The dangers of forex gambling and how to stop
FX trading and gambling are different. Gambling is where the rules are against the gambler, and unlikely to make long-term profits. In forex trading, there are no rules against the trader preventing them from making long-term profits.
Many forex traders try to make quick profits like a gambler which usually leads to losses. Gamblers think there is a secret to making a quick profit and fail to control their losses. To become a profitable forex trader, stop gambling and treat FX trading like a business.
Below are 5 points to help you stop gambling when trading forex.
Always have a trading strategy
Gamblers believe in luck and do not have a trading strategy. Professionals use a trading plan that outlines their analysis method and risk management strategy. Before starting to trade, analyse the market and choose your trading strategy. Gamblers watch the market and look for trades. Professionals are prepared and know which trades they will execute.
Keep trading records
Gamblers rarely keep trading records as they want to forget their losses. Analysing your past performance to find your strengths and weaknesses will help you understand how to improve your trading skills. A professional trader will understand which strategies and markets give them the best opportunity to make profits. The trader who best understands their past performance is most likely to be profitable in the future.
Test your strategy on historical data
Gamblers enjoy the thrill of trading and spend little time testing their strategy. Professional traders enjoy the process of analysing historical data and finding trading strategies. There is no guarantee a trading strategy profitable on historical data will be successful, but it is helpful to test your trading strategy. Traders who analyse their trading strategy are more likely to profit than gamblers.
Focus on the long-term
Gamblers expect to make money on every trade and focus on potential profits. Gamblers will take risks to make short-term profits which leads to trouble. Professional traders first focus on controlling risk and then maximizing their profitable trades. Over time traders understand it is impossible to make profits every day. Focus on achieving long-term positive results over months and years rather than making a profit today.
Treat trading like a job
Many people trade for excitement which leads to gambling. The markets are moving 24 hours a day, and unexpected news is exciting. Professional traders treat trading as a job and control their emotions. Traders should focus on making consistent long-term profits rather than looking for excitement. As with any other job, the goal is to follow the rules and be responsible for your actions.