My thoughts on Financial Trading & Forex

Hello all,

First some background information about me. I have been trading for 4 years. Been making money for 1 and a half years. I am 23 years old and have a Commerce Degree from a University, took many finance economic classes and even a few on investing. Went through many trials & tribulations as a beginner financial trader. I have traded stocks during the US equity rally and have since switched into Forex a year ago. Forex came a lot easier to me than stocks did. Perhaps that is because i have previous experience. I have only been making money in Forex, of course its not straight profit, but more gains than losses. I use both EA’s and manual strategies. Still not making a killing as my accounts are in the micro lots and am slowly working my way higher. Nonetheless, by using structure and carefully using leverage in Forex I have been making higher gains that the average person who knows nothing about trading thinks is possible.

I don’t mean to offend anyone, but here are my observations.

One thing i have noticed on this forum especially is how many people relate Forex trading to gambling. Some people come straight out and say that trading is the same as gambling. Some people talk about placing “bets” and “folding hands” as if it were a casino or some sort of card game. I’ve noticed this all over this forum. Others such as myself, tend to think that trading is different than gambling. Sure no one knows the outcome of any given trade until it is over. But this is what statistically tested trading systems are for. To me this becomes a mathematical thing, which is far different than pulling a lever at the casino aka gambling.

Now some people may not like to read this, but i believe a secretly large amount of “traders” on here are secret “gamblers” at heart. They justify a negative which is gambling, with financial trading in an attempt to make it positive. However they still even believe trading is gambling. Profitable or not, I believe this is their largest downfall.

Understanding the mental environment required for successful trading is arguably the hardest thing most people ever take on in their lives. It definitely comes easier to some than others. But, are these “gamblers” holding themselves back from making massive returns in the market? Have the consistently successful “traders” realized this? Or could i be out to lunch in some way?

Trading is serious business and should be treated as such. I see financial trading as a financial profession, not professional gambling.

Again, not meant to offend anyone. Any thoughts on this?

I think that every trader has to make their own decisions as to whether or not trading is gambling or not. My suggestion to you is don’t get involved in a debate that is semantics. Every person has a different view on what’s gambling. If you cross the street when cars are coming is that gambling? If you go to the super market and buy a box of something that says fat free, is that gambling. Missing annual physical, is that gambling. All depends on your definition. I played poker all my life, professionally for several years. If you asked me what’s better slot machines or poker, I would tell you both are gambling poker is not as much.

Professional gamblers approach the casino the same way they approach the foreign exchange. 1. Strategy that on balance of probabilities give you the opportunity to have more positive results than negative [B]Long Term[/B] a money management system that firstly protects your bankroll and secondly adds to it; again [B][U]Long Term[/U][/B] Finally execute your strategy and money management with patience and discipline.

Trading and gambling have a lot of things in common, most players go broke like most traders. A fish in gambling is someone who doesn’t have a strategy, money management plan that long term will deliver based on probabilities positive results and of course they want it all now so they take chances based on emotions and over leverage, don’t protect their bankroll and have no idea what long term is. Same term and definition would apply to most traders.

Now since you’re kind of new I’m going to spare you what posting something like this would normally get you a lot of posts outlining the different interpretations most parading has facts instead of what they are opinions on the difference between trading and gambling.

So gambling or trading depends on how you define the terms; My personal opinion is that instead of trying to illustrate a difference that you won’t be able to, spend your time learning how to put the balance of positive outcomes on your side, protect and build your bankroll and work on patience and discipline. That’s my 2 cents
Gp

What a load of hogwash. So you believe you are actually exchanging goods when making a trade. We are called speculators not traders for a reason… So much for that uni degree

Thank you for this insight gp00053. What you say makes good sense. Ive been reading a good book on discipline recently and am almost finished. Its called the disciplined trader - developing winning attitudes. Although the guy who wrote it traded futures, the principles are the same. It has given me more insight into the market and caused me to begin looking at it in different ways.

