gambling – Forex Academy

Introduction

Market speculation is a term that can put you in a bad light if discussed with a casual investor. People often relate speculation to the irresponsible behavior of the banks and financial institutions. To a layman, this term is nothing but a synonym for gambling. The only difference being, in gambling, personal money is used, not investor money.

The concept of speculation is misunderstood by many. Agreed that investing is all about balancing the risk to reward ratio, but speculation is no different. It is an anticipation that the risk on the investment is going to be well worth the risk. In this article, we shall be clearly understanding the concept of market speculation and determine if it is evil to the cryptocurrency market.

What is Speculation?

Trading and investing involve the managing of risk and return. Speculation is that space that fits in the area opposite of guaranteed investors, like bonds and other safe havens. Be it any type of investment; there involves risk. The risk cannot be completely eliminated but surely be reduced. Typically, an investment with low-risk yields low returns. Similarly, investments with relatively high risk, the payout is equally high. And speculation work with the latter principle.

Myth – Speculation is Gambling

There are still a lot with the conception that speculation is no different from gambling. Gambling could involve some skill elements but certainly cannot cut off the risk on it. It is basically like a game of dice. Considering the die to be unbiased, the probability of a predicted number coming up always remains 1/6. Speculation, on the other hand, involves high research in the background, where the speculator studies and analyses all the risks involved in it, and then take actions accordingly. Also, when they bet on something involving high risk, they try making sure that the odds are in their favor.

Cryptocurrency Speculation

Cryptocurrency speculation is mostly inclined towards Bitcoin as it was the first cryptocurrency in the market. Back then, only a handful of people predicted the exponential rise of Bitcoin from a few cents to thousands of dollars. However, there was a good number of investors who made a fortune off this move. In the ocean of investors, there are the ones who anticipate a high return from a small investment, in short, the speculators.

Cryptocurrencies are those that seem like they are specifically made for speculative purposes. And these cryptocurrencies are unlike the tulip bulbs of old that would turn out to be a scam. Bitcoin, for example, is a cryptocurrency known for its security and trust as it backed up blockchain technology. Since the cryptocurrency market is fresh and new relative to others, speculators can consider it a great opportunity to bet on their chosen coins.

Conclusion

Market speculators from the very beginning have earned a bad name. This misconception is still in the air. As a trader/investor, you have to be conservative, but it does not mean you cannot be a risk-taker. Taking risks during the right times and on the right securities can turn out to be a moneymaker. And this is what successful are onto.

What Is Forex & Is It Not Just Gambling?

There has been an explosion in interest in forex trading since the advent of the retail Forex market, which opened up after the internet was born.

Example A, Much hype has been made of people making fortunes from forex trading in the retail space. So is it all true, or is it a fabrication, and is it really easy to make money trading Forex? Unfortunately, wherever there is money involved, there will always be fraud, and therefore you will find a lot of scams in the forex retail space within social media sites such as Youtube and Facebook and Instagram, etc. People upload videos onto YouTube telling you that they will help you make a fortune and then, of course, they want to be paid money for their education programs or perhaps trading on your behalf with your money, when in actual fact they are ill-equipped and do not care about making a profit for you, they are simply out for your subscription fee or investment funds.
And so the forex world may conjure up ideas of easy money and wealth, with flash cars, luxurious houses, jet-set lifestyles, and exotic holidays. That is the reality Far from the portrayal that many of these scammers would lead you to believe?
In truth, the forex market is a skilled profession. There is a steep learning curve to go through to understand how this industry works. It is a highly complex and extremely fluid marketplace, Where over 5 trillion dollars are traded every day and which is interconnected throughout the financial markets With other asset classes such as stocks bonