Is Forex Trading Gambling

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

Thats a good point, but that would make just about anything we do in life a gamble.

Yes, the outcome is uncertain and risk of loss is attached, but it is not gambling.

Yes, everything in life has an uncertain outcome but if its possible to invest some skills / knowledge / abilities to affect the outcome, its speculation, not gambling.

The person who takes Forex Trading as a Gamble loses all, you need to understand that if you wanna become successful, you need to learn about the proper market analysis and lots of other things and if you just take it as a Gamble, then sooner or later like any Gamble, you will lose everything.

Leverage and lot calculations are complicated beasts for the newbie!!! If you don’t understand them, then Forex very much is gambling

For pity’s sake, forex is not gambling. The lottery or roulette is gambling.

Forex is either good trading or bad trading but it is speculation not gambling since there is a physical correlation between the player’s skills and the outcome. It might be that some traders are so unskilled their gains look random so this feels like gambling. But it is not.

Most of us would say that trading is long-term less risky than gambling. So if as a trader you don’t understand the difference you have the same likelihood of success as a player of the lottery. Trading is a business, not a game. Gambling is a game.

If you think trading is gambling you probably think of buying property as an investment. In fact its speculation since the probability of successful return is not certain but your skills can affect the outcome. If you don’t understand the risks you take, your risks will take you.

Maybe some contributors have English as a second or other language, if so, I mean them no offence. But as a reflection of the trader’s psychology and attitudes this is fundamentally important.

This is why I’ve refused to participate into this argument, before I get banned or at the very least an infraction :wink:

I agree with everything you have said, for the record.

Edit: It’s also something which I have come to realise more and more; members here who have English as their second language are unfortunately diminishing the quality of an important and valuable post. It is no fault of their own, but it really doesn’t help, especially when the difference between what is realistic and what is absolute garbage [B][U]CAN[/U][/B] consist of a very fine line.

Yes it is. This means its not guesswork and its not good luck when you make a profit month after month, nor bad luck when you get stopped out of the same x% of your trades month after month.

Its equally not always that you were wrong when putting a trade on. If the TA and FA fits your entry criteria, the only error would be to not put that trade on.