It is not uncommon for Forex trading to be seen as synonymous with gambling, as it brings with it uncertain returns. In reality, FX trading is based on sound analysis and its results are not left to chance. Those who become Forex traders only have to keep themselves in check in order to run a controlled risk and avoid unwelcome results. Trading is not gambling and they do not run the same risks. Those new to Forex will do well in reading what follows and consider it as they set out to be successful in trading.
Trading Strategies and Market Analysis
Serious and successful Forex traders take the time to analyze the data they have available and establish a trading strategy to follow. Contrary to those who gamble, Forex traders take the time to learn the market and determine milestones to achieve as they trade, thus leaving little to chance. Even though Forex markets can fluctuate, there are some measures that make it possible to mitigate any unnecessary risk. Strategies and market analysis make all the difference as well as choosing the right broker.
Gamblers are completely unaware of what might happen next; it is all left to chance. In FX trading, this does not hold true. In fact, stop losses and many other tools are available so the trader does not incur monumental losses. On the contrary, properly managing risk may actually result in considerable gains. This attention to risk will allow for the optimization of profits while diminishing risk.
The Balance in Risk and Reward
A big difference between a Forex trader and a gambler lies in the focus on risk. A gambler disregards the risk and focuses on the rewards, whereas the effective trader balances both and has a strong consideration for risk. Being able to assess rewards, risk and market fluctuations is at the heart of establishing a sound strategy for trading. Being blinded by the promise of rewards, like a gambler would, can only eat away at your profits and place you in unnecessary risks.
Keeping Emotions in Check
Time and time again, Forex traders compromise their profits by making decisions based on emotions rather than analysis and facts. Similar to gamblers, greed and fear can blind the person to the point of disrupting the gain to be had by trading. The best Forex traders tend to be calm and understanding of the implicit risk while not allowing themselves to be rattled enough to deviate from their trading strategy.
To the outsider, Forex trading and gambling may appear very similar. There are risk and rewards involved and it appears as though the individual is the one making the call based on chance. In reality, the trader has a lot of information at his fingertips, as well as tools to avoid unnecessary losses. On the contrary, the gambler is forced to leave his hand entirely to Lady Luck. The points made above should be helpful to the novice trader, helping one to know how to conduct oneself as different trading situations are presented.