Forex Articles from FXCC

Is Forex Trading a Form of Gambling?

Sep 19 • Forex Trading Articles • 20728 Views • 12 Comments

There's been a subtle change on the high streets of the UK over recent years. Previously betting shops were mysterious smoke filled denizens where the errant uncle, father or grandfather wasted a proportion of his wages each week, (in between visits to the local pub), they're now clean, open inviting places offering a massive range of products.

Similar to the drinks industry, who realised over the past decade they could reach down and get the kids hooked as early as possible with the invention of sugary tasting alcopops, the betting industry has not been slow to adapt in their hunger to ensnare the next generation. Not only are the betting shops unrecognisable, now offering a laid back, leisurely, ambient environment in which to lose your money with ease across a vast array of sports markets, the major firms have also migrated to mobile devices, you can now throw away your fivers and tenners with ease across: iPod, Android or Blackberry devices, and similar to financial markets bet when the markets are in play.

Think Fernando Torres will get a penalty in the match versus Chelsea, after scoring one great goal and then missing the open goal of the season and that he'll fluff the penalty, then begin to pull his bleached hair out, roll around the penalty area, sucking his thumb whilst crying like a baby screaming, "take me back to Athletico Madrid"? Then there'll be a bookie that'll gladly take your money off you in record time.

Those last two paragraphs read as rather arrogant, flippant and dismissive of a massive industry, any apologies will not be forthcoming as it's quite deliberate. No doubt certain readers will point out the irony that forex trading is still gambling and suggest the methods used by brokers are not too dissimilar to that used by bookies and in some ways they'd be correct. However, there are subtle differences and one massive difference, the massive difference is that your ECN broker wants you to win, his success can only be perpetuated due to your continued success. There is no broker involved in sports betting, there's a 'bookie' and he wants you to lose. They want you hooked, then they want your money, as much of it as possible. They make no efforts to increase your performance and profitability and only increase their supply of apps based technology in order to take your money off you, using smarter quicker methods, through your smartphone.

 

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There may be a few horse race 'form' algorithms and certain on line bookies offer systems, the most sophisticated betting algorithms available are still 'Martingale' systems; keep on doubling up the bet until you get the winner, then quit and go back to your original level of risk. This system is taken to the extreme at dog tracks where the suggestion is that you stick to a trap number. Not quite Fibonacci retracement or Ichimoku cloud indicators which you can plot on a free charting package, all provided by a broker who wants you to be successful. There's no seminars from the bookie, no video support, no blogs, strategies, techniques, or support articles, it really is a one way relationship based on the provision of addiction.

The advantages of forex betting or markets betting over traditional sports betting could form a long list, here's just a few critical differences;

We only bet on two horse races; price either goes up or goes down.

We can stop our race; we simply exit the trade early and as a consequence we immediately reduce our risk.

We can change our jockeys and horses at any time during the race; if you think the other side of your pair trade is the better direction then you can take it at any stage of the race.

We can alter our bet in the race; if we've got direction right we can increase our position size. If we've got direction wrong we can hedge.

Trading is gambling, without any doubt we bet on the direction price will move. No layers of sophisticated description will cloud that fact. We may prefer to use the more socially acceptable word "trading" in place of "gambling", however, the process is the same and traders would do well to embrace the similarity. We use the words "take a trade" as opposed to "placing a bet" as trading sounds respectable, it's what "clever people do" not what the errant relatives do.

But consider if the errant Uncle, Dad or Grandad walked in his front door and instead of avoiding the scowls proudly announced that last week, after reading the markets form (fundamental analysis by way of his Bloomberg and Reuters iPhone app) and taking a look at support, resistance and the 200 day moving average he'd decided sentiment for the euro was still bearish so he went short on a swing trade versus the dollar using fifty pounds and he'd banked £300. This kind of betting suddenly seems responsible and sensible, betting is no longer speculation, it's an investment based on thorough research and analysis. It's a socially responsible activity at a time when the returns on savings and other investments are non existent for the vast majority.

12 Responses to Is Forex Trading a Form of Gambling?

  1. Mr. Scalper says:

    Hello there!

    Well to inexperienced/newbie trader, it Seems to be very easy to reach this conclusion. But for me personally I don’t believe there is a professional trader who look at the forex trading as a form of gambling. It is a real investment!

    I would really love seeing FXCC offering educational courses to newbie traders, especially technical analysis to help newbie traders to be able to study charts and technical indicators to identify trading patterns and help them find potentially high probability trading positions.

    Peace.
    Mr. Scalper

    • FXCC Blog says:

      Mr. Scalper hi and thanks for stopping by.

      I think we agree on the conclusion. Forex trading isn’t gambling – as we pointed out in the article. Yes, the process is similar – you make a decision based on what you think the future outcome will be. There the similarities end. Trading is a skill – not a coin flip, and like any skill, it takes time and effort to acquire. That’s why we offer our demo accounts for all new traders to try and see if forex trading is for them.

      We will be offering trading courses in the very near future. It’s something we have been putting together for a while now, but, like everything we do, if it’s not 100%, we won’t release it. We have some interesting projects in the works which I’m sure will be a great benefit to our traders – training courses included.

  2. Mr. Scalper says:

    Hi and thank you for the prompt reply.

    It is very cool to know that, wish you all the best luck.

    IMHO, a trader without solid rules, discipline and consistent strategy is for sure a gambler.

    Thanks
    Mr. Scalper

  3. Johnny D. says:

    Don’t forget about knowledge. Did you ever thought why so many people wake up one day willing to trade big $, they go online, buy the EA that has the best reviews and then call themselves traders?!

    • FXCC Blog says:

      This is why we recommend to all our clients to register a demo account first before trading on a live account. It will allow the trader to get used to the trading platforms, to go through trading and news materials to enrich the trading vocab and knowledge and it will allow them to see exactly where they stand in the forex world.

  4. ak says:

    hi, to be cocksure, is online forex trading a betting game or not? thanks

  5. Bourse says:

    Et dire que je ne connaissait pas ce site, vous voila bookmarker !

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