2.4. Forex trading – business vs. gambling.

Ask yourself, what you think about Forex Trading, do you perceive it as a business or gambling and why. It is hard to differentiate between trading and gambling; many Forex traders said they are doing business but they actually approach it as gambling, and they do not realize it.

Be honest to yourself. What you perceived of trading Forex is very important. It will be the foundation of how you will approach the market and create your own trading system. You will have a completely different trading system if you trade Forex trading as a businessman or as gambler.

 

To me trading is a business. Let me tell you the main differences between business and gambling.

Expect to double your money in a short time vs. Expect to grow your money in a steady and long term perspective.

There is no real business in this world that will give you 10% return in a month unless you highly speculate and gamble.

 

You have to predict the outcome  in order to win vs. Whatever the outcome is, you plan to maximize profit out of it.

When you sell your merchandise or service, you will never predict which price your customer is going to pay. You set your price; I want to buy at this price and I want to sell it with x% of profit. If the price is too high for your customer, you cut your profit or wait to sell it later at the correct price until it is sold. But never sell at a loss, until special condition warrants you to sell at a loss. And you do it very rarely.

 

Lose some win some regularly vs. Always strive to sell with profit, very rare to cut loss.

When you have a business you will not sell your merchandise at loss regularly! No businesses will survive if they have this practice.

If you have a hotel business, do you cut and sell unoccupied rooms? When you have a farm, do you cut and sell your chickens that have not spawn eggs?

If there is a trading guru that claims he regards Forex Trading as a business but his trading system has a characteristic of win some and lose some, then he is completely wrong. Either he does not know what a “business” is or he is just stating it without foundation.

 

Set your mind that:

• You are going to grow your money in a steady and long term perspective.
• You will not try to predict the direction of the price will be in order to make money.
• You always seek to close your sells with profit.

Then you will have a trading system that will last for a very long time and profitable.