Forex Trader: “How is trading Forex any Different than Gambling”?

 

I saw this question on Reddit recently and thought that was a great question to ask, but the forex trader who asked it was asking a good question in the wrong way. best broker for forex trading

This is the kind of thinking that sends people down the wrong road from the very beginning and gets them lost in maze of trading bots, indicators, endless holy grail strategies all of which which usually results in blown up accounts.  broker forex regulated

o let’s refine the question a little and ask it this way:

“What is the difference between gambling and trading?”

Better, but still too general.

The key factor to both trading and gambling is profitability. Some gamblers lose everything constantly, some make profits occasionally, some tend to break even, and some (very few) make more that they lose. forex trading reviews

It’s the same with traders.

So Let’s rephrase it again:

“What’s the difference between a profitable trader or gambler, and unprofitable trader or gambler?”

This is the kind of question people need to be asking, searching for, and googling, but most beginner traders just don’t know it.

The difference between profitable gambling and unprofitable gambling is: strategy.

And yes, the same goes for forex trading.

A profitable forex trader/gambler will chose a trading instrument/game in which he can deploy a strategy which put the odds of winning slightly in his favor. He’ll then repeat the same strategy time after time leaving his profits to the law of averages. broker forex

The unprofitable forex trader/gambler will bet on hunches, and gut feelings and get attracted to exciting new instruments/games to bet on.

The profitable forex trader/gambler will NEVER go “all in”, but will bet small amounts based on the size of his account.

The unprofitable forex trader/gambler will go by an emotionally driven decision making processes, thinking that the only way to make money is to go “all in” from time to time. best brokers forex

Unprofitable forex traders love to google question like this:

Can forex trading make you a millionaire?

What are the Best forex trading bots?

Can forex trading make you rich?

What forex trade strategy has the highest win-rate?

Profitable forex traders tend to google questions like this:

How can I better control my emotions when trading?

How can I become better with my trading psychology?

What are the best books for trading psychology?

What are the best books about crowd psychology?

New traders tend to focus on making money, but experienced traders tend to focus on bettering themselves so that money flows to them more easily. broker for forex

New traders look for fast gains, experienced forex traders look to learn about what causes the market to move in order to capitalize on that movement.

New traders think a perfect strategy is what makes money, experienced forex traders know that the perfect execution of a decent strategy will make far more money than sloppy execution of a perfect strategy. best forex brokers usa

So how do I get better at Forex trading?

Well first of be careful about the instruments (games) you choose.

Binary Options

Binary options are something that a lot of beginner forex traders start with, but unless the platform is run by a reputable forex broker, there is A LOT of room for fraud. usa forex brokers

Binary options are time based, so they tend to attract people that are in the trading game for quick profits, so be careful! If you cannot puts the odds in your favor through a statistically driven model (trading strategy) then you will not be profitable.

Scalping

Or also known as a sure way to blow up a new beginner traders account.

From the outside it’s looks like the easiest way to trade! You get in, grab a few pips and get out. Repeat that few times and you’re done for the day. oanda reviews

The internet is full of sewage-quality “information” about ‘scalping strategies for beginners’, I call it sewage because most of these strategy peddlers KNOW how hard it is to make consistent profits while scalping, yet they sell this stuff to beginners anyway!

Scalping is for a certain type of experienced trader.

-me

Let me repeat that: it’s for only a certain type of experienced and knowledgeable trader.

Why is scalping a bad choice for beginner forex traders?

Scalping is one of the most stressful things you can do if you aren’t built for it. A trader first needs a really good strategy (something that beginner traders do not have) and then he needs to stick to it (something beginner traders never do) and also be ok with losses (something that … well you get the point)

When you put your money on the open market, you’re really opening up a pandoras box of stress, emotions and money related phycological issues, many of which you never knew you even had. best forex trading platform

In order to scalp (or trade) profitably, you need to develop a certain mentality which is described as “mental tools” by Mark Douglas’ great trading book Trading in The Zone. These mental tools allow you to better manage your stress and emotions. forex trade demo

And don’t forget even the best traders need to take breaks often. Scalping can put you in a stressful, emotionally charged state for hours everyday, think about what that does to your health?

So unless you are well suited for scalping, and have some well thought out, tested strategy in place, you should avoid it at the beginning.

Swing trading the best option for beginner traders

Swing trading is not exciting, you have to wait “a long time” to see trading signals, but it’s were you can potentially make the most profits with the least amount of effort, time and stress. forex brokers best

Why?

When you swing trade, you aren’t in and out of a position in minutes, rather, you are looking for longer term movements in the markets based on currency “swings”, from one high point to another lower point and vice-versa. forex reviews

These swings can take days and even weeks to go from one extreme to another.

So that footers a lot benefits to beginner forex traders.

Such as:

• Trading opportunities are fewer, so you can practice patience and sticking to a strategy.
• You have time to think a trade through and decide if it’s a genuine signal, or if it’s just “in your head”.
• You have the potential make a lot more in swing trading.
• You can structure your trading so that you only trade a few minute per day.
• You are trading with the larger trend, which is a great thing in trading!

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