I haven’t made a post in a while and have taken a break from it all and been in Thailand for 3 months. Since I’ve been back I have just been doing a bit of work to the house. I was going over some old FaceBook posts and found one I wrote about “is Forex trading gambling”? So, I will keep this short and its pretty much a copy and paste from my FaceBook post but, thought it would be good to update this as its get asked quite often.
First let’s look at the dictionary meaning of Trading, Gambling and, Speculation.
To stake or risk money, or anything of value, on the outcome of something involving chance. This usually relies purely on luck and the outcome has little or no bearing on skill.
When in trading this is just taking a punt a guess or just hoping to have some luck.
To engage in thought or reflection, to meditate.
When trading this is using all available tools to analyze the current market. To think, reflect and, theorize.
However speculation is not set in stone and is reliant on circumstances of future events.
The act or process of buying, selling, or exchanging commodities, at either wholesale or retail, within a country or between countries:
So to summarize this let’s take an example.
A patient is sick and a doctor has to diagnose his condition…
Would a doctor take a guess, a stab in the dark ( A gamble) at what the patient has.
Would the doctor run some tests to diagnose the problem? (Speculate) Even though the doctor may have done everything to diagnose the patient the outcome may still not be favorable.
In order for the doctor to run some tests he must have the knowledge what to look for and what tests to perform, to be able to make a diagnosis. This however would fall under the term speculation. RIGHT? After all it is called a practice its never perfection.
After many years of experience making the right speculation becomes natural. Circumstances and history repeat them self and, its becoming aware of these patterns that gives you the edge and a second nature.
If a trader was to take a stab in the dark with trading this would be put under the term Gambling.
But, if a trader was to analyze economic data and do a chart study this will enable the trader to have an advantage and be able to “SPECULATE” on achieving a desirable outcome.
It takes many years to become a doctor and likewise with trading. The difference is, anyone with a pc these days can start trading and without any knowledge what so ever and have inevitably set them self-up to loose. This brings rise to fast losses with new traders, then to falsely accuse the trading game as a scam.
Is Forex Trading Gambling or not you decide? 😉