Diversification in Forex: Ways to Spice up Your Portfolio

Is Forex gambling or not?

Apr 14 • Forex Trading Articles • 994 Views • Comments Off on Is Forex gambling or not?

The question, such as forex trading, is not disjunctive, as both answers can be accurate. Both answers may be acceptable makes this topic a frequent debate among Forex traders, financial advisors, investors, and the general public.

Also, suppose any economist or any interested person opens a survey on this single question. In that case, the answer will change depending on the respondents’ financial education and the background of the trading. While Forex trading is a gamble for a beginner or untrained investor, it is purely economic science for an expert trader. Hence, the answer to this question depends on the person who answers it and the person who trades in Forex.

On one hand, an untrained eye can miss the almost unlimited potential for earning income from Forex trading. Perhaps he does not see the connection between political unrest and exchange rate fluctuations.

Also, people with little financial knowledge cannot recognize price trends, chart patterns, and understand the various technical and fundamental analyses required to predict future exchange rate changes.

Therefore, since they do not understand either the Forex market or economic policy, they can only guess which currency pair will rise or fall.

In these conditions, the interviewed respondents should give a clear affirmative answer to the question, is Forex trading a gamble? They may answer ‘yes’. Forex trading is a gamble as they don’t know what they are doing and why the price might change.

On the other hand, professional Forex traders or people with knowledge of the financial markets should answer the question negatively.

If Forex trading is gambling or not is laughable to them, to say the least, in light of their acquired knowledge of the market and their personal experience. Also, they know that the exchange rate varies depending on several determinable factors. They understand the information in price charts and recognize patterns that predict future exchange rates with great confidence.

Also, they can monitor the market and prevent losses by closing their positions before the end of the current trend. For this reason, this group will reflect pessimism to the question, and they confirm and can prove that Forex trading is not a game of chance but a science and art that can be learned and mastered.

When is Forex trading a gamble?

Forex trading is gambling every time a trader does not study and prepare on his own to determine market behavior and recognize current trends and possible interfering factors or market noises.

It is a gamble…

  • When a trader invests more money than he can afford to lose.
  • When a trader enters a position without understanding the current market sentiment.
  • When a trader doesn’t take enough time to learn how to spot price chart patterns and signs of reversal.
  • When a trader does not follow economic indicators, politics, and international news that may affect his trading market.
  • When a trader relies on luck and maintains an open position without closing it profitably.
  • When a trader does not have or does not adhere to a good investment strategy.
  • When the trader does not have a risk management plan.
  • When a trader does not include possible transactions and brokerage costs in their profit estimates.

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