The line between forex gamblers and forex investors is very thin, and it all boils down to what your motivations are and the decisions you make. If your intentions are to make a lot of money fast, and you’re ready to make blind decisions in order to bank on what you think might be an opportunity, then you might be a gambler. But if you’re trying to diversify your investments, look at in depth analysis, and like to accrue small, but steady profits over a long period of time while applying sound risk management practices, then you might be the latter. So what exactly separates forex gambling and investing and what can you do to correct your gambling tendencies?
The Real Difference Between Forex Gambling and Trading
Occasional gamblers will rarely have a real plan in place and will make bets based purely on hunches. That’s why they can’t get steady gains and eventually end up syphoning their accounts.
And many new forex investors behave the exact same way. They just enter the markets and start making trades without any specific plan in place. And if they have a plan, they haven’t thoroughly demo traded or back tested it before they make the trade live. These traders often just end up mindlessly betting on forex movements with no rhyme or reason and play the market for sheer entertainment.
Trading Forex as a Pro
While some people might think that games of chance are just purely luck, there are many players who approach gambling just like any profession. Just look at people who play blackjack with a system or play professional poker. Many people understand that there is a certain element of chance to what they do, but also know that they can use techniques and strategies to mitigate risks and use odds in their favor.
And the exact same thing applies to forex traders. A professional trader will have a clear strategy they will apply to their trades through a consistent trading plan. They also show a high level of discipline and will tally up their wins and losses to calculate their net profit. This is the difference between pros and the rest.
Understanding Risk-Reward Ratios in Forex
Understanding your risk-reward ratios on any trade is essential if you want to be successful as a trader. Good traders will usually only enter a trade if they have a 1:2 risk-reward ratio, meaning that they will only enter a trade if the risk they are taking represents at least half of the possible reward. And people who play casino games in Japan should also apply the same strategies when gambling if they want to counterbalance their losses.
Also, by weighing your risk-reward ratios when investing on a probability scale, you’ll be able to optimize your trades and increase your chances of being successful long term.
At the end of the day, traders always win over gamblers. So, if you want to become a real trader, try to implement a clear and tested strategy and make sure that you stick to a strict trading plan if you want to turn your forex gambling into a business.
