Trading on a demo account is different than trading on a live account because actual emotions are involved while trading in a live account. It is easy to make a plan and difficult to execute it and stick to it
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This is why the psychology of trading is the most important part of our trading plan ! Right ?
Forex trading can never be a gamble. Because by investing here you can trade with 95% probability.
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True that, trading is risky but it is far away from gambling. Risk is a part of every crucial business and so it is a part of trading as well. With right information and strategies, trading requires use of brain, patience and investment. For me it is no different than doing a self owned business.
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Thank you for the information. This is interesting and it makes so much sense
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Hi (again),
I have just re-read this thread because it is relevant to the work I decided to do this week for my latest (2021/22 trading and investment plan), relating to a better plan to address some deficiencies in two areas:
Firming up the plan for a bear market
Setting a mechanical strategy and plan for exit when market turns bear or choppy
Both of these areas have been adequately addressed (at least until I write the practical rules and test them out) by reading the book “The Crypto Trader” by Glen Goodman.
I have had (relatively) huge success this last year compared with the past 10 or so years, and now turn my attention to the fact that the results have all been due to a raging bull crypto market. There is a huge hole in my detailed plans for what I do in the bear market, how I address shorting (leveraged or unleveraged) and how I determine what triggers my exit strategy when we are all ultimately faced with the next 80% crypto market crash.
And that has brought my attention to this age old conundrum - is trading gambling? I now believe that trading is far less risky than long term investment in stock, commodities, bonds unless those investments have also been made with a plan of how to manage a crash. Some have probably used options or futures. I am yet to author the detailed plan but it did occur to me that a trading plan that has automatic stop losses set upon entry is far less risky than a stock portfolio with no options to cover a flash crash or a bond investment that has no plan in place of how to respond to an unexpected increase in the yield curve (with the corresponding erosion of price of the underlying bond instrument). Just food for thought
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Yes, it is true that Forex is not gambling itself but most of the new traders treat it as gambling and mostly fail and leave the market very early.
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Trading Forex is often referred to as gambling. If you trade without knowing how to win it is gambling. It means that you are taking a chance of losing to win.
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To me… if you over leverage or risk more than say 1-2% of your account with no obvious strategy it is gambling yes.
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Because a lot of people want the lambo life style and to become rich over night. They’ll throw 1k in an account expecting to make 1m. Over leverage, 1 bad trade and they lose it all.
Bit like betting. Place your balance on an accumulator and lose it all.
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The same people don’t think the same when they want their holiday money though.
An emphasis on what one can make rather than what one can lose is the downfall of most new traders.
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True. it’s true
I can gamble some odds on soccer and be a lot more informed on my decision than I could on a bet with the same odds in another sport.
This is a lot like trading. I study GJ relentlessly, but never EU, trading GJ is a lot less of a gamble for me
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Trading is for most people a form of gambling, they just dont want to admit it.
And what will gamblers do?
They will build a narrative that will place them as not being gamblers, they will always deny and make every excuse to tell that they are not gamblers.
Lets take your example, its just a stupid excuse to deny gambling,
If you throw 1k in an account and lose it in 1 trade, you are a gambler,
a very stupid one.
But if you trade that 1k and end up losing it in a matter of one, two or three years, you are still gambling, you are just doing it in a more conservative way.
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Any and every business is gambling, with risk, if people just jump onto it. Trading requires a complete set of strategies, learning and execution. When all these things fall into place, trader starts getting successful. It requires patience, persistance and practice just like any other money earning occupation would.
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I know this is an old thread, but I have just finished a book recommended on a forum called New Trader, Rich Trader 2. It was the sort of book that started off a little long winded and unfocussed but became increasingly of value the more you read it.
I have pasted a whole section from this book on the title subject of this thread. It seems a logical definition of the difference between gambling and speculating (trading).
Enjoy
On the subject of gambling or speculating.
Are you a reactive trader or a predictive trader? When we take an entry before a signal is given, we are predicting it will be given later. When we trade a stock at $600 just because we believe it will go to $700 we are predicting.
Ask WHY the trader entered the trade. If they say I bought it because it can’t go any lower, or I bought it because I believe it will go to $100, or I sold stock short because it just can’t go any higher, then they are predicting and not reacting.
A reactive trader says I bought it because it broke out over resistance of a three-month price base to all time highs, or I shorted it because it broke down under long term price support levels, or I bought it because it bounced off a key support level or it broke out over short term resistance.
A reactive trader needs a reason to take a trade based off a price action that appears to give them a probability of success. A predictive trader needs only a belief or opinion to take a trade.
Almost all traders are trend traders whether they know it or not. The trader has to focus on quantifying how they will identify and capture trends in a profitable way in their timeframe.
The entry should be at a high probability moment after confirmation that something has changed in the price action which may indicate a move in one direction. The entry level needs to have a good risk/reward ratio where, for example, the trader is exposing 1% risk for a 3% profit on total trading capital.
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People who does not know how to trade think trading is gambling
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Very interesting !!! thanks for sharing and believe me this thread never gets old. This question will always be asked !!!
That’s a very original way to put across your ideas and kudos to you for that. Completely agree with the crux, nothing can surpass learning and trading’s no child play. If you’re in for serious money making, stay committed and consistent.
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