Forex is the theme of the decade as far as the brokerage business is concerned, and with the many great opportunities that it has brought to trader’s lives, it is more and more in the public’s spotlight. Yet there is often a great deal of confusion about what forex is or is not. The reckless choices of many individual traders with respect leverage and risk management have made forex trading almost equal to playing poker for many American families, while stock or bond trading is regarded as a more or less wiser and sensible choice. And yet, though gambling with one’s money in forex is plainly stupid, knowledge and understanding of gambling techniques and methods is hardly a disadvantage. Let’s take a look at the reasons.
Forex trading involves risk taking
Forex, like all trading activity, involves a considerable degree of risk. Traders take risks as they open positions, while they maintain them, and even as they liquidate their trades. In consequence, a trader has to be a connoisseur of risk, and in that sense he is very similar to a skilled and experienced gambler
And that’s why some great traders are also great card players…
Jesse Livermore had his first trading lessons while betting at the “bucket shops” which were gambling houses in all but name. From Warren Buffett, to Bill Gross, from Jimmy Cayce to Bill Gates, many famous personages in the business world, in particular the financial world, are fond of playing some kind of chance game where one must manage himself in such a way that he has the best odds while dealing with the unknown. A skilful gambler always has the potential to become a great trader, since during gambling he applies (if he’s any wise) similar risk controls and money management methods to those used by a smart trader of the markets.
Do not gamble with your account, but acquire the skills of gamblers to manage your trades better.
Of course, we do not advise that you gamble with your account, we only suggest that you take advantage of some of the lessons well known to gamblers. Understanding probability, analyzing the situation calmly, and leaving the game without pressing one’s fortunes too hard will be beneficial to both the forex trader, and the professional gambler.
We know that forex trading is a business that strongly depends on predictions. In the sense that in both practices understanding of chance variables, and reaction to them is of great importance, a gambler does have a lot to teach to a forex trader. An open minded-approach that focuses on the analysis of probabilities in the familiar framework of gambling, while avoiding reckless decision making is certain to improve your overall forex strategy considerably.
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This post was submitted by ForexTraders.
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