In this article, we will see forex trading is just gambling or not. In forex trading, most of the retail traders lose money. Therefore, many people think that it is impossible to make money from the forex market. On the other hand, many traders are regularly making money from the forex market.
Let’s have a look at how the forex market is formed.
The structure of the Forex Market
The forex market is the world’s biggest financial market, where the main participants are financial institutions that have millions of dollars as their investment. Therefore, institutional traders have a big intervention in the movement of price.
On the other hand, retail traders are part of the financial market only. Most of the retail traders operate their trading activity through a retail trading broker, but the main activity happens in the over the counter (OTC) market.
What is over the counter (OTC) market?
Over the counter market is the wholesale market, where most of the institutional traders and multinational companies buy and sell currencies.
The price that we see in the retail broker comes from the decision of over the counter market.
Who Runs the Forex Market
The Forex market is the world’s biggest financial market, where more than 6 trillion dollar transactions happen every day. The key market driver in the forex market is Central banks. Central banks intervene in the strength and weakness of currency by changing the country’s interest rates and inflation rate.
Furthermore, hedge funds, insurance companies, multinational companies, and investment management firms are the leading market drivers.
The forex market is directly linked to a country’s economy, and it has a solid background to say that forex trading is not just gambling.
Is Forex Trading Just Gambling?
In retail forex trading, the majority of traders make losses in their trading. Therefore, traders often think that forex trading is just gambling, which is not valid.
The forex market is similar to the stock market and even more significant than the stock market. According to the recent report, the forex market is three times bigger than the New York Stock Exchange (NYSE). However, making money from forex trading is not an easy task.
You need to have a lot of knowledge about the market, and you should perform enough practice to get yourself ready for trading. Furthermore, trading is not a process to be a millionaire overnight. You should focus on risk management and follow a specific strategy to ensure a steady gain from the forex market.
However, the main risk is that if you do not follow any system and take trades just by guessing the price would be gambling.
Making money from the forex market is not easy, but it is possible to take trading as your career. Many successful Forex traders are earning a consistent profit from the forex market to meet their financial needs. The best things about forex trading are that if you follow a reliable track record system, you can easily make money.