Is Forex trading really just gambling?

Forex Gambling
Everyone knows that financial trading comes with a high degree of risk, but often Forex trading is picked out as being more risky than other types of financial trading. In fact, if you take a browse around the internet you will find a number of people claiming that Forex trading is nothing more than gambling. In this article, we evaluate why some people think Forex is no more than a form of gambling and what are the reasons behind this.

Forex and Gambling

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Unregulated Forex Brokerages

As a Forex trader or industry professional, you will have noticed the huge number of brokerages competing for business. While the majority of the big name brokerages are based and regulated in jurisdictions where the provision of FX, there are a significant number of brokerages who are based in offshore locations where regulation is non-existent or very lax. People's opinions regarding unregulated brokerages differs greatly with some advising traders to steer well clear, while others are happy t...
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Liquidity Risk in Forex

When traders are trading with a brokerage who executes client orders using a No-Dealing Desk model (STP/ECN brokers), retail traders are exposed to what is known as liquidity risk. Genuine, No-Dealing Desk brokerages simply act as an agent for their clients passing trades onto the firms liquidity providers. No-Dealing execution can lead to a decrease in counterparty risk and also removes any conflict of interest between ...
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Counterparty Risk in Forex

forex_generic2Counterparty risk refers to the possibility that one party in a particular transaction, could potentially end up defaulting. When used in the context of FX, counterparty risk typically refers to the possibility that the brokerage or trading venue used by a trader could default or collapse, leading to significant losses for th...
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Negative Balance Protection in Forex

forex_generic2Retail Spot FX traders tend to be highly leveraged, with many traders making use of leverage in excess of 100:1. While this allows traders to make impressive profits when the markets move in their favour, it also means that traders can be exposed to heavy losses should the market move against them. When trading with a brokera...
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Forex and Gambler’s Ruin

forex_generic2The concept of Gambler's ruin refers a number of related statistical ideas, related to gambling and negative sum games. Typically the concept of Gambler's ruin is used to persuade people that gambling against the house (for example in the casino) is likely to lead a gambler losing all of his bankroll. Others have attempted to...
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Francogedden – Swiss Franc wreaks disaster for major FX brokers

forex_generic2Numerous retail FX brokerages have been facing major problems after the Swiss National Bank, unexpected abandonment of the capping of the Swiss Franc against the Euro. A number of brokerages have been forced to enter into insolvency proceedings, following the market turmoil which followed this unexpected announcement. The ann...
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Forex in Belize

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When you think of financial services, Belize might not be the first country that pops into people's minds. But the small country of Belize who only gained full independence from Britain in 1981, has managed to establish itself as a popular offshore option. This is due to the fact it is relativ...
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Binary Options: Social Trading

forex_generic2Ever since the first FX social trading products were launched back in 2008, the growth of social trading has been extraordinary with a large number of products being launched to compete with industry pioneers such as eToro and More