What is consider more as a gamble Forex or Stocks?

Hi,

A lot of people would argue the Forex Market is more like gambling at a casino compared to the Stock Market because you cannot predict what’s going to happen. Whereas the stock market, you could have an idea what would happen. Still many would argue the Forex Market isn’t considered gambling at all, but rather having skill in reading charts, using the proper tools such as setting up trends, structures, resistance or support. Many would argue the Stock Market is more like an investing game rather than a gambling one. Many would disagree, many would agree, what are you thoughts on this?

Which market do you think would be worth to invest in the long run?

Why are you investing in Forex rather than in Stocks?

Well I prefer forex trading because it is more volatile and you’re required to use less your own capital (margin) in order to make decent profit. Of course risk increases proportionally but nevertheless if you use strict money management you can handle that.
Although stock trading have some advantages like you can see volume of trades, order flow, everything is regulated so you don’t worry about execution and safety of funds.
I do trade some stocks via stock CFD on Hotforex but only during major fundametnal news and events.

I don’t think forex is any more “gambling” than stocks; to be honest I think the opposite, if anything.

[B][U]However[/U][/B] (and it’s a [I]very big[/I] “however”!), there’s a widespread perception that forex is more “gambling”, and that’s because the realities and mechanics of the trading world are such that forex actually attracts a lot of gamblers. In other words, it isn’t the nature of the trading/investment/instruments, it’s because of some of the type of people readily attracted to it.

Forex is widely traded with minimal deposits, and with ridiculous leverage, via scammy, barely-licensed, barely-regulated “brokerages” in dodgy offshore countries, who have set up their businesses there [U]because[/U] of the light regulation, so that they can be counterparty market-makers whose [I]entire business model[/I] revolves around fleecing gullible, inexperienced newbie punters by holding the other sides of their trades at the same time as making up the prices and all the rules and interpreting them however they like, and holding all the clients’ deposited funds as well.

You don’t really get anything like that with stocks, and you don’t have all the ludicrous nonsense like “no-deposit bonuses” heavily advertised by scam brokers.

So the effect of all this is that forex [U]does[/U], in fact, tend to attract gamblers who don’t even understand what a genuine broker is, and don’t want to.

That’s not because it’s forex rather than stocks: it’s just because of the availability of fast and wild and loose “trading companies” pretending to be brokers, which attract a “certain type of aspiring trader” who very often has wildly unrealistic expectations of forex-trading.

It’s one of those “It must be true because I read it at Babypips, and posted by a verified analyst” moments … but I’m afraid it’s just [I]wrong[/I]: it’s [U]untrue[/U].

Lexy, what broker are you currently using if you do not mind me asking?

I mostly use Interactive Brokers (and I also do some tax-free spreadbetting, as a UK-resident, through Capital Spreads). I also still have an account at Oanda, but never use it, these days. From my own experiences, I recommend these three companies in the senses that (a) I did a lot of “due diligence” and expert advice-taking (not in forums!) before opening my accounts with each, and (b) I’ve never had a problem with any of them, and © personally, I’m satisfied and convinced that these three are honest and ethical, as well as being well-regulated, having separation of client funds and their operating capital, and so on.

Briefly, for spot forex-trading (and this is personal opinion only, of course): I think people should avoid counterparty market-makers if they can, but if they do need to use one, I think it’s pretty difficult to get safer/better than Oanda. Just my perspective.

Maybe you would like to get hold of this interview?

http://forums.babypips.com/newbie-island/35919-forex-gambling.html

Forex has more gambling than stock market.

In my opinion one shouldn’t view forex trading as gambling. It’s something you analyze and understand, rather than count on chance to profit.

If you’re saying the forex market is more volatile than the stock market, you are incorrect. See Looking at Volatility Across Markets - The Essentials of Trading.

If you’re saying that trading in forex is more volatile than trading in stocks, then that’s a question of employed leverage.

If you have skill - which could be translated to a statistical edge - then while any given trade is subject to randomness, overall you aren’t really gambling. If you don’t have an edge, then no matter what market you’re in you could be said to be gambling.

