The Fine Line between Trading Forex and Gambling

There's a fine line between being able to trade successfully and simply wagering your trades on a limb that the market can go either way. After all, there are only two ways any currency pair can take. They'll either rise or fall. You can buy or sell and profit or lose from the PIP (percentage in point) movement. Does that make it a 50/50 gamble on whether you'll win or lose? In roulette, the same 50/50 rule can apply. The law of gravity tells us that no matter which way you play it, the ball will eventually land on red or black. Systematically, you could double up continually, wagering on one colour, guaranteeing that when gravity turns in your favour, it lands on your colour and you're onto a win. A strategy like that is called a Martingale. Double the original stake on every loss, and win your stake back, plus the original stake. Sounds like a winner, but table limits guarantee you will end on a losing streak with an empty wallet/purse. If you're wagering in Forex with any type of Martingale, then it's definitely gambling and you're likely to lose more than you gain, unless you get lucky – consistently which is highly unlikely. You cannot make a career from flukes! Just as a gambler cannot make a career out of betting. The bookie always wins in the end, and the gambler probably goes into rehab. Forex, with the right mental approach isn't about gambling. It's about self-discipline, knowing your limits, setting your stop losses, analysing graphs, predicting trends from the information on charts, and making informed choices. Going back to the gambling side of things, punters bet on horses every day of the week. At the same time there are professional handicappers sitting on the sidelines, taking notes, recording the races on TV to study later. Professional handicappers will watch and re-watch races. Sometimes as much as 16-hours a day. They'll take notes on different horses, watch the jockeys and study their form, analyse the trainers and what horses they have on different tracks. Every bit of data they can study including the horse, the jockey riding it, the trainer, and the past performance of the horse, and other horses of the same trainer over distance, to the furlongs, jumps and the courses the horse has run and never run on. Handicappers will consistently study all that data, therefore, because of the time it takes to go through the analysis, it's impossible to bet on every race. When a race comes up that has all their indicators showing a horse to be a high probability of a win, they'll move in and wager high. They've done their homework, studied form and go in for big money as they know they've a lot more study to do before they'll come across the next winner. Professional Forex traders are similar, but because there's less analysis involved, they're not on the sidelines as often. They're in the thick of it, making profit from the points movements. They also have the self-discipline to sit trades out. Putting themselves on the sidelines and study the charts. The focus is on the recognising trends, drawing data from the high points, low points, and identifying the base lines to make an accurate prediction on which may a currency is likely to swing. When they see the patterns emerging on charts, that show trends occurring, there's a predicable movement happening. It's that predictable movement that make the profits possible in the Forex market, and as it moves at a fast pace, it can happen any second. All it takes is self-discipline and a solid understanding of trends and you can become a sophisticated Forex trader.