Is Forex trading gambling, or investing? Small account holders in the foreign exchange market, are thought of as fish food for the larger sharks that are swimming around in a big pool. This thought process comes from the way so many of them jump into Forex trading with their money and their emotions instead of actually knowing what they are doing.
A professional trader looks at the Forex market as an opportunity for investment, while most new traders look at the Forex market as an opportunity to get rich quick. Although the market can indeed make people very rich in very short periods of time, taking a professional approach To Forex trading is more ideal.
New traders and investors in the Forex market, see:
– Fast profits, because the markets move quickly
– High liquidity, allowing them to get in and get out quickly, taking their profits and running
– A chance to beat the big boys at their own game, because they are so small they cannot see them
– A chance to take a lot of small profits very fast (this is called scalping)
– An opportunity to occasionally take a huge win which will outnumber any other previous losses made.
New traders and investors in the Forex market, think that small losses will not add up or hurt them. Some of them also believe that they will see some success in around 90% of their trades, but this is not the case. Professional traders and investors in the Forex market, know that:
– Long-term trading strategies work best
– You should never fight a trend, as contrarian positions in the currency market are foolish
– Money management is the key to long-term success
– Trading strategies work, even if they only deduce modest results
– Using safety tools (like stop-loss triggers) is a necessity
– The best way to not lose money, is to not trade
– Forex trading requires discipline and an iron clad.
Forex trading requires that you decide a certain type of currency will either become stronger or grow weaker against another type of currency. In essence, you are betting that the price of one currency will either rise or fall. Professional traders sit down at the computer and approach their trades calmly and with a certain set of rules in place. These rules, once in place, can never be violated. Violating the rules completely ruins their trading philosophy and most often leads them to losses from which they may never recover. Sound harsh, it may be but it is the truth that is investing and not gambling.
In conclusion, Forex trading can only be called investing when you have a plan that you follow all the time without fail. Once you begin to deviate from a tested trading plan, your Forex trading becomes gambling and you begin to lose money as emotion becomes a factor. Whether you want to be a professional trader making money in the Forex market or just find a way to add a few dollars to your monthly income, Forex trading can meet your needs if you learn to trade like a professional, maintain your plan and maintain your discipline.