Forex trading is slowly becoming the most popular job to strive towards as it is an amazing passive income option. This has led to a need for knowledge about the space that is rising substantially as many people have started to invest. Forex trading isn’t anything new, the industry has been on the rise ever since the boom of the economic revolution and has been hailed as a great money-making option for anyone. Especially in the mid to late 1900s when investing was widespread.
This period coincidentally was marked as a special era of investing, most prominently the period of the most ‘’faithful’’ investors, referring to the drastic shift in investing methods in the upcoming years. The biggest change that occurred was with the average hold time of a stock or asset, with the past average being around eight or more years. Nowadays, this range has gone down to a shocking average of four months and is still declining. This has led many to consider forex trading a form of gambling such as playing online casino games. The fact that anyone can play casino table games online as well as trade forex online while earning money at a risk makes this correlation common.
Forex Trading vs Online Gambling
For newcomers, the differences between these two money-making methods may not be apparent at first glance. Especially with the low average hold time of investments which has led to a faster market with more fluctuations. This effect has made forex trading more profitable short term compared to its past but also it gave it a bigger risk factor. Taking just this into account, anyone can easily compare it with online gambling.
But the differences step in and make themselves clear when you take that with online gambling you have much lower odds while having a better risk-to-return rate. Forex has better odds with the option to hold your investments and see bigger profits at a later date. Online gambling on the other hand does not have this long-term option, since all stakes are immediately lost or transformed into profits.
All this makes forex trading and online gambling, although slightly similar, two completely different ways to make money in your spare time.
The basics of Forex Trading
Forex is a portmanteau of foreign currency and exchange and entails the process of changing one currency into another for a variety of reasons, usually for commerce, trading, or tourism. The forex daily trade volume in 2019 was nearly six billion U.S. dollars just for the USD currency, three times higher than the euro that year.
Forex trading can be a risky and complex process, due to the large trade flows within the system. It is a difficult space for rogue traders to influence due to the systems in place that create transparency in the market for investors with access to interbank dealing. Retail investors are advised to spend time learning about the market and do research on which forex broker they should use. Additionally, it is crucial to find out whether it is regulated within the country you will trade from. Looking at account protections that counter any market crisis or a dealer becoming insolvent is a great way to start.
Just remember to take your time and do the necessary research before rushing into forex trading. The market has been here for decades and is sure to last, even more, making it never too late to join it. Even if you miss out on big cash-in it is better to always place it safe and play smart with your funds while steadily earning profits. Lastly, don’t let losses discourage you, learn from your mistakes and in no time you will become an expert forex trader.