Trading Forex: Gambling or Investing?

Filed under: Learn Forex Trading |

It is very easy to sum up whether trading forex is gambling or whether it is investing. No matter how good your market edge is, when it comes to single trades, anything can happen – and therefore, over the course of just one single trade, forex trading is gambling. There is no doubt about that. The market can move either way at any single moment in time. You cannot predict with 100% accuracy the movements of the markets. This is impossible.

 

However, if you have a market edge, then over the course of a long series of trades (let’s say at least 100 trades), then you can be sure that your edge will play out and you will be profitable. This is not gambling. This is what I consider to be medium risk investing.

 

If you have back tested your system or methodology with historical data, and then done a substantial live test on a demo account, you can be reasonably confident that you will be profitable if you employ the rules of your system over the long term. However, your first trade, taken by itself, is in essence a gamble.

 

If you go into forex trading with a long-term plan, then this is not gambling. However, if you stop before that trading plan comes to fruition, then you will have been gambling because you have not let your edge play out. If you get cold feet after just a few trades and then close your account, you will have been gambling. You must follow through with your plan – otherwise, there will have been no point in starting at all.

 

Forex trading is all about finding a market edge, and then sticking with it and not becoming emotional about the results. Your losses are the cost of doing business. Your gains are your profits before the costs of doing business. Always see the big picture, and don’t let the day-to-day running of the business get you down. In the end, if you have a market edge, you will be profitable.

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