In my years of trading I now have come to the understanding hat yes it is gambling no matter what you are trading. Reason is simple we as traders have no idea what is going to happen in the markets. Just like gambling. I have also figured out you dont need to know where the markets are going or why. You have your people that go to vegas and gamble to have fun (like myself) not caring if they lose but of course hope to be a millionaire by the time I am drunk and have to crawl back to my hotel room. Then you have the people that gamble to make money. They dont really have a good edge they just want to make money and sometimes they do but most of the time they dont. They you have gamblers. These are the ones who understand risk and can counter that risk with as rhodytrader put it a “statistical edge” and althouogh they still lose money they have found a way to beat the odds so if the take a loss it dont matter as they are making money over the long haul. Same with trading we cant be certain where the market is going to wind up. Then you have the same type of traders you have the ones that come in not sure what they are doing, no concept of risk, basically they put it all on black. Sometimes the win most of the time not. They bandage the wounding and move on. Then you get some that are pretty much the same as the last group but hey they went to the school of babypips so they are now seasoned traders as some even watched some youtube videos. Guess the forgot the part of the school that explains risk management as they come in swinging for the fences hoping to have a million by the end of the year with there $1000 account. They blow it up and move on. Then you have traders who have found a way to turn the probability in there favor but still dont know for certain where the market will end up and realize it really dont matter. They might win this trade they might not but the "statistical edge should leave them profitable over the long haul.

So yes my opinion is forex stocks whatever is all a gamble in the end. Its just more a organized form of gambling

Forex Trading is everything but not a Gamble, thus you could consider it as a job or business, but not a Gamble.

Unless you have personal disgust to every word posted under my nickname ;), please provide proofs.
Have you measured volatility yourself or post about your own expereince? Then indicate that, because in my posts I rely on only what I had in my trading.
And as a rule of thumb, when you express any opinion its highly indiscreet discrediting anybody with an opinion opposite to yours. Simply know as [U]ethics of discussion[/U] which I guess you’re not aware of.
Cheers.

No problem at all: this is so well-known, and so frequently monitored and proved, that they’re all over the place. If you had actually [B][U]read[/U][/B] the thread, before pontificating in it, you’d have seen that [I]some are already linked to[/I], above! I suggest you start here. :wink:

Hi lexys,

I hope it’s not too personal but i wanted to ask, as a full time trader how are you able to do this?
You can PM me the answer if you prefer.

I know that in forums people sometimes allege that if it’s your sole source of income, spreadbetting [I]isn’t[/I] tax free. In my opinion, that’s missing the point: I’m told that now it’s even been tested and confirmed by litigation on the subject that that [U]isn’t[/U] what it depends on at all. My understanding is that as a UK resident, the only way you can be liable for tax (meaning either income tax or capital gains tax) from spreadbetting profits is if that income arises as part of a broader trading business [B]which involves being a vendor of trading-related services or products[/B]. (That makes complete sense to me, because if HMRC tried to tax independent traders on spreadbetting profits, they’d also have to allow losses as tax-deductible, which is perhaps the very [I][U]last[/U][/I] thing they’d ever want to do, given that most people lose? They’d make an overall loss on it, wouldn’t they?) But in spite of my having been given this information by someone who had it confirmed by no less an authority than a Commissioner of HMRC, a few people (perhaps very few, these days) discussing the subject in trading forums still allege that that’s wrong!

Utlimately, however, it’s a question we all have to take responsibility for satisfying ourselves about from an authoritative source. For myself, I’ve done that, and I advise others to whom it’s relevant to do the same: in my view, taking advice on a subject like this from doubtless well-intentioned but all too often ill-informed (and sometimes anonymous) people in forums just [B][U]isn’t[/U][/B] a sensible plan for anyone.

Thanks for your reply lexys.

Yes, the tax thing has been done to death in various forums and i don’t want to make a big thing of it here. Before i started trading full-time a few years back i contacted an accountant. Prior to contacting him my understanding of the relevant HMRC documents was as you describe. My accountant however said this was incorrect.

He spoke of various “grey” areas and that in his experience the HMRC were very difficult to pin down as it were. If you lose they are are not too bothered, would rather not hear about it in fact, for the reasons you mention; but if you make a profit… they want their cut.

It was interesting to hear your own experience.

Oh I see… demagogy + Referring to some little-known sources with simplified calculations
Now I know your style :slight_smile:

As the author of that little-known source with its simplified calculations I’d love to hear what would satisfy your requirements for evidence that foreign exchange rates are less volatile than stocks.