When Indian investors trade forex for the first time, they either get lucky or fail to turn the market condition in their favour. Although it might seem like a gambling scenario forex markets are primarily meant for finance. Because in forex, traders are not deliberately put in a disadvantageous position, unlike gambling. Many Indian investors who start their forex trading journey in the hope of making substantial profits get discouraged after suffering from losses because they do not know how to trade like a professional. Let us find an answer to the question “is forex trading in India gambling or not” which a lot of frustrated traders ask when they are at their wit’s end.
We shall find out what distinguishes forex trading and gambling and under what circumstances does trading forex turns feels like gambling to Indian traders.
Is Forex Trading In India Gambling Or Not?
Simply put, no trading foreign exchange pairs and gambling are not the same thing at all. Forex trading is a complex yet rewarding activity that might result in profit and help individuals across the globe financially. The mechanisms of both forex and gambling might bear a striking resemblance to an untrained eye but reality could not be farther than this.
The reason why people come to think that these two activities whose goal is to make a profit for individuals are similar are:
- They fail to see the loopholes and traps set in gambling and
- They ignore the authenticity involved in forex trading.
Reasons Why Forex Is Finance, Not Gambling
For an expert forex trader, the differences between forex and gambling are evident. We share some of these dissimilarities as follows:
1. Gambling Is Luck-Based But Not Forex Trading
Those who have ever tried their hands of gambling would agree that it is a purely luck-based activity of increasing personal finances. You bet with a considerably low amount of money hoping to obtain more than 100 fold of the initial investment through gambling. But in the case of forex, luck is not involved in its trading process. The chances of making a profitable trade solely depend on the initial investment, chosen forex pair, and the forex broker. In gambling, the house has an advantage over players, but forex gives people a fair chance.
2. Forex Trading Requires Strategies & Tools Unlike Gambling
Professional gamblers always have a trick up their sleeve to turn the odds in their favour and gain an upper hand while gambling. But in forex trading, beginner traders based in India have to expand their knowledge and find various helpful tips that could help them trade profitably at a given time. Experts utilise different types of trading strategies to get the result their expected results when they trade any forex pair using any particular but genuine forex broker. Trading platforms provided by brokers do not function to the trader’s advantage unless useful tools and strategies are not applied.
3. Probabilities In Forex Trading Is Different Than In Gambling
The primary reason why forex is more of a finance thing than a gamble of money is due to the difference in probabilities. In gambling, players tend to act against the house (which is usually one step ahead of them) to make a profit. Gambling is an unfair process where people are scammed out of their initial capital. But forex trading presents a completely different scenario because there is no one which acts against the traders. During forex trading, people have to apply different techniques to take advantage of a particular situation.
Tip: Learn useful forex trading strategies at Investopedia
4. Gambling Affects People Socially But Forex Does Not
People addicted to gambling usually get in trouble because of their preference as they end up in worse situations like debt. Gamblers tend to shy away from society and never reveal that they partake in gambling activities as it is shunned by most people. Gambling affects people’s mind and their abilities resulting in a social recluse who does not lead a normal life far away from financial stability. But forex enthusiasts do not have to suffer from such consequences at all. Like stock traders, they can pursue forex as a side hustle or as their main job and still be a respectable part of society.
Tip: Try social trading and copy trading with eToro
5. Forex Trading Is Impossible Without Prior Education Unlike Gambling
Forex trading requires skills, practice, and knowledge to work for your benefit. Without proper knowledge about how stuff works in forex, one cannot hope to succeed. That is why one can find several educational resources helping out people to understand various forex-related terminology, facts, and strategies. But when people choose the path to gambling, they are better off without any sort of education. There is not much to learn about how gambling works and because of that many who are unaware of gambling risks become a victim and lose their money.
Tip: Learn about forex at Investopedia
Situations When Forex Trading Turns Into Gambling
Now that readers have come to understand that there are clear dissimilarities between forex trading and gambling, they should be aware of the situations when forex traders feel like it is a gamble of money. People might get confused that forex is like gambling especially when they have no idea what to do and fail to follow a trading strategy properly.
- Chasing losses has become a common way where people tend to gamble in forex. It is more of an emotional step taken to recuperate from previous losses by placing more orders in hope of a profit.
- At times, forex traders behave like gambling addicts who keep on trading day and night desperately trying to win back their losses by making bigger trades.
- Sometimes after suffering from back-to-back losses due to inexperience or unfavourable market conditions, traders choose riskier methods like leveraged trading to make profits.
- In retail forex, traders get to review the previous price action before opening new trades like being able to see the dealer’s hand before deciding your next move. This makes forex feel like it’s the ultimate form of gambling.
- People are tricked into gambling by letting them win for the first few times and for people who have started forex trading recently might sound a bit similar. In both cases, people experience “beginners luck.”
Ways To Avoid Gambling Situations During Forex Trading
Even though forex trading sometimes might feel like a gamble of money to many newcomer Indian traders, there are methods to avoid such gambling situations such as:
- People who have a history of addiction (especially gambling) should avoid entering forex markets. Because it is an unfortunate truth that forex trading is not meant for anybody who does not want to improve.
- If you are new to forex trading and have been feeling that all you do is a gamble with money then try changing your approach to reverse this process and accept that there is much to learn.
- Once you begin learning everything there is to forex trading, you can trade efficiently and smartly. That is the best way to avoid gambling situation while trading forex. Beginners should always prioritise education.
- Any professional forex trader would never open a trading account, gamble away all of their investment, and repeat the same process all over again. Building trading strategies and avoiding common mistakes is how traders can avoid gambling while trading forex.
- Risk management is a significant consideration for all kinds of traders. Without setting limits on how you trade and how much capital is utilised, one cannot break the gamble-like cycle that exists in forex trading.
It is important to make the right decision to keep your finances safe in-between trades because gamblers fail to do that and fall into a downward spiral of dire consequences.