Forex trading quickly becomes a popular investment option for individuals looking for more returns for their money. And with the popularity it gives, many investors go into it without the right education required to enter into the volatile world of forex. As a result, there are many forex investors who lose their investments in a short period of time.
Statistically, over 90 percent of the first currency traders lose their capital within the first three months to make their first trade. It is not surprising, because most of them are very poorly prepared to handle the wonderful investments in this financial investment.
So many are now questioning the validity of forex as an investment. And some now ask if currency trading can actually be gambling.
So is forex trading actually gambling?
First of all, forex trading is an investment. But let us clarify that statement more definitely. Forex trading is a form of speculative investment. And as a definition, speculative investments are high-risk investments. Simply put, a person invests in something that he or she speculates will increase in value in the future. And when the times as the value of his investment rises, he or she will sell it to profit. It is so speculative investments get you money.
A company that a person builds is an investment of many levels. It is an investment of its money, of course, because he invests capital to buy assets and resources that are necessary to drive the business. A company is also an investment at one time, as the investor has to spend some time in order to monitor the financial position and financial position of the transactions. And a company is also an investment of skills. Depending on the type of business you are in and what kind of expertise you use to build that business, the skills are required to drive the business and make the business gain significant.
Having said that, a company, with all the investments taken into it, is still not a guaranteed success through a range of such wishes. There is always a certain risk when setting up a company. Although the risks are not as big as a speculative investment, the risks are actually.
Risks for speculative investments and investments in companies can be quantified. At what level becomes an investment risk speculative is an open financial debate.
But the other end of the equation should be taken into perspective when discussing risks. And that is reward. Rewarding is simply the gain an investor gains from the risks he takes when making the investment. It is a general rule that the higher the risk, the higher the reward. And this applies to most investments. If you want to get exceptional returns on your investment, be ready to take significant amounts of risks
Games, on the other side of the spectrum, focus on chances. There are no other variables like setting up a company where the skills of the workers, or the managers ability to manage, or the financial capabilities of the players involved would be at stake. Gambling is just a game of chances.
Seeing forex trading as gambling is not exactly accurate because investments in currencies are not a mere chance game. There are factors that are involved in why and when a currency estimates or depreciates in value. Factors like interest rates, financial stability, political atmosphere and trade balances are all important indicators that affect currencies from all nations. And these indicators are all verifiable by forex investors. These can form the basis for the sound basic decisions made by forex investors. As for the timing of currency positions, that is where technical analysis comes in. But that would be an issue for another in-depth discussion.
So if you want a clean game of chances to take your shot when you get rich fast, go to casinos and play. But if you prefer a speculative form of investment with lucrative profit potential, try out currency trading. But you should always remember that no matter how attractive the profitability of investing in forex there is still work to do. It is not just about throwing a coin to choose whether to buy or sell a currency pair. Basic knowledge and technical analysis are keys for success in currency trading.