When the subject of Forex trading comes up, things can get pretty heated very quickly. People will either not have an opinion at all or feel very passionately about Forex and not always in a good way. The question that drives the biggest wedge between proponents and opponents seem to always be one and the same: “Is Forex just gambling?” and even “Is Forex gambling in the first place?”
When combing through Quora or Reddit for answers, you will often come across upbeat messages that assure you that Forex not only doesn’t depend on chance, but you can learn the right skills to master the trade. To attest to this potential for success, in February 2020, a Reddit user posted a screenshot claiming to have closed a $4.3 million Forex transaction to the envy and admittedly scant cheers of fellow readers.
Surely, a person who has won that much would never consider Forex as just gambling. Yet, there is no way of knowing for sure. Some people may just have a lot of money they can afford to play fast and loose with. So, the question remains, is Forex just another form of gambling?
Is Forex Gambling? It Certainly Seems So…
Forex always carries an element of luck that most sensible traders argue cannot be accounted for no matter what your expertise. No matter how long you have been trading or how long you have studied, you would never be able to eliminate the risk that Forex trading invites.
Some retired traders even argue that Forex is in fact much worse than gambling, because when you gamble, you at least acknowledge the sporadic nature of the game, whereas a Forex trader is led to believe that if a loss happens it’s their own fault.
Many Forex experts argue that you can neutralize risk. Then again, they still try to convince you to represent you and offer you trading advice in exchange for a commission, of course.
That naturally brings up the question, if someone is so sure of how Forex operates and how to minimize risk, why aren’t they using their own money?
Forex essentially is […] “risking something you own, i.e. capital, against the prospect of turning a profit.”
In a similar vein, many traders who represent trading companies are actively trying to convert people into customers, promising a quick profit. A quick scoop through Quora will convince you that Forex is indeed profitable, and not really gambling. Yet, traders in communities will assure you that you won’t be able to become rich right away, but at least live comfortably as you master the trade.
What does this even mean?
When playing poker, there is a limited deck and a pool of opponents you often study for years. Yet, when you are trading Forex, you are betting against the entire economy not blowing up in your face. Besides, what does a comfortable living really mean?
More importantly, however, the definition of gambling coincides with what Forex essentially is, in other words, “risking something you own, i.e. capital, against the prospect of turning a profit.”
Forex Is Not Purely Gambling and Here Is Why
To put your minds at ease, we can argue that Forex does involve skill, training, and understanding. Based on these things alone, we could argue that unlike playing roulette, for example, Forex still expects you to have knowledge and understanding of finances, trading, and global markets, not to mention a deeper grasp of politics, to be successful to some extent.
There are many specialist skills that will allow you to at least feel like you understand how Forex works and assess risk adequately. Coming prepared is a key to try and be successful at Forex in the long term, and there are very few people who, through rigorous training, have been able to master the trade, but more importantly, have done so because they tend to work as large bank executives or hedge fund managers.
“George Soros wagered $10 billion against the Bank of England in 1992. He fetched $1.2 billion in profits, but more importantly, Soros had the $10 billion to wager in the first place.”
So, the one conflicting point about whether Forex truly constitutes gambling is who’s trying to benefit from it. While you may keep telling yourself that you can be anything in your life with the caveat you have enough time, money, and dedication to study when it comes to Forex, there are only a few of us are going to ever end up a true success. However, almost certainly none of us would be as successful as George Soros or Warren Buffet.
Besides, George Soros had $10 billion to wager against the currency policy of the Bank of England back in 1992 and that only got him $1.2 billion in profits. Do you feel that this is a worthwhile investment? But to return to the question at hand here, Forex has all the tell-tale signs of gambling.
As previously stated, you are taking your capital and risking it to add to it. Certainly, you are doing so while trying to ensure that the odds are stacked in your favor.
So, Let’s Settle This: Forex Is Gambling
Down to the very bone, Forex is a form of gambling and there is no way to change the definition. Yet, it could be argued that just like any other human endeavor, practice can allow a person who is well-versed in the nature of Forex to exploit certain aspects of the trade game.
Whether this is insider information you collect throughout the years you trade or a way to see beyond what regular traders do is really a matter of one’s personal aptitude, talent, and rigorous training.
Just like gambling, there are no guarantees in Forex, or at least no guarantees that you would be able to quit your day job and spend all your time trading on Forex.
To come as close to success as you can, it’s important to look at the odds and start stacking them up in your favor. Being able to spot trends and recurring probabilistic advantages, though, will put you in a good position to at least try to take on Forex with some degree of success.
The other strategies to consider aren’t too different from what you do at the poker table or playing cash games online, and they include using sensible money management and only going for the high odds openings when they become available.
Just because Forex is gambling, it doesn’t mean that you cannot exploit its weaknesses. Very few people are destined to make a mint, though.