I was reading the School of Pipsology article How to Choose a Forex Broker - BabyPips.com, and then I came to know that there is nothing like a Non-Dealing Desk (STP, ECN, or DMA).
In this article How Do Forex Brokers Work? - BabyPips.com, I learned that our trades are not executed in the original market. We are not buying or selling original currency pairs; it’s full of guesses and luck.
I used to think that we are buying the original currency with leverage and selling the original currency with leverage, similar to what we do in the stock market (buying and selling original stock with leverage/margin, and our trades are directly executed in markets like the New York Stock Exchange, National Stock Exchange, Bombay Stock Exchange, etc.).
If we are not buying or selling, and it’s full of guesswork and luck, it is called gambling. If it’s true, as mentioned in the School of Pipsology, then forex is nothing but well-glorified gambling.
I thought false equivalene fallacy was what you were using. You argue that playing at a casino is gambling, and therefore that trading is likewise gambling. I hope you don’t go to casinos.
In the stock market, we buy or sell shares, with or without leverage. Our trades are directly executed on exchanges like Nasdaq, NYSE, NSE, BSE, LSE, etc. Essentially, we trade ownership of companies for currency. Therefore, the stock market has intrinsic value based on the underlying companies’ assets and potential.
I initially thought the forex market, particularly A-book models like STP, DMA, and ECN, functioned similarly. We seem to be buying and selling currencies directly on exchanges in New York, London, Japan, and Australia. This also appeared to imply intrinsic value due to the exchange of real currencies. However, according to School of Pipsology, all brokers are market makers, and our trades don’t actually reach these exchanges. Instead, we’re essentially placing bets against the broker in a gambling-like system. This absence of ownership and real currency exchange suggests that such forex models lack intrinsic value, similar to a casino.
My question, therefore, is whether there exists any forex market or broker where we can truly hold underlying assets and build intrinsic value, similar to owning shares in the stock market.
It is not necessary to only trade assets with underlying value in order to make a profit. Even a debt has value and can be bought or sold.
Placing bets is not an invalid mechanism for speculating on share price or asset value or currency exchange rate etc. merely because possession of an asset is not involved.
But let’s get down to the nitty-gritty, which is making money. Are you trading forex?
You have a point, but it is still not convincing to me. My understanding of the forex market and brokers completely changed after reading School of Pipsology, and I’m quite disappointed.
The difference between “actual” and “virtual” is very smudged nowadays. The “actual” currency that you mention is not actually money at all. Only cash is actual money. Even salaries are only bookkeeping entries between two accounts. Crypto, like Bitcoin, for example, are entirely virtual whether you buy/sell it with a wallet or trade it as a CFD through a broker.
The key point here is not whether it is real or not. The point is that the bid/offer spread offered by your broker is always directly derived from the current real market price. Therefore, the price at which you buy or sell via your broker will always be tracking the actual price in the real interbank market (ignoring spread differences, etc).
Therefore, from a price point of view there is no relevance whether the asset is real or virtual. On the other hand there are significant benefits from using a virtual market:
There is no settlement requirement. If you buy/sell real currency then you would need a separate bank account for each currency that you wish to trade
You can trade small amounts with almost interbank spreads. The interbank is not going to deal direct with small sums. If you want to deal in amounts less than 1 mill units then your spreads will be unacceptably wide.
There is always a market available regardless of trade size in one place. There is no need to “shop around” for a best deal.
Good brokers also provide additional services that help in decision-making.
So whether you are dealing with a real currency or a virtual one, the price evolvement is the same. One is a close shadow of the other.
So there is no difference in practical terms that makes one trading and the other gambling.
In my opinion the short answer is …YES!!!
And when you accept that simple reality you will begin to see an improvement in your forex trading outcome.
I will never understand why it is that when citing gambling examples people always look to casinos which usually have totally random outcomes. When Lebron’s team lines up against the last ranked team in the NBL what do you think the outcome will be? The latter is gambling material too of which the outcome is known before the first ball is tipped. In the same way that forex people analyze charts and trends people who gamble do their homework and examine past history, weak opponents, injured stars, home advantage and all the rest.
I am not a religious person, and I do not believe in God or an afterlife.
I also do not consider gambling as wrong, but today I realized, after checking the School of Pipsology, that the current Forex market includes no real buy, sell, or currency exchange. Thus, it is highly similar to casino gambling.
People are trading against liquidity providers or Forex brokers - this is really scary. No one wants to pay a lot from their pocket, even if it’s bigger.
In roulette, the ball randomly falls on a number. There is no knowledge, analysis or skill or any other action which the player can take which affects this outcome. No number from 1-36 has a higher probability of being called than any other. That is true gambling.
In other forms of gambling, it is possible for the player to use knowledge, analysis and skill to gauge that a certain outcome has a higher probability than any other. This is also true in investment, but also true in other areas of life.
Accept that not a thing in life is completely predictable, but some things are less probable than others.
What you are trying to justify is a logical fallacy.
I did not say anywhere that a banknote or paper note is the only real currency. Virtual currency or stocks are also real, but they include intrinsic value.
Normally, when you transfer money to someone’s bank, in exchange, you get a product, services, or another currency, whether it’s digital or physical.
My post was never about virtual or physical currencies; it’s about you placing a Lot in your MetaTrader, thinking you’re trading, but in reality, you’re not buying, selling, or having an exchange transaction. Instead, you’re just betting 1 Lot against the market maker (Forex broker or liquidity provider). I explained this here
I disagree with your points. There are a lot of gamblers who do analysis, use math, and conduct technical analysis before betting, thereby increasing their possibility of winning. Not everything in gambling provides random outcomes.
Game of Skill Gambling: Games that involve more skill than luck fall into this category. For example, people betting on Rummy, Ludo, Cards, etc.
Game of Luck Gambling (Also known as Game of Chances): Games that involve more luck than skill fall under this category. For example, roulette, lottery systems, etc.
If we are not creating any intrinsic value by placing a trade on Metatrader because our trade does not actually involve a transaction like exchange (buying/selling), then it is not a trade but a bet.
I feel the Forex market involves market makers and is nothing more than a game of skill gambling.
Not begging but asking for help. I never mentioned anywhere that I am a big profitable trader; instead, I mentioned the reality that I am making losses.
There is no shame in asking for help, but your unprofessional and rude behavior is evident here. But no problem, sometimes we get help when we ask, sometimes not.
Instead, you should have informed me in the same private message that you’re not interested in helping or advising, instead of trying to insult me in a public forum. I asked for help from a lot of members of this forum in private messages, and some helped, some gave advice, and some clearly said no, but no one tried to insult me like you did.
I don’t mind if my trades are described as bets. In fact as I’m based in the UK, my forex trading is done through a spreadbetting account. I recognise it as a type of betting, but it’s complicated because the UK authorities do not regard forex spreadbetting as gambling.
A financial spreadbetting account and spreadbetters’ techniques are not comparable with roulette.
