Is Forex Trading Gambling

Lots of previous threads here in BP where this has been discussed to great lengths; without really reaching an answer as it’s very subjective.

Just to clear up though, forex by definition, is speculation and never trading (as you never exchange anything of value, rather it is a speculative ‘bet’ on the direction of the market) - this part of my answer is fact rather than opinion.

I’ll leave the rest of the debate for others to decide :wink:

If you play with your real money without proper knowledge then, it would be gambling for you! But for knowledgeable traders, it’s all about business! Because, they are very sure about their trading activities! Even, they trade with an impressive probability ratio! Forex trading is not buying or selling, for being a consistent performer here, traders need deep knowledge on technical and fundamental analysis! There is no connection with luck!

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For me as an experienced Fx Trader, it would certainly NOT BE gambling for my own personal sake. This is because I use advance technical analysis to identify an edge in said set up. If there is enough confluence in the trade, then the law of numbers would give you an edge if you use similar parametres are used over time. And when you are consistent with your trading plan which has an edge, probability will eventually mean profits will occur.

I casino owner has an edge of punters. Yes they take losses, but they know they have a slight edge in the games they offer and if the casino is a busy one (high volume), then the edge plays out to even greater effect and they are profitable. Even after all the $1 million spot prizes and car giveaways.

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It really comes down to the individual trader. If you treat it like gambling, it’s gambling. If instead you analyze the market carefully and place your trades in a reasonable manner, it’s not.

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Strictly speaking, trading cannot be termed gambling as it does not rely solely on luck. Activities involving reliance solely on luck include roulette, lottery etc. - no levels of skill are physically connected with the outcome.

The appliance of any degree of skill which could affect the outcome, even by a fraction of a per cent, means we’re in speculation.

The level of interest an individual displays in answering this argument displays very little about trading (or gambling). Rather, it shows their socio/religious bias with regards achieving gains without “work”, and profiting from the losses of others. No matter how long this goes on, we will learn nothing about trading from it.

What I find about Forex is that as soon as its mentioned you are labeled as a gambler apposed to stock trading. As with any kind of trading there are only 2 possibilities either price will move in your favor of against.

Other than that whether it goes for or against, a trader can hold a stock or a currency for yield or a dividend payout. This may fall under the category as investing.

What I have found is that very new inexperienced traders that have a pc and Internet access are too quick to jump in the deep water without knowing how to keep afloat let a lone knowing how to swim.

This however leads them to quickly accusing FX as a scam or gambling.

Most that get into FX trading look at it as a easy way out of work like the above post suggests. As far as learning how to trade I find its more of 1st having the right mindset.

The most successful traders i have met are those that trade with over 100k and trade as a 1:1 ratio or less, trade pairs that give only a positive yield.

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How do you trade less than 1:1 - this means your ‘paying’ more than face value for the underlying asset/security/exchange :o

This is true, and something we just have to accept - although we all know the truth here.

When you rock up in a Ferrari it soon puts all these comments to rest, this works for me anyway.

Here, proof that I’ve made it


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By placing a 1 lot trade on $200,000 of currency. This will be trading with a leverage rate of 0.5:1

As one full lot 0n $100,000 is 1:1

10:1 will be 10 lots on $100,000

This is incorrect, very much incorrect.

1:1 on a trade with a notional value of $200,000 would require a [I]real[/I] position size of $200,000. Hence, no leverage. The percentage movement in the market would directly correlate to your P&L 1 for 1.

It’s impossible to trade with less than 1:1

1:1 leverage is the same as going to your bank and changing pounds for euros. If you get 1.3 euros per one GBP pound then this is 1:1 leverage (or no leverage). For the sake of an example, if you asked your bank for 0.5:1 leverage then they would give you 0.65euros per GBP pound - worse than the market rate!!

Think about what you’re saying :wink:

Here is something that might help you, a leverage calculator. Margin Calculator | Margin Calculation | Trading Tools | FxPro

To keep it simple.
If I have $1000 to trade with and to keep my leverage at 1:1, I need to place a a mirco trade of 0.01 lots.
If I have $10,000 to keep it at 1:1, I can place a mini of 0.1

If i were to use .05 lots on $10,000 what is my leverage?

What currency pair would you be trading, what denomination is your account in and finally what is the market rate (exchange rate) within this example.

Understandable some trading platform dont use the Lot system and go by 1 standard trade which is $100,000. So to use 1:1 leverage you will have to place a $100,000 trade.

To reduce risk all you have to do it place a $50,000 trade this reducing leverage by 50%

This will be varying depending on the currency you are holding and pairs you are trading with.

I hold AUD so trading eur/usd for example will have a different degree of sizing.

Ok, I see the confusion here.

If your account size is greater than the total value of notional trades open, then it may appear that you are using less than 1:1 leverage.

However, it always remains at 1:1, regardless. The remaining equity in your account which is left over from this 1:1 leverage trade is simply not being used, is not invested, and can not be effected by the trade in question.

This remaining equity may as well not be in your account.

Let’s look at this as a great example.

The trade has a notional value of $50,000

You have $100,000 in your account.

[B]You use 1:1 leverage and $50,000 is now tied up in the trade. You also have $50,000 left over sat in your account which is not being used. The most you can lose on this trade is the $50,000. You will always have the remaining $50,000 left in your account. This remaining $50,000 is doing nothing - it can not drop the leverage used below 1:1 [U]because it is not being used on the trade in question[/U]. [/B]
[B]
[U]I’m not trying to confuse you[/U]
But it’s a mathematical impossibility to drop below 1:1 leverage[/B]

If you don’t want to believe me then you can call your broker - it will be the quickest call you’ve ever had.

I’m quite surprised that successful traders have told you this, I’d personally question this… :wink:

Where is Clint - He usually provides insightful examples of this nature.

I am trading also use cent account now and start small capital, I am not forex as gambling but trying to treat money with risk management trading plan and start lowest lot size, but I like use high leverage like as many retail trader that still not treat forex as serious manner

I’m not trying to confuse you
But it’s a mathematical impossibility to drop below 1:1 leverage

There is no confusion on my part but mathematics is not only linear progression.

But I know where you are coming from and how I am trying to explain it as in reducing risk. One does not have to use 1 full lot per $100,000.

As I have said I know the most successful traders do not leverage up and in theory reduces leverage by 50%

You can go on about using only $50k of your $100k balance but this will bring rise to over risking, by NOT understanding how leverage works.

I will leave it here as its going off the post topic.

V great info… Now I know what the real difference between 1:1 until 1:50

You’re referring to effective leverage, not leverage used. As I have said, you can not use less than 1:1 - this is impossible and has nothing to do with maths being linear - there is no need to try and make a simple calculation sound complicated.

This is also a proven fact when trading on a margined account. Every retail trader, commercial trader and broker understands this and uses it day in, day out, without any problems. But, for some reason you can’t agree with it and want to be the minority.

You need to understand this if you’re going to use it as the foundation of a constructive argument.

It is what it is.

Considering you have a twitter feed where you apparently provide advice, I would assume that these basics would be second nature to you. Quite rightly so Babypips removed this link earlier this afternoon.

The richest 1% of the world are a minority. :wink:
Top 5% of the forex market are a minority. :wink:
Someone here will understand Im sure.

Hi, I’m a newbie and if you place anything of value on anything where the outcome can not be guaranteed, it’s a gamble. Imho. Cheers Bantam