorable outcome. This means that every attempt can be completely different from all others.
So, is forex trading gambling? No, but it can sometimes be hard to see the differences that set them apart without looking deeper. They both come with uncertainty and the risk of losing money. Still, the ability to use tools, enact strategies, and maintain the mindset required to make well-informed decisions separates the two industries.