*Updated March 2023!
Individuals sometimes perceive the forex markets as a gambling platform, anticipating quick and substantial profits. However, it is imperative to question the likelihood of success for such a strategy. The number of individuals who remained successful is minimal.
Only those who engage in activities such as poker are likely to attain success, but even then, it is impossible to surpass the house. Entering the forex market expecting quick profits is a precarious venture, as it is inherently distinct from gambling. It is necessary to acknowledge and comprehend the critical distinctions between the two.
This article will examine these differences to understand better how to approach the forex market.
The Forex Market Is Regulated By The Government
Forex brokers require licenses from the relevant forex regulators in their operating region. The parliament typically authorizes these regulatory bodies, providing them with the legal backing to address complaints. While some may argue that gambling is also regulated, such as by the Gambling Commission in the UK, it is essential to note that no instances of compensation for individuals who have lost all their money or accrued debts have ever been recorded. That's because all individuals who enter a casino are ultimately responsible for any losses incurred, regardless of whether or not the casino engaged in unfair practices. On the other hand, aggrieved forex traders can file charges with the regulators, who investigate the matter thoroughly.
It is worth noting that even the Gambling Commission's stated objective is to "prevent gambling from becoming a source of crime" and to ensure that "gambling is done fairly." However, the commission cannot pursue a complaint by a gambler for their losses as they do not have access to the casino's books, and there is no way to prove any wrongdoing beyond a reasonable doubt.
Conversely, forex regulators can demand a client's trading records, compare them to market data, and determine if malpractice occurred. The critical difference between the forex market and a casino is that forex trading is subject to regulations, which is not the case with casinos. The outcome of a casino depends upon an individual's luck, and they must accept responsibility for any losses incurred.
In short, while gambling and forex trading may appear similar, they are significantly different, with the latter having greater legal and regulatory backing to ensure fair practices.
Forex Brokers VS Casinos - The Selection Process
When choosing a forex broker, it is essential to establish trust with the company. This process thoroughly analyzes factors such as the company's reputation, client reviews, and regulatory compliance. Evaluating these aspects lets you determine whether the broker is reliable enough to manage your funds. Additionally, you may also consider the broker's offerings, such as trading instruments, market conditions, and other services. Comparing these factors against those of other brokers in the industry helps you make informed decisions.
On the other hand, choosing a casino does not require such pragmatism. Most people base their selection on superficial factors, such as the casino's ambiance, beverages, and attractive staff. As a result, people seldom scrutinize the company's management, regulation, or corporate structure. Casinos foster a decadent atmosphere where individuals indulge in luxury and excitement. That is why casinos strictly enforce a "what happens in Vegas stays in Vegas" policy, even with regulators.
Forex Trading VS Casinos - The Key Difference
Throughout history, renowned Forex traders such as Jesse Livermore and George Soros gained fame due to their mastery of the art of Forex trading. These traders succeeded through years of experience perfecting various trading strategies and diligently analyzing market dynamics and economic principles. On the other hand, gambling success depends solely on luck, and no famous gamblers have maintained success for extended periods relying on luck alone. While some poker players may achieve notoriety, gambling's reliance on chance makes it an unsustainable approach to wealth creation. Consequently, forex trading is markedly different from gambling, requiring a disciplined and diligent approach to achieve success.
Comparing Forex Trading and Casino Gambling
Below we discuss why forex trading and casinos need to be treated differently.
Patience and Impulse:
In the world of forex trading, one of the essential lessons is the virtue of patience. This was exemplified by successful traders such as Jesse Livermore, who spent most of his time analyzing the markets rather than executing trades. Today, this principle still holds, as the most prosperous traders are those who can make strategic decisions and hold positions for extended periods, resulting in higher profits. Unlike in a casino, patience is rewarded in forex trading. Essentially, one cannot expect to earn money by waiting for opportunities to present themselves in a casino, where luck is the primary factor.
Financial Objectives:
Another difference between forex trading and casino gambling is the approach to short-term and long-term goals. Forex traders do not pursue quick cash; rather, they aim to create a consistent source of income over time. However, a casino provides a means to make a large amount of money quickly, but this approach caters only to short-term financial needs. Forex trading, therefore, is not a get-rich-quick scheme but a discipline that requires careful planning and consideration.
Final Thoughts
Understanding the differences between forex trading and casino gambling is essential for anyone interested in either field. Forex trading involves knowledge of market dynamics and adherence to governing principles, whereas casino gambling is an unpredictable activity that carries high-risk exposure. Aspiring forex traders should cultivate patience and strategies for the long term and remain informed of market conditions. On the other hand, those who enjoy casino gambling must do so responsibly, limiting their spending and avoiding addiction.
