*!!! Is Forex Trading a Gamble??? !!!*

"He that can have patience can have what he will. — Benjamin Franklin"

People often ask me, or to be more specific argue with me, that TRADING is GAMBLING. I say a big “NO”. It is indeed a highly debatable topic. I just want to put my views forward on it.

Is Forex Trading a Gamble?

FOREX

That’s what everyone thinks at first but it really isn’t. Forex Trading will become gambling when there is no fundamental or technical reason supporting a trading decision. Let me explain…

GAMBLING

- To bet on an uncertain outcome.

- To play a game of chance for stakes.

SPECULATING

- To engage in any business transaction involving considerable risk or the chance of large gains, esp. to buy and sell commodities, stocks, etc., in the expectation of a quick or very large profit.

I think it’s all about Speculation. The trader takes on risk in a market for a potential reward. The gambler risks a $5.00 chip on the black jack table to try to make $10.00. Pepsi pays for commercial television time at a network (risk) hoping to see a return (reward) on that investment much greater than the cost of the commercial. The retail store owner buys inventory (risk) in hopes of selling that inventory to you and me at a much higher price (reward).

I think you get the point. If you think of it this way, the real question becomes, "What type of speculator are you?"

Are you the type who only takes on risk when the odds are stacked in your favor or the type who takes on risk when the opportunity "feels right" and "looks good"?

My answer to a friend of mine was very simple, I said, "People think Trading and gambling are very similar but there is one very big difference. Trading is what you see, Not what you think. And gambling is just the opposite.

Then, I relayed a scenario for him, "Imagine someone is playing Poker and he bets money on the table after he has a very fair idea of what the 5 cards to be opened will be. If he/she does place a bet, then also they can take all their money off the table at any point of time That’s trading!" Gambling can mean a lot of things. Trading Forex really depends on your competence and intention. If you don’t know what you are doing and want to make quick and easy money that is gambling. If you are very competent and want to make money in the Forex market, that is speculating. Speculating in the Forex market and holding on to your loss making position is Investing (LONG term).

“If you don’t know what you are doing, doing nothing is better than doing what you know”

Many other differences exist between the casino/gambling industry and the Forex market. These are just some examples. If you have more, or disagree with one of the above points, feel free to speak your mind in the comments.