As for bobbillbrown, you contradict your self. Your little picture says “relax… i am a forex trader” Yet you call your self a speculator and not a trader… I cant really listen to anything people say if they contradict themselves so blatantly.

Bro, your 23. I reckon you know everything anyway

Haha. Enough to know a hater when i see one.

Na. She’s all good bro. See I work in manufacturing and every 23 year grad I’ve had come work for me is well hopeless. Full of theory good for sweet FA. Not that I’m going to catagorize you.

It is an interest issue you raise. Gamblers focus on the money where as speculators focus on the process. It takes a bit to click on when we talk processes. But if you have a well defined trading (business) plan all of you processes are documented and the rest falls into place. Gambling it is but then so is getting in my car and driving to work. Here I’m gambling with my life that thetes not a ****head on the road coming my way

Just another perspective, but it’s gambling… just because its a game where you can, maybe, tilt the odds in your favor doesn’t mean it’s not a gamble. Ask anyone who was on the wrong side of the CHF. Furthermore, if you think there aren’t folks out there blowing the rent/grocery money one more long shot trade, you’re crazy.

Continuing to work in manufacturing in this country is gambling that some ****head isn’t driving another GFC towards us to. :wink:

Has everyone forgotten that there are professional gamblers? There are individuals who make their living from playing games of chance. Trading and investing is just the same, and those who make money are calculated risk takers who sway odds in their favor. Those who lose money, haven’t figured out the game or found the right one yet.

Okay i think Ive got it. taking risks of any kind can be considered gambling. Just as the example of driving a car can be considered gambling. Where this becomes an issue really is in the example of people blowing their whole paycheck on one trade. This is senseless gambling. As are the slot machines at the casino.

As for calculated risks though, we all do this everyday. Example is driving a car. Anyone who buys property or somewhere to live and borrowing money to do so is taking a chance. Yet people do this all the time. So really in order for one to succeed you would need to take on many risks that have good probability of being successful and then hope probability falls on your side (lifetime of driving a car and not having any major accidents).

Transfer this into trading and it means taking on calculated risks that overall have a higher chance of being successful than unsuccessful with the end result never being known until the end (example is not knowing if a crash occurred until the drive is over). So is trading gambling? It prolly is, depending on how you define gambling :59:

Thanks for the input on this everyone. This has been something i was debating to myself for awhile now.

After a lot of acid, I am ready to get down to serious business. Lets get effin’ SERIOUS yo!

Courtney Smith gave a good distinction between gambling risks and the risks taken in finance. Gambling is the artificial creation of risk for the purpose of a thrill. The risk is created artificially by the act of gambling itself. If you don’t pull a lever on a slot machine, the risk does not exist at all.

Trading a financial instrument does not always create new risk, it merely transfers risk from one party to another. If you don’t buy Apple stock today, the risk of owning it still exists, it is simply held on to by someone else. And if you do, you do not create new risk, you simply take it on from someone else.

Admittedly, forex trading can be somewhat of a grey area. Depending on the dealer, a trader may not actually be taking any risk out of the market but may actually be creating new risk in the form of a bet with the dealer. ECN dealers may still be simply linking two traders essentially placing bets against one another and thus creating new risk. Futures traders can likewise create more risk than would otherwise have existed in a market of all hedgers. But a forex trader could indeed be taking the other side of a hedger’s trade and thus actually take on risk from another party that would have existed anyway had he not taken it.

The real question is “Who friggin cares?” Are we Mormon and concerned about gambling as a moral issue? Is somebody’s mom going to ground us if we get caught?

Like very much how you have thought this through. Its just the type of mindset you need to play this game. Using your example of slots then thats gambling. You have absolutely not control of the variables or outcome. However when driving a car or purchasing a house you have to a large degree complete control of the variables therefore allowing you to calculate the risk. This applies to speculating. Go in with no control your gambling. But knowing what variables you can control you can calculate your risk allowing a far greater chance of success. In the words of one of the most respected members here, Clint, "risk is the price we pay for opportunity "