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Forex gambling?

  • #1
  • First Post: Oct 6, 2006 8:31pm Oct 6, 2006 8:31pm
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?
//C
  • #2
  • Oct 6, 2006 9:04pm Oct 6, 2006 9:04pm
Hi,
If you want to be successful in forex, you have to sacrifice time, and gain experience and learn until you feel that you are able to teach.

sorry if i didn't answe all of your questions
good luck
Trading is a long and a short story.
  • #3
  • Oct 6, 2006 9:14pm Oct 6, 2006 9:14pm
Quoting cdysthe
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?
nope.. ppl who say its gambling gamble and then cry about it afterwards..
BECAUSE I CAN !
  • #4
  • Oct 6, 2006 11:28pm Oct 6, 2006 11:28pm
you said something very importante here, banks make money in forex, now how do they do that ? I mean what do the bank traders look at in the charts ....
  • #5
  • Oct 7, 2006 2:47am Oct 7, 2006 2:47am
well then technically isnt stocks, bonds or futures gambling as well? if what you meant was that its more risky than other markets, i personally dont think so. Its all about money management and psychology, if you can do those well, risk can be eliminated to a certain extent, but of course theres always risk. But if you learn proper techniques, its not a blind gamble, not by any stretch of the imagination.
  • #6
  • Oct 7, 2006 4:08am Oct 7, 2006 4:08am
Trading is worse than gambling. You'd make better use of your luck in a casino. Where the dealer asks how much you'd like to wager, and closes you out when you loose. In trading YOU are the dealer, and most don't realize that. That's why accounts can get blown out faster than a game of poker. The trader never closes out and watches as his funds depretiate, while he keeps readjusting his SL.
  • #7
  • Oct 7, 2006 4:37am Oct 7, 2006 4:37am
Quoting cdysthe
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?
The CFC's design their trading screens to promote you to gamble forex. They don't advertise it in their campaigns, but subconsciously that's what they want you to do. It only makes sense! Everytime, you click your mouse - they make money! It's really that simple. Hmmm....I wonder if they care whether I make money or not? If you look at the trading screen below, it could easily resemble an online gambling casino. At the moment, the market is closed so everything is green. But, when the market is open and active everything is lit up with pretty flashing colors. Red, blue, yellow, green price changes "dancing about your screen". It very much resembles more like a "gambling casino", rather than a "trading screen"!

Unfortunately, many people fall into the trap of forex gambling.
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  • #8
  • Oct 8, 2006 10:01am Oct 8, 2006 10:01am
Is forex gambling? Well, what is gambling? Dictionary definitions talk about various concepts. One says "game of chance". There sure is an element of chance in forex. The market is chaotic and overall does have very large random elements. But there's an intelligent element to it as well. So maybe it's not gambling. But then BlackJack has an intelligent element to it and is considered gambling.....

Another definition of gambling is "any matter or thing involving risk or hazardous uncertainty". By that definition, forex is definitely gambling. It involves risks and uncertainties.

Where does that leave us? Well, when you go to gamble in a casino, your'e not the only one who's gambling. The casino itself is doing the same thing; it's gambling. Of course, the casino has set up its games in such a way that the odds are on its side. Not by much by the way. The average return for the casino is about 104% (from my recollection but of course this varies between different games). So in the long run, the casino (even though it's gambling) will end up making 4% more money than it has to pay out. And by doing so, it makes humongous profits....while still relying on chance.

In forex, if you have a strategy that gives you a risk/benefit of more than 100% (after spread is taken into account), your gamble is much like that of the casino. You're set to win in the long run.

Of course banks trade forex as part of their portfolio. But that doesn't really mean much. Eg, recently there was a big scandal in Australia where a bunch of institutional traders (working for a bank) had lost big big big bucks (of the bank's money) on forex.

Still, whenever someone tries to knock forex, I just tell them "and where do you put your money when you wanna save up? in a bank. and just what do you think the bank does with your money? it invests in financial instruments. and one of those is forex".

L
"The market will rally from this or lower levels"
  • #9
  • Oct 8, 2006 10:40am Oct 8, 2006 10:40am
If you don't know anything and simply trade, that's gambling.

Learnt well and that's your business.
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  • #10
  • Oct 8, 2006 10:46am Oct 8, 2006 10:46am
As one of my favorite film characters once said when asked if poker was a game of chance .... " Well... not the way I play it." - W.C. Fields

Lou
  • #11
  • Oct 8, 2006 10:59am Oct 8, 2006 10:59am
Quoting elishagan
If you don't know anything and simply trade, that's gambling.

Learnt well and that's your business.
Hmmmm interesting approach. Not sure if I agree...wow, Lighty's in a debative mood today.....for a change

You see, from what you're saying, if a gambler (poker, blackjack, roulette, whatever) knows what they're doing, it's no longer gambling. And yet, some people know how to gamble better than others. In fact, there are professional gamblers out there who make their fortunes on games of chance. So really, is it simply a question of knowledge vs ignorance?
"The market will rally from this or lower levels"
  • #12
  • Oct 8, 2006 11:08am Oct 8, 2006 11:08am
Quoting LightKeeper
Another definition of gambling is "any matter or thing involving risk or hazardous uncertainty".
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
  • #13
  • Oct 8, 2006 12:34pm Oct 8, 2006 12:34pm
Quoting cdysthe
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'm not a banker...but imo...

Because you don't have the Other side of the Ledger to balance {hedge} it. If you were {as well as trading FX} accepting Deposits from and Lending to other people with a Spread in the Interest You Paid or Charged, it would be Simple to claim that you make Huge Gains Trading Currencies.

Lend a Client $500,000.00 @ 9%
Buy $500,000.00 on FX to cover the Loan.
If the $ Falls, you Still have your 9% diff as a cusion.
If it Rises, you win both ways.

Take a Clients $500,000.00 Deposit and Pay him 4%
Sell $500,000.00 on FX because you have to have a portion of your Deposits on hand Working.

Thes examples are obviously very basic, and to say the least, a pitance to the real numbers involved but I hope you now have a little clearer picture.

(Deposits On Hand - Loans Outstanding) - Gov Guarantee % = Margin Acct...

This equation, of course would be way more complex to include assets/liabilities {gold etc..} held by the Bank
  • #14
  • Oct 8, 2006 12:39pm Oct 8, 2006 12:39pm
Quoting narafa
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
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
"The market will rally from this or lower levels"
  • #15
  • Oct 8, 2006 10:14pm Oct 8, 2006 10:14pm
Quoting cdysthe
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?
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?
  • #16
  • Oct 9, 2006 1:16am Oct 9, 2006 1:16am
Quoting RizkInvestments
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?
BIN-GO!

Although as you can probably see, I go further than that. I say 4X can be classed as gambling more appropriately than most other things.

People get cheesed off about it because the word "gambling" has a bad taste to it. But why should it? If you play a game of chance using a strategy that makes sure odds are on your side, who cares what they call it?
"The market will rally from this or lower levels"
  • #17
  • Oct 9, 2006 3:16pm Oct 9, 2006 3:16pm
Quoting LightKeeper
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
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
  • #18
  • Oct 10, 2006 1:25am Oct 10, 2006 1:25am
Quoting narafa
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
Nader

Just do thet maths, man. It's simple. Every cent you get, someone has lost. That's all there's to it. 90% blow their accounts. Maybe some of them go home happy afterwards. I don't know.

Sorry, I don't understand the stuff youv'e said about commercials being happy to lose money.
"The market will rally from this or lower levels"
  • #19
  • Oct 10, 2006 2:36am Oct 10, 2006 2:36am
Good thread fellas! FF for advice, guidance and a thorough exercising of the old grey matter thrown in! and all for free!

You've stirred me into making my first ever post!
  • #20
  • Oct 10, 2006 3:08am Oct 10, 2006 3:08am
I don't mean to start a flame war here, but I have been doing some money management practice, as well as studying the "art" of technical analysis and I say Forex is far from gambling. Why? For a couple of reasons. Number 1: Technical analysis is nothing more than psychology, it's the interruptation of greed and fear, and not some random numbers game. Technical analysis is not a random act of gambling, as there are definate "patterns" to the psychology of buying and selling. Sure, technical analysis is not an exact science....but niether is psychology, yet no one calls psychology "gambling."

Once again, I don't mean to start a flame war, but to put it bluntly, the title of this thread reminds me of the controversery with guns. Are you gonna blame yourself, or are you gonna blame THE GUN for blowing your OWN brains out? It seems to me that only ametures blame their loss and pain on the Forex, while the professionals take FULL responsibility for their own mistakes...learn from them...and go on to make millions. It's that same old nasty trait that the poor lack, but the rich seem to have an abdudance of, it's called PERSONAL ACCOUNTABILITY.
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