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The Foreign Exchange is an innovative, busy and energetic financial market — and the biggest in the world by trading volume. Allegations of Forex being gambling create unnecessary and unjust confusion. Let’s look at some of the most common concerns and explain the main differences between Forex services and the dubious domain of gambling.
Confusion is an obvious enemy of education. This holds true particularly when talking about a complex sphere such as Forex, where many questions bubble up in the media, influencing public opinion. So let’s start with the most pressing one.
What is Forex?
Forex is a dynamic basket of foreign currencies, functioning as a global exchange. The full description reads as ‘Foreign exchange’ and houses the process of changing one currency for another. The Foreign Exchange market is decentralised by nature. It lives completely online and covers a great variety of countries, currencies, and commodities.
The Forex sphere—who does it consist of?
The main actors of the Forex industry are the broker who provides the trading services, and its clients, regular people who use these services. Also, Forex brokers rely on the essential relationship with liquidity providers. They function as mediators who are required to give traders access to the Forex market, offering the most accurate value estimation for the traded currencies.
There are global Forex service providers such as OctaFX and local Forex brokers—the bigger the reach and regulatory scope, the bigger the Forex broker.
Forex and the gambling accusation
The confusion between the established and mature financial sphere of Forex and the gambling sector still appears to be running fierce. To make it clear: Forex is not some gambling scheme.
It is true that engaging in trading bears a set of risks. There is no secret about it and the fine print, as well as the street banners, are clear on that.
Gamblers bet on outcomes that they have a very difficult time in predicting. Therefore, luck, chance, and good fortune are the most common approaches they can count on. Surely, a minority of players of—let’s say, the card game blackjack—are able to apply what is called ‘card counting’. This is a game strategy in which the player is running a constant count of the revealed cards and places his bets accordingly. While legal in Great Britain and the United States, the casinos that host these events try their best to intercept card games of players who use this strategy. Since it really has an impact on the casino’s profits.
You simply can’t ‘count cards’ in Forex, though. There is an inventory of legitimate techniques, strategies, and methods to help you make the best trading decision. Trading execution requires deep knowledge of trading instruments, proficient application of analysis and data and enough discipline to keep irrational thoughts away. Thoughts that would otherwise impact decisions in a bad way.
Gambling, on the other hand, generally invites poor judgement, math issues, and often the priority to have ‘short-term fun’.
Behaviour, psychology, and discipline are the dividing line. If a trader relies more on intuition, rather than level-headed analysis, trading could be recognised as gambling. So, much depends on how Forex is put to practice.
‘Knowledge is power is not just an empty phrase: it’s what distinguishes successful traders from the not-so-outstanding ones.
So, Forex is not gambling?
One more time: no, it is not gambling. Gambling means one is always uncertain of their chances of winning. While their chances are consistently and notably lower than those of the institution they gamble with. One can’t analyse or forecast the next combination of a slot machine or Blackjack card playing position.
However, serious and devoted Forex traders research, devise and test various trading strategies that shift the odds in their favour. They use different analysis tools to detect market trends and apply them to their advantage, opening a position that is bound to be profitable for them.
We can’t reiterate it enough but being fully prepared for most market dynamics through research, utilising ‘risk management seriously, and accumulating relevant knowledge, are the milestones to developing a profitable overall position. This kind of training and education leads to skilful trading patterns.
This post and content is sponsored, written and produced by OctaFX.
