Why forex is gambling

[JimP]

I agree with Marc when he says that Forex is gambling of a sorts.

For one thing, Forex brokers are selling you a service and a platform. They actually make money whether you make a profit or loss. So, at the minimum they will form you just enough so you remain a customer for a while.

For another, the software itself does nothing but mimic what forex trading might have been when everything was done by phone. The only difference is that it's being done through the Internet. And yet, as a programmer I can tell you that it would be possible to create far more flexible tools that would allow things like trailing stop losses or even a basic scripting language that would allow just anyone to make their system semi automatic.

In short, the odds are against you just like in gambling and the game is about risk management. I guess that's the first important insight you should give to anyone contemplating trading.

[robsam]

In short, the odds are against you just like in gambling and the game is about risk management. I guess that's the first important insight you should give to anyone contemplating trading.

The term risk management is the only way which directly fits to the fx market. If you are smart enough to understand this term and manage yourself and your money with high sensitivity then I think this gambling becomes easy up to an extent. Sometimes you loose your money because your prediction goes wrong. So, I agree with this GAMBLING word.


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"gOING hIGH"
forex broker

[capsmart]

Hi Jim.
Yes trading is gambling but... there is a big but.
Is the casino gambling? In a way yes, but because the odds are in it's favor in the long run it wins. Same is with us. If we have a system that is accurate 75% of the time, then there is no reason for not making money. There is an if here. If we trade long enough. So after 100 trades 75 will be profitable and 25 losing but they will not come in this order. So if you have 10 losing trades in a row then you start asking yourself about the system, you change money management rules to recover the losses and you know the outcome.
Now concerning Metatrader we should consider the following.
Metatrader is a very nice platform with a plethora of forums talking about it and thousands of indicators and systems. But IMHO it is not a good platform. And I think they do not want it to be one. It is a platform to learn trading and then move on to something more processional.
If you try some other platforms like Ninja or eSignal you will see that they offer everything you are looking for.
But even with Metatrader they exist tools that help you manage the trade. I would suggest that you have a look at Broker Nightmare

[raa]

This makes sense for a scalping and a bucket broker. I personally use a MM2.1 EA from Dean and Marc, however would prefer several levels of SL to be had. Like EA from FTC has, but currently it works only on Gallant FX, although they promise to release a version soon for any broker.

[maliahh]

Hello,
Gambling? Speculating? or Investing? - trading in the foreign exchange market largely depends on your competence and intention.

If you do not know what you are doing and want to make quick and easy money in the forex market, that is gambling.

If you are very competent and want to make money in the forex market, that is speculating.

If you are speculating in the forex market and holding on to your losing position, that is investing (as in--investing in stocks for the long term in a bear market).

thanks!!
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[Gally]

It's gambling. But so's poker and people can be very skilled at it. Stock and forex prices are, after all, a random walk. But we're not trying to predict what the value of something really is. We're trying to predict what other people believe the value is (Keynes' metaphor of a beauty contest). Understanding of psychology is far more important than understanding of fundamental factors. As is understanding of riskrofit ratios. Just like poker.

@maliahh, I'm assuming that was a bit of a joke? People that hold losing positions are not usually called investors...except by their brokers in getting them to buy more.

[Athlon]

I keep hearing the forex and commodities are a zero-sum game how about the stock market?

[capsmart]

The zero sum game is when one is loosing and someone else is making a profit.
If you forget about commissions then stock market in theory is not a zero sum game.
If prices keep going up (or down) forever ???? If I buy a stock at 1.00 and sell it at 1.20 I made a profit. If you buy it at 1.20 and sell it at 1.40 you also made a profit. If I buy it again at 1.40 and sell it again at 1.60 I again made a profit etc. So if price keeps going up till the stock has a price of 100 we all made a profit in the run. But this is just theory.

[Gally]

A zero-sum is a situation where for every winner there is a loser. In Forex pairs, if one side goes up, the other goes down. So there is always some movement. In stocks, thats not true. Which is why stocks can be boring to trade a lot of the time--there's no need for movement. Not the last two years though!

[dn1]

It really is not that different from poker, as far as I can tell. A zero sum game with the house shaving a bit off every transaction. If 2 players of equal ability play poker, heads-up, for long enough, and both recieve an equal amount of good fortune, then eventually neither will have any money left as the house will have taken all the cash in rake.

Either player must therefore have a significant edge over the other player (enough to more than negate the rake) to avoid going bankrupt after a certain number of hands (unless they just get lucky, obviously).

Many online pros will play 12-20 tables at once and play over 1 million hands per year. This is enough of a sample size to make luck, basically, not a factor.

I am a total newbie but I can already see some similarities on the forex and poker forums from new bot users. People are complaining about bots losing them money in the first week, or saying how great the bot is, because they are ahead. I think you will need several months and a proper bankroll strategy to even begin to have an idea if it is working.

Having said that, I am only throwing a couple of hundred dollars at this, for a bit of fun. My 'risk of ruin' is therefore high, unless I trade for extremely small stakes, which I doubt will be allowed. I haven't even started yet, so excuse any ignorance in this post. Just saying how it looks to me, from initial impressions.

By the way, if anyone can point me in the direction of a recent thread about recommended VPS, I would be grateful. I can't find one.