Forex gambling?

Quoting cdysthe

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Hi,

I am relatively new to Forex and got into it kind of through the backdoor: I work for an European company and got paid in European currency. I also have stock/options in the company which has been sold in Europe. I had to be careful when I took the money over to the US so that I didn't loose on the exchange rate. After a while I thought: "There must me money in this somehow" and ended up finding the Forex trade!

I'm beginning to get the picture: Trading Forex is not "Get Rich Now" unless you have tons of luck, luck which in that case could have been spent almost as well in a casino. I am going for the small every day wins which adds up over time, just like I do with my salary evey month! Small losses, small wins, but more of the latter than the first have been my initial goal, and it's working out so far. I may be too careful, but heck, it's my money and I do not want to throw it out there unless there's a reasonable chance it will result in a little more profit than investing it elsewhere would.

However, I keep seeing people say "trading Forex nothing but gambling" in many places, even scattered around this forum. If that's the case major banks are basically gambling with peoples money? Banks are as far as I know pulling huge profits from Forex trading every year. Why is it supposedly gambling for me but not for them? I guess they can trade differently and with more resources than I do. But in the end they need to be able to see into the future just like anyone else to make a profit. They can't just be "better gamblers" than I am, can they?

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Quoting cdysthe

Disliked

Hi,

I am relatively new to Forex and got into it kind of through the backdoor: I work for an European company and got paid in European currency. I also have stock/options in the company which has been sold in Europe. I had to be careful when I took the money over to the US so that I didn't loose on the exchange rate. After a while I thought: "There must me money in this somehow" and ended up finding the Forex trade!

I'm beginning to get the picture: Trading Forex is not "Get Rich Now" unless you have tons of luck, luck which in that case could have been spent almost as well in a casino. I am going for the small every day wins which adds up over time, just like I do with my salary evey month! Small losses, small wins, but more of the latter than the first have been my initial goal, and it's working out so far. I may be too careful, but heck, it's my money and I do not want to throw it out there unless there's a reasonable chance it will result in a little more profit than investing it elsewhere would.

However, I keep seeing people say "trading Forex nothing but gambling" in many places, even scattered around this forum. If that's the case major banks are basically gambling with peoples money? Banks are as far as I know pulling huge profits from Forex trading every year. Why is it supposedly gambling for me but not for them? I guess they can trade differently and with more resources than I do. But in the end they need to be able to see into the future just like anyone else to make a profit. They can't just be "better gamblers" than I am, can they?

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Quoting elishagan

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If you don't know anything and simply trade, that's gambling.

Learnt well and that's your business.

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Quoting LightKeeper

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Another definition of gambling is "any matter or thing involving risk or hazardous uncertainty".

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Quoting cdysthe

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Banks are as far as I know pulling huge profits from Forex trading every year. Why is it supposedly gambling for me but not for them?

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Quoting narafa

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Excuse me, this definition is not a precise one...If you consider a corn trader for examples, someone who buys corn & re-sells it or exports it to another country for example, his business in buying & re-selling corn involves risk & hazardous uncertainty, because he is at risk due to fluctuating prices & due to fluctuations in suplply & demand...Also he is at risk due to several factors such as shipping costs which may vary, taxes & a lot of other factors...Does this mean that this man is gambling??? Of course not, it's his business to take risk in return for an expected profits...

In my opinion, the real definition of gambling is to take risks in expectations of return based on chance & at the same time don't produce anything real in return to your risk...For example, the corn trader is taking risks to achieve returns but on the other hand, he is adding something economically...In other words, he is doing something good to the economy, this is not gambling....Guys in a Casino take risks for nothing, they add nothing to the economy & this is pure gambling...


Thanks,

Nader

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Quoting cdysthe

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However, I keep seeing people say "trading Forex nothing but gambling" in many places, even scattered around this forum. If that's the case major banks are basically gambling with peoples money? Banks are as far as I know pulling huge profits from Forex trading every year. Why is it supposedly gambling for me but not for them? I guess they can trade differently and with more resources than I do. But in the end they need to be able to see into the future just like anyone else to make a profit. They can't just be "better gamblers" than I am, can they?

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Quoting RizkInvestments

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First of all... there are TONS of banks out there that lose alot of money trading forex. Many of the ones who do make money do so because they rip off their customers when filling their orders. Even on million dollar transactions I've seen banks charging their clients half a cent. Talk about easy money... :-)

Anyhow, trading forex can certainly be classified as gambling. But what in life isn't gambling?

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Quoting LightKeeper

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Mate,

The definition came straight out of a dictionary. And I DID say it depends how you define it in the first place, didn't I?

Now, to your corn-trader example.....The corn trader buys a commodity at wholesale prices and knows virtually for certain that the re-sale (I was going to say retail but you're talking higher level I think) price that he will charge for it will be higher than his cost. He's marking up on his cost and making money that way. Yes, there's supply and demand and surely corn prices do fluctuate. Taxes change. And of course, ships sink, insurance companies go broke, and sometimes governments refuse to underwrite their clients' losses (I guess). Yup, the corntrader is definitely engaging in an activity that is frought with risk and uncertainty.

Now, by contrast, forex is the prime example of a bona fide business acitvity. No gambling, no risk taking. Just pure business.......

Now, seriously.....

We operate in a SPOT market where you don't even get to set the prices you're going to charge. You have no say in it whatsoever. It's a spot rate, you take it or you leave it. We're speculating on the future value of a currency against the future value of another currency (usually based on their past actions), with a leveraged account. And what's more, with absolutely no intention of ever actually receiving the currency we're buying (because we don't actually NEED it) and never parting with the one we're selling (because we don't actually HAVE IT). Round trip transaction......Come on, there are some pretty good techniques for semi-accurate predictions of the market which combined with a carefully planned money management strategy can be beneficial. But let's not forget that all we're doing is BETTING on what course a currency pair will take at some time in the future.

As for contributing to economy......Our contribution to the economy is only slightly more than that of a typical casino gambler. Namely, we pay taxes (well we SHOULD pay taxes). Of course, professional gamblers also do.

Do we take risks for nothing? That depends on the strategy we use. I'd say most of us do. This is clearly reflected in the forex success rates. I don't know where the figure of 90% comes from (referring of course to the "common knowledge" thingy about 90% of traders blowing their accounts). I don't know where the 10% comes from (referring to the "common knowledge" thingy about 10% of traders going bankrupt). But those are figures that go around and seem to be accepted by most traders.

And face it (and this is the most important point), if you think you are successful at forex, how many people must fail? After all, each red cent you make from the market is a red cent someone else has lost. That's a little bit different to the typical corn trader who sells a commodity, provides a service to the community, gets paid for his work, and everyone goes home happy (except for the corn, mercilessly slaughtered for our benefit). Our job here is to take someone else's money and give them nothing in return. Or alternatively to give someone else your money and get nothing in return.

And last but not least, the guys we entrust our hard-earned money to are called BROKERS.

Need I say more?

L

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Quoting narafa

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Are you really convinced that currency traders take risks for nothing ??? Think about commercials who lock their currency risks through me, you & other traders who take the other side of the trade & bear the risk...This commercial will be happy to lose on his currency transaction because it benefits his business, yet, me, you & other traders made money...

It's not risk for nothing my friend...In many times, everybody goes home happy as well...


Thanks,

Nader

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