There are some profitable forex traders who will continually argue that forex trading is not just another form of gambling because they can use technical indicators, market analysis and economic data to make informed trading decisions.
However at the end of the day the currency pairs can either go up or down, and despite all of this information that is available to traders, it is still possible to rack up big losses very easily.
In some ways it is just like a roulette wheel because there are just two possible outcomes (not taking into consideration the 0 on the roulette wheel) – the currency pairs will either rise or fall.
Forex trading is also similar in some ways to horse racing because people can analyse past results and study the form of each horse as much as possible to give them some kind of edge, but it is still really hard to make consistent profits on a regular basis.
In forex trading this is particularly true when you trade currencies on an intraday basis because price movements can be fairly random during a particular trading session with no real pattern to the movements. So any analysis or technical indicators can be rendered useless in many instances, and therefore it could definitely be argued that short-term forex trading is often just another form of gambling.
Similarly, even though the markets may well expect a particular currency pair to rise in value based on positive economic data, there are still no guarantees that this will actually happen if the news is indeed positive.
Sometimes the price will rise briefly and then fall back sharply when people start to take profits, and other times the price may not rise at all on the back of positive economic data because it was already priced in.
So the point I am trying to make is that people can talk about how they have some kind of edge as much as they like, but ultimately forex trading is in many ways just another form of gambling, which is why so many end up losing money.
All you can really do is to use technical indicators and support and resistance levels to weight the odds in your favour because so many traders will be looking at the same indicators and will be expecting the price to react around certain key levels on the charts.
It is also a good idea to study the economic forecasts and keep an eye on global events if you are more of a long-term trader.
That way you are giving yourself more than a 50/50 chance of making money from every single trade that you place, and are more likely to succeed in the long run.
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