When it comes to trading, some controversial opinions always arise. You start trading and one of your friends, instead of supporting you, gets angry and says things like “What? Investment? No, no, no! It's just a game of chance”. After such a reaction, you, as a beginner trader, are lost in doubt. Is Forex trading just a game of chance? What do I do? At first you feel down, but then you calm down, you do research that allows you to give your friend some quality arguments, and you continue to overcome the difficulties you encounter.
Here are five steps that will bring out the truth.
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Step One – Dictionary Definition
To give you a hand, we have started the process of finding the truth. Our first step in this long journey is through a dictionary. Maybe a quick glance will clear things up. The Oxford dictionary gives us the following definition of gambling: “the activity of playing games of chance for money and betting on horses etc.” The key concept here is that: you put your money on the line and the win is based on pure chance.
According to the same dictionary, trading is “the activity of buying and selling things.” There is no word on earnings and chances. However, to be more objective, it should be kept in mind that Forex trading is supposed to involve risk, and therefore monetary stakes are also included. In summary, trading and gambling are strongly associated with the expectation of profit and risk.
Hmm, it turned out that wasn't convincing enough. So we go to the next step.
Step Two – Risk Allocation
What seems to be the most apparent difference between gambling and Forex trading? The answer lies beneath the surface: with trading, you have the ability to prolong risk, whereas, with gambling, your money can suddenly fly away.
Bettors stake their capital in a particular channel. If they fail, it is impossible to get the money back, they lose everything, while traders can avoid losing everything. Online trading is more like an investment, you own something, but then you can sell something or close order and build your capital when you need it.
Moreover, online trading shows you perspective. With gambling, your chance of making a profit ends when the game itself is over and trading allows you to grow through probable future income streams.
It becomes clearer, doesn't it?
Step Three – Test Yourself
Forex trading is like playing video games, at first glance it is too complicated, and without proper preparation you will not be able to cope with a huge amount of rules and limits.
To master all the features of trading, demo accounts were then developed. These accounts allow you to make real market decisions in Forex, while avoiding risk. When you think you are competent enough to open a real account, you will not be surprised because everything will be the same as with the demo mode. Nothing will confuse you. So you can start trading right away.
Moreover, games of chance do not have a simulator identical to real games. Of course, you can find children's games, but they have little in common with real games.
Step Four – Who Has the Information
The power of trading lies in the availability of relevant information, whereas non gamstop gambling has none. The fundamental and technical analysis goes hand in hand in the Forex market with market data and the latest news. It's priceless. Based on market information, traders can develop their strategies and react quickly to market changes caused by unpredictable events.
Traders then become more persistent and flexible in their activity, while bettors have access only to the facts related to the coldness or the heat of the gaming table. Nevertheless, it is useless if you want to evaluate your chance of success. Unlike trading, there is no information about previous experiences, winning tactics, and risk management with gambling.
We are slowly moving towards the most representative difference between the two activities that have held our attention for several minutes.
Fifth stage – Knowledge Is at the Rendezvous
If you are looking for short-term gain, gambling is for you. If so, be prepared to face unavoidable disasters. It is sad but crucial to realize that the risks are too great compared to the reward. No tactics, no experience of successful players, and no training will help you. It all depends on luck and not on your well-considered decisions.
On the other hand, trading is an activity where you can accumulate knowledge and use it to your advantage. In addition to market data, traders can obtain a wealth of useful investment information and use it to become Forex experts.
In other words, you can master trading skills, while your gambling skills are limited to luck, intuition and maybe cheating. Both traders and bettors are in the unknown and they have no idea where they are in danger. Nevertheless, to some extent, information in trading is a real compass that shows you the direction. It's much better, isn't it? With gambling, you are left alone in the unknown and you have nothing to help you.
The effort you put in to shine in Forex is well worth it. The more you train, the more results you will see.
At this point, your friend's mistrust must be dispelled! If not, only the practice of trading can help.
In conclusion, despite all the differences, risks are inevitable with trading and gambling, and no one can avoid them. But we can change our attitude in this regard. So it's up to you to decide if you want to go blind and bet or if you want to become an expert and trader.