Is Forex Trading Gambling?

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When it comes to Forex in Kenya, one question that constantly emerges in most conversations is “Is Forex trading gambling?” This may appear like a simple question with an obvious answer; however, a deeper understanding reveals that they’re quite different.

The main difference between a gambler and a forex trader can be seen when both make a “play.” The chances of a gambler winning are never certain, and unless they are committing foul play, they will always believe the odds are stacked against them. Thus, there are always fewer chances to win than the house, or the odds are similar.

Read on to find more about why one can relate Forex and gambling and how these are different!

Forex trading and gambling

Whenever you open a forex position, you engage in gambling because the Forex market is unpredictable. The forex market in Kenya is typically very dynamic, and no one can predict with certainty how one currency pair will move, even after years of carefully studying it and analysing it.

Analysing tools and past projections are the only resources available, but they are also not certain. Forex risk is always present in every position you enter. Risks associated with this type of risk arise from the dynamic nature of the market and the inability to predict how it will perform a day or even an hour from now.

There will always be a forex risk, no matter how much technical or fundamental analysis you undertake, and this shows an element of gambling in every position you take.

Forex traders in Kenya, however, work on developing trading strategies that will change the odds in their favour. With the right analysis tools, they can forecast market trends and establish positions that are sure to be profitable.

The traders are sure that their overall position will be profitable after they use some well-thought-out trading patterns. A forex trader and a gambler are starkly different in this respect.

Also, the participants in these two markets differ greatly in terms of their characteristics. Below is a list of some of the most distinguishing features between them.

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In both cases, people venture into these careers mainly for the sake of making money. Investing in a market position that will bring positive cash flow to one’s pocket is what everyone wants to do, whether it’s placing a bet or taking a market position.

There is a vast difference in the amount of money flowing between these industries in Kenya. The forex market sees over 5 trillion dollars traded every day by participants around the globe. There is no way the amounts involved in the gambling industry can even compare to that. This is where these two industries differ greatly.

Participants in the industry

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There are people involved in every industry. Whether they are major or minor players, they have to work together for a successful outcome. For example, retail traders make up most of the players in the forex market in Kenya.

Individual investors make investments in various parts of the world. They develop their trading strategies to outperform the market. Financial institutions like banks and mutual funds are also participants. As big players, they contribute to establishing the legitimacy of forex trading. Therefore, you can be assured that it is legal.

On the other hand, gambling is illegal in some parts of the world and encumbered with many legal obstacles. Participants are limited to illegal underground activities, which makes the whole thing a questionable affair. There are other differences between them as well.

The tools used

While forex trading has its own set of uncertainties, you are usually aware of your position’s reasons when placing it. Several software programs in Kenya help analyse the market correctly, and there are many guidelines fr opening and closing trade positions.

The guidelines will depend on the method you use for analysis and your trading strategy. Either technical or fundamental analysis allows you to monitor market trends for several days or weeks before deciding what position to take. This proves that there is no such thing as a lucky trade, and all these decisions are based on proper market research.

Forex traders use these tools to make successful trades and become more successful. Unfortunately, these tools are not available in gambling. No trends are available for analysis and making informed decisions. I don’t think this is a good strategy since everything is left to chance.

Emotions

Gambling often leads to addiction for most players after some time. Research in Kenya shows that this is due to the emotional aspect of gambling for most players. When a gambler enters a casino, their primary objective is to make money.

Because of this, their judgment is clouded, and they don’t realise that they can also lose money. There is no way to make informed bets, and all of them rely on luck, so they may lose their entire investment if they don’t have a lucky day.

When it comes to gambling, rather than stopping someone from doing it, it pushes them further as they keep coming back until they become addicted. However, the situation is rather different in forex trading.

In the course of trading, one learns how to separate their emotions from their decisions. To open profitable trades and separate greed and fear, traders need to learn to separate both. Trading in this way ensures there are no emotional attachments, and traders can withdraw at any time.

Strategies employed

As with any business, engaging in forex trading comes with a lot of uncertainty. Some traders claim they can be on a losing streak for months, but you realise they didn’t have an evaluation strategy in mind while making their trades.

These traders in Kenya largely subscribe to the narrative that forex trading is gambling. However, successful long-term trading depends on a trading strategy. Therefore, it is important to carefully analyse any trade before committing money and determine whether it will help you reach your desired position.

By doing so, you’ll be able to decide whether to engage or avoid more easily. In addition, the tools provide various components, such as Stop Losses, to ensure trades are closed at the proper time. Gambling, by contrast, doesn’t require any strategy since you don’t know if you will win or lose your bet until it’s too late. This makes it a very different activity.

Do you have a gambling problem?

Consider these questions to find out if you are gambling on the forex market:

  • Do you believe you have a trading strategy that gives you an edge over your competitors?
  • Have you ever traded a move that put more than 2% of your account at risk?
  • Are you investing money that you cannot afford to lose?
  • Is it just a matter of waiting for that next big deal?

Answering yes to these questions means you are likely gambling with your money in the forex market, rather than a professional who approaches trading more cautiously, as they would in a business environment.

Gamblers in Kenya do not regard their activity as a business. Therefore, their zealous approach to Forex is quite dangerous. And here lies where trading forex differs from gambling. With the aid of proven methods such as Price Action trading, traders can edge out the competition.

A gambler’s actions are most often based on hope. The team is hopeful they can come back from their losses and win their next game. Forex traders can put themselves in very risky situations if they depend on hope.

What do you do if you are trading like a gambler?

The realisation that you are trading is a gamble is painful, but it can be overcome by approaching it like a business or career. A sound business plan is essential for any business in Kenya, and this should also apply to your trading activities. A good business plan includes the following factors:

  • Knowing how much risk you are taking on each trade
  • Entry and exit requirements.
  • A set of rules for managing trade
  • The times you will scan the market

The success of your trading plan depends on being realistic about your goals.

The forex market in Kenya can give you a steady stream of profits over the long run, but if you open an account with $1,000, you are very unlikely to make $1 million and quit your job any time soon.

Also, any business that makes a profit or loses money must keep records. Therefore, it is a good idea to keep a trade journal or book for your trading. All trades you put into your trade journal and their outcome, including your profit and loss, should be tracked.

Start acting like a professional trader

Professional traders do not view trades in Kenya as games or places where enormous risks can be taken. However, forex traders understand that managing risk is central to their business.

Put yourself in the right frame of mind and become a risk management expert. Take care not to over-leverage your positions and take risks that could lead to account vulnerability. It would be best to focus on your money management techniques and how you can limit your downside risk without limiting your upside potential.

Trading forex isn’t gambling – here’s why

There is no house in forex trading, as there is in gambling. The trader in Kenya who competes with you on the market has their interests. Forex trading is, in a sense, the equivalent of a zero-sum game where some people win, and some people lose. It is important to remember that the real enemy in this sense is yourself: You must think before making a decision and don’t let greed get in the way.

Thus, Forex in Kenya is different from gambling in that traders are not passive participants whose position is intentionally adversely affected by the market. Instead, to have the edge over the market and be ahead of other traders, traders use an array of strategies and tools.

How can a trader turn the odds in their favour?

Diverse techniques and approaches in trading help people make more thoughtful and well-informed decisions. Below is a list of a few popular methods:

  • Trading strategies incorporating technical analysis are commonly used. A trader can minimise the randomness of trade through this method, further highlighting the differences between Forex and gambling. Technical analysis can be used to observe past price movements, analyse them, and forecast future movements. Numerous indicators can help with this;
  • Traders can also use inflation and other economic indicators to conduct fundamental analysis. This method allows them to observe a company, market, or country’s current state, assess their strength, and predict whether an asset will increase, decrease, or remain the same in value;
  • There are also several ways to manage risk, reduce the likelihood of losing too much, and make the portfolio more stable. By using a variety of instruments, a trader can diversify his portfolio, for example.

Of course, there are other strategies that traders can use to increase their odds of success in Kenya. Plus, even they cannot tell us the exact point where the price will go next – they are useful only in that they make speculations more accurate. The greatest benefit of these tools is that they allow traders to make more informed decisions about Forex instead of gambling.

Can a forex trader increase their chances of success more than a gambler?

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There are many ways individuals can boost their chances of success in gambling and Forex. Gambling is a game where the house always has the advantage, unlike Forex, where the player is always at a disadvantage. While it is possible to reduce the upper hand, it cannot be removed completely.

The odds of trading, however, can be manipulated so that the advantage goes to the trader. This can be accomplished in a variety of ways. Many people in Kenya use technical analysis for this purpose. Traders can make use of technical analysis to analyse historical price movements and anticipate future movements. This can be done using a variety of technical indicators.

Additionally, we have the fundamental analysis, in which a company, market, or country is examined to determine its current state. It allows traders to determine whether an asset’s value will rise, fall, or stay the same and speculate on its strength.

The management of risk is another way to maintain an advantage, which is composed of many elements. Diversifying your portfolio in Kenya is one of the best ways to reduce losses and keep your account more stable by using different assets simultaneously.

Bottom line

Forex is a treacherous market, so you should always be aware of that before starting to trade. You can end up in financial trouble, so you should be aware of these risks. By contrast, a well-crafted and disciplined trading strategy will produce good rewards over time and make you a professional.

The key to building a successful business strategy is not to base it completely on your short-term goal and ambitions, and you will improve over time. However, the following aspects should always be considered, and it is important to remember that forex trading is not gambling.

Accepting this allows you to develop strategies to make profitable trading positions, and your decision-making becomes more critical. Foreign exchange trading is quite different from playing slots.

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