Very often when I talk to people about running a forex business, I am challenged by people who say that forex trading is nothing more than gambling. There used to be a time when I would take the bait and jump in to defend currency trading. Today, experience has shown me that sometimes people understood the same words that I used differently. Once I accepted this, it was easier to define a suitable answer.
So let’s take a look at the three words, gambling, betting, and speculation.
This single word is probably the biggest cause of confusion in this debate. As an analogy, consider the word running, and let’s limit this to using the word as physical exercise.
The person who jogs for 30 minutes at night after coming home from work is running. The athlete who runs the 100 m in 10 seconds is running, the person who runs for 5 hours to complete a marathon is running.
At its highest level, gambling can be viewed as engaging in any activity that involves risk and is associated with the prospect of potential gain. If this definition is used, then UFA yes, currency trading is a game. But so is investing in stocks and shares, even leaving money in a bank can be seen as a game of chance; it rarely happens, but banks fail.
For the purposes of this article, gambling will be defined as betting or risking money, on the outcome of something that involves random events. For example, rolling a dice, roulette, buying a lottery ticket. In this decision, there are no previous facts that influence the result.
Currency trading is nothing like this.
The definition here will be to bet or risk on any event that expects an outcome in which the outcome is not totally random but is influenced by other variables. The last part of that sentence is important as it adds an additional element to the definition of game.
For example, someone may decide to bet on a team to win based on the fact that two of its key players have returned from injury. Or maybe the world number 1 in tennis is playing the world number 134.
There are several traders who are in this position. A forex trader expects currencies, for example, to strengthen based on improved economic data. A stock trader expects a stock to increase in value based on the performance of the company.
I would even go so far as to say that many people who invest their money in stocks and shares, in pension funds, etc., are actually betting that they made the right decision. In sporting events, say, the success or failure of a result is known in a few hours, when investing in stocks and shares, the timeline is considerably longer.
I believe that most forex traders who take this approach can define their trading approach as betting.
I would like to propose a definition that speculation is an action that involves a certain amount of risk, in order to obtain a financial gain, which is supported by the consideration of a variety of factors that the trader believes support the decision made.
In other words, when you speculate, you base his decisions on evaluating a variety of different sources of information, relying on his knowledge and analysis of past events. It is this active engagement in the decision-making process that is based on real events, be it events, announcements or the technical analysis of chart patterns, that defines the speculation of betting or gambling.
All successful professional forex traders and those who run a forex business from home operate this way. All of these skills can be acquired and then must be put into practice.
Kaz Kowalski has had great success as a project management consultant working on a number of high-profile projects at front-line companies in a variety of industries, including banking, information technology, and telecommunications. He has used his analytical skills to review and determine the profitability and effectiveness of different home business opportunities in building viable and profitable business models. As a result of his analysis, he has come to the conclusion that a Forex home business has significant advantages over most other home business opportunities.