Forex, just a gamble?

Beginner Questions
24

Well I think I’m going to post my view on this and I hope I’m rigth. I’m totally convinced that forex is not gambling, not even a chance. But this also depends on what you understand by gambling. Lets see a definition of gambling by wikipedia

wagering money or something of material value on an event with an [B]uncertain outcome[/B] with the primary intent of winning additional money and/or material goods

There are three variables common to all forms of gambling:

-How much is being wagered, the initial stake (in money or material goods).
The predictability of the event.
In mechanical or electronic gambling such as lotteries, slot machines and bingo, the results are random and unpredictable; no amount of skill or knowledge (assuming machinery is functioning as intended) can give an advantage in predictability to anyone.

-However, for sports events such as horse racing and soccer matches there is some predictability to the outcome; thus a person with greater knowledge and/or skill will have an advantage over others.

-The odds agreed between the two (or more) parties to the wager; where there is a house or a bookmaker, the odds are (quite legally) arranged in favour of the house.

Some speculative investment activities are particularly risky, but are still usually considered separately from gambling:

Securities derivatives, such as options or futures, where the value of the derivative is dependent on the value of the underlying asset at a specific point in time (typically the derivative’s associated expiration date)
Foreign currency exchange (forex) transactions
Prediction markets

If flipping a coin is your definition of gambling, then you could not possibly consider forex as gambling. There is nothing in life that could even get you close to predicting what is going to happen to the coin. The sole fact that you can predict what is going to happen to the price of a currency when its country changes its interest rate, separates forex from gambling by miles. In fact, there is a guy in this forum who is conducting an experiment. He is comparing three different systems. Two systems are you average indicator based system, and the third system has no indicators but he actually flips a coin to decide wether he buys or sells the selected currency (which is also selected by fliping a coin). Last time I checked, the third system was bitting the hell out of the other two. Shows that even when you try to gamble forex, if you have a good “cut you losses short, let you profits run” kind of strategy, you can still win. In gambling, when you won, you won whatever is on the table, nothing else. In forex, based on your strategy, you can add more to a winning trade and make more in return, in gambling, they don’t allow you add more once you realized you are winning. This last one is why many traders believe that a good money management strategy is far more valuable than an acurate system.

Even the most predictable events in life can be turn into gambling by the way you approach them. That’s the key.

You want an example of gambling with an event you think could be totally under control? I was born and raised in Argentina. When I was 21 (1999) I traveled to the US with US$ 400, a 90 day visa, and a potential girlfriend waiting for me here. Don’t you think you could have more control over such event? I took my chances, I had no system and didn’t speak a bit of english back then. Got married and decided to stay. I was a total ignorant for this country (till this day I don’t even have a GED). Today, I’m still hapily married, have a beautiful daugther and I’m the Lead Network Technician of a local ISP and I make good money.

Just like others mentioned, I’m not critizing you, but rather trying to help you see things from another angle.

Here to help if you need anything

Thanks

P.D.: sorry about my english. It is my second language

25

I have to tell you, I don’t really care about winning BIG. You have to think that 90% of the people who do this don’t suceed because we are the 10% who are up coming pros at this. Remember the rule, 20% do 80% of the business. Well, 10% do 90% of the business here, I think. I am going to use my money to buy vacations and shoes. If I wanted to support my family on this job, I would go work for Bank of America as a trader and get a salary plus comission for this. As a stay at home wife, this is a pretty good habit. Better than drinking too much wine and watching re-runs of Desperate Housewives every night.

26

To SandyD :

Thats a lot of shoes! :smiley: :smiley:

Kind regards, Tymen Wortel, Perth, Western Australia.

27

Excellent Post!

28

Interesting thread. Before i give you my opinion, a little background about me, I am a professional poker player, and before that i was a senior engineer and now i am also a part-time trader.
I know most of you would say i am gambler because i play poker (which is a huge misconcept everyone that doesn’t really understand the game has.)

I have been trading for 6 months and let me tell you with discipline, a good system and good money management FOREX can create a nice income.

Now…becoming a millionaire from FOREX is a different story. To become a millionaire from FOREX you should be willing to lose even 10k at times even if you know in the long run you are going to win with your 75% win rate system? However, how many people can sleep at night knowing they can lose that much?

Even if statistics are WITH you, sometimes you chose not to go for it. Let me give you an example, assume you made 1 million trading 5 years,let’s say Bill Gates challenges you to a game of flipping a coin.

If you win, he will give you 10 million
If you lose, you will give him the 1 million

Statistically you should play the game because from each 10 times you play the game you will win 5 times and lose five times (10Million5 - 1Million5=45 Million)

However, would you really play it? would you risk your only 1 million that took you so hard to earn to the flip of a coin?

In a nutshell, to become a millionaire from FOREX you need:

  1. a good system (at least 60% win ratio)
  2. dicipline
  3. patience
  4. and GUTS

These are my 2 cents

29

I broadly look at forex like playing limit hold 'em at a casino. Every hand the dealer takes their cut and the remainder of the pot is left to the winner(s). MM is still important, you essentially have a stop-loss, and for some reason I think I can consistently win in limit hold 'em (although my sample size is too small). However, no-limit is another game; one for which I make no comparisons.

Why are there not more public stories of success? Besides the ubiquitous story of Black Wednesday I have to assume it is because the few that are making real money see no real benefit in disclosing their success. They are going to be criticized, called liars, and in general receive unwanted attention. What is their reward?

Although, I personally believe there are better markets to trade, Forex is so exciting and dynamic it is easy to see why it is so popular.

30

Thanks! Any advice is much appreiciated! It seems like everyone in this industry is so willing to help!

31

My piece of advice…
-> Treat FOREX (any capital market) with RESPECT.
-> Japanese say business is war. Treat forex as a busines and thus as a war. It is a BUSINESS after all we are talking about MONEY. You cannot win a war with a knife. Need to have guts, strategies, etc, etc. Manage your money ie position. They are the same in FOREX if you are in.
-> 1% for the “where I enter question” and 99% where I exit question and how much I weight my position.
-> Sorry but it is definitily NOT GAMBLING. It is a business, a rsiky one yes, but a business where you have to think in probabilities or odds.
-> Have a buisness PLAN with GOALS.
-> Recap and say AGAIN. MONEY MANAGEMENT/position management is the most important IMHO.

Psycholgy.

-> You fight against yourself NOT the market. Psychology, discipline and attitude are the most imprtant things apart from exit and money management. Your worst ENEMY in the markets is YOURSELF.

Do you start a business just like that with no ideas. NO. THINK what I said. Try to UNDERSTAND.

Have a nice day.

32

Dear Yari,

I think 1 linkcould end this thread where everyone are pleased. this link has the answer to your thread. is forex a gamble? no. it isn’t.

here you go. the ultimate proof.

the link is for pip surfer’s “pip my system” blog. you can see evidence for a consistent money-making (more than 170 pips avg in a month) for over a year, with lots of trades. if this was a gambling game, on the long run (and more than a year is defiently a long run), he would have lost.

I think it sums it up. if you’re educated and disciplined enough - you can make money relatively safely. I think that 170 pips a month can also make a nice living if you have enough capital.

Regards.

33

yari, have you considered learning how to trade FX futures then? It would get you past being scammed by the “house” or brokers so often. Also much cheaper for you. I really don’t know a whole lot about FX futures but know some London companies actively recruit, train and then allow traders they trained to trade with company funds and keep an agreed percentage.

In the meantime maybe some day somone will come on these forums and post their system that wins loads pips each day/week. There are traders out there that sell such systems and so far I haven’t bought them to see if they work, you could try it though.

I guess it is always best developing your own trading strategies and systems though.

And as bullrock says:

Your worst ENEMY in the markets is YOURSELF.

Who is up for some hypnotherepy (not hypnosis) then? Seriously, someone has to have done. Business hypnotherepy is becoming more popular these days.

Unlike most others that are very successful I would share it on here in time.

34

I truly beileve you can make a living at this yari123. I think the difference is in education (learning the game). They say 90% fail, 5% brake even, 5% win. Well what do the 5% of people winning have?That is an understanding of the game.Discipline is the hardest thing to accomplish I think. A system can be figured out. But discipline is a control over your feelings and that is a challenge for most of us.I am very new to this myself I have been playing around for about 3 months.demos and reading like crazy.I realized it wasn’t as easy as it sounded.But I like that because something that sounds to good to be true always is.I am open to any comments from anyone here.That is what I am here for to learn!!!:rolleyes:

35

What systems are better than Forex?

36

Forex is a gamble to those that don’t use proper money management. In life, everything is about odds. Having a strategy with an edge will yield success in the long term. Too many people try to get rich quick and over trade which results in a losses. This is why 90%+ lose money because they don’t have the discipline and always try to make a quick buck for the short term.

37

chofman, I think their reward is sharing what few or no others do, how they actually achieved success, not just merely gloated about it and how easy it is. Some billionaires say it is as easy for anyone to make their next billion or hundred million as it is a few hundred dollars. Now that I agree does no good unless they go on to explain how one may achieve this.

James has shared some of his trading strategies or systems with us on this forum as have others and it works for most of us. Not all of us but most of us it works. And forex is so huge it really would do no harm sharing it now would it?

38

forex is so hard. what are about those hundred thousands of of Japanese housewives who trade Carry Trade from their kitchens? they can do, why not us?
There got to be the a lot of money we can make in forex.

P.S.
Now it is not good time for Carry Trade, but you get the point.

39

We interupt the Previously Broadcast Special, to bring You this Flash News Update.

Everything in Life is a Gamble!

Nothing is a Guarantee. Except Death and Taxes. Which I would Assume Taxes will Have to be Paid on the Other Side. ;o)

40

Yes, life is a gamble. You take a gamble when you get up in the morning, drive to work, etc, etc. But, on a different note, true, we as traders are taking a risk. We start off at 50/50. Buy/Sell. But the trick is to manage the risk so the odds go in our favor. I have a quote by Warren Buffet memorized. I say it every day before I start trading to remind myself. It goes, “Risk comes from not knowing what you’re doing.”

Sorry, but living here in LV and talking odds on winning, for both the gambler and the house, I just have a chuckle when I see the words “gamble” and “forex” in the same post.

In the spirit of football season, I approach trading forex like I approach wagering on football (at least until 2:00 PM when the Sydney market opens here.) :smiley: I have a 50/50 shot in hitting a winner if I just pick a random team. However, I study the stats, injuries, and past performances of the teams to reduce my risk and move the odds into my favor to pick the winner. Yes, the house has their vig (in forex terms “spread”) which I pay.

There are many similarities between “gambling” and forex. But if you stick to your rules, do your research, and keep reading, you will reduce your risk and come out on top.

pimpinpips
Viva babypips.com