Is Forex currency trading gambling, or investing? Small account holders in the foreign exchange market, are believed of as fish food for that larger sharks that are swimming around inside a big pool. This way of thinking comes from the way in which so many of them jump into Forex currency trading using their money as well as their emotions rather than actually understanding what they are doing.
A professional trader compares the Forex market as an opportunity for investment, some first time traders look at the Currency markets as an chance to make money fast. Even though market can indeed get people to very wealthy in very short amounts of time, taking a professional approach to Forex currency trading is more ideal.
New traders and investors within the Currency markets, see:
- Fast profits, since the markets taking action immediately
- High liquidity, letting them enter and obtain out quickly, taking their profits and running
- A chance to beat the big boys at their very own game, since they're so small they can't discover their whereabouts
- An opportunity to take a large amount of small profits very fast (this is known as scalping)
- An opportunity to occasionally take a huge win that will outnumber any other previous losses made.
New traders and investors within the Forex market, believe that small losses will not accumulate or hurt them. Some of them also believe that they will see some success in around 90% of the trades, but this is not the case. Professional traders and investors within the Currency markets, know that:
- Long-term trading strategies work best
- You shouldn't fight a trend, as contrarian positions in the currencies market are foolish
- Money management is the key to long-term success
- Trading strategies work, even if they only deduce modest results
- Using safety tools (like stop-loss triggers) is really a necessity
- The best way to not lose money, would be to not trade
- Forex currency trading requires discipline as well as an iron clad.
Forex currency trading mandates that you decide a certain type of currency will either become stronger or grow weaker against another kind of currency. In essence, you are betting that the price of one currency will either rise or fall. Professional traders take a seat in the computer and approach their trades calmly with a particular group of rules in position. These rules, once in place, can't ever be violated. Violating the guidelines completely ruins their trading philosophy and many often leads them to losses that they may never recover. Sound harsh, it may be but it's the fact is investing and not gambling.
To conclude, Forex currency trading can only be called investing when you have a plan that you follow all the time without fail. Once you begin to deviate from the tested trading plan, your Forex trading becomes gambling and you start to lose money as emotion turns into a factor. Whether you need to be considered a professional trader making money within the Forex market or just find a way to add a few dollars for your monthly income, Forex trading can suit your needs if you learn to trade just like a professional, maintain your plan and keep your discipline.