Forex Traders: Are they Gamblers?

By: Harold Hsu
Forex trading can be a very lucrative activity for retail traders. We’ve all heard about traders that make a few thousand dollars in only a couple of hours – which makes trading sound like easy money! Unfortunately, what we don’t hear about quite as often are the traders who lose twice that amount, in only half of that time.

With such large amounts of money so easily won and lost every day in the currency markets, it’s no wonder that so many people think of Forex trading as nothing more than a legalized gambling activity.

But that’s where they’re wrong. This is one of the biggest misconceptions by the public and amateur traders.

So please allow me to explain my point: When someone gambles, that person is essentially betting on chance.

For example, when betting ‘heads’ on a coin flip, there is an equal (50%) chance of winning or losing.

There are only two possible outcomes here: either you win (heads), or you lose (tails). And both outcomes are equally likely.

If you keep betting ‘heads’ on the coin flip, after a number of tries you’ll most likely win roughly 50% of all your bets. That’s what basic statistics teaches us.

However, it may shock you to know that only 10% of Forex traders actually make money trading. The other 90% are traders that consistently lose money.

Think about that for a second.

If you bet on coin flips with nine other people (ten in total, including you), and only one person keeps winning, would you still think this was a game of pure chance?

Of course not, right? If it were truly a game of pure chance, then most of the time we should have five winners and five losers.

But this is not what’s happening in the Forex market! In Forex, out of every ten traders, only one is making money.

So now we know that Forex trading is definitely not a game of chance – at least not to the winning traders. The traders who treat trading like a gamble are likely those who constitute the 90% of losing traders.

Don’t be like the losing traders – do your homework before you trade, and don’t take wild guesses. Learning to trade profitably can be challenging, but the rewards are more than worth it.

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