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Trading in the forex markets is essentially binary and the price of a currency might go up or down, and a trade might post a win or a loss. At that simple level, trading the forex markets could be equated to gambling or making decisions based on chance, somewhat similar to a coin toss. The difference between forex trading and gambling, and the reason some investors can make sustained financial returns, is that various strategies and techniques can be used to create a more professional approach. This article will concentrate on the differences between forex trading and sports betting
Forex Trading
Before we can decide to explain or talk about the difference between forex trading and sports gambling one must know what forex means. The foreign exchange market is a global decentralized or over-the-counter market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all aspects of buying, selling, and exchanging currencies at current or determined prices.
Forex is traded on the forex market, which is open to buy and sell currencies 24 hours a day, five days a week, and is used by banks, businesses, investment firms, hedge funds, and retail traders.
Sport Betting
Sports betting is the activity of predicting sports results and placing a wager on the outcome. Sports betting is one of the most popular forms of gambling because it taps into the passion of sports fans. A bet placed on a race or a game allows fans to prove their knowledge of a sport or to show their loyalty to a particular team or competitor.
However it promotes Camaraderie among friends, sports betting can enliven otherwise boring or one-sided contests when handicapping systems offering odds and point spreads increase the bettors’ stake in the competition.
Is Forex Trading Gambling?
One of the easiest ways to move away from your forex trades being random gambling is to develop a trading strategy and apply it with a degree of discipline. Taking that approach to a higher level would include conducting post-trade analysis to establish what works and what doesn’t and incorporating that information into your future trading.
Forex trading differs from gambling because good brokers provide a range of tools that allow you to test strategies in risk-free environments. That enables you to make mistakes for no monetary loss and gives you greater confidence when you move on to trade with real cash. Gambling casinos don’t offer such services and, in reality, rely on catching people’ cold.’
It’s also worth considering the level to which you can work on improving the odds of being successful. Casino games, such as roulette, are entirely chance-based. While some blackjack players may develop the underlying skill of card counting, compared to a well-developed forex strategy, gambling in a casino offers fewer opportunities to invest in developing your understanding of the situation.
Attributes that Differentiate Forex Trading And Sports Betting
Numbers
Before getting into morals, ethics, legal issues, and legitimacy, let us focus on the reason anyone gambles or trades Forex: to make money. There is no comparing the amount of money traded daily in the Forex market to that of the gambling arena. No industry handles so much money daily. Depending on who you ask, there are anywhere between 2 and 5 trillion dollars traded daily in the Forex market. I could not find exact statistics about how much money passes through the casinos daily, but I am pretty sure the numbers do not compare.
Players
The Forex market is backed by the biggest and most important financial institutions on the globe. Indeed, traders do not trade with the banks, but rather on the retail market, even so, the fact that the market is supported by such organizations provides a much higher level of legitimacy than the gambling world. While gambling always faces challenges on the legal front, Forex is as legitimate as any other market, such as stocks or commodities.
Trading Forex Isn’t Gambling – Here’s Why
Technical analysis is also a major contributor to the differences between trading and gambling, as you can have a set of indicators or a trading system overall that gives you a hint as to when the conditions might be correct. Obviously, it will be a bit different in each game, but overall you are not only betting on the random result of dice, cards, or perhaps a roulette wheel, furthermore you don’t have much to back up your thesis, certainly, not as much as you would on a financial chart.
Lastly, one of the biggest distinctions between trading and amateur gambling is money management. A professional trader won’t risk too much of their trading capital on any particular trade, while an amateur gambler may go “all in” on a bed, which of course is reckless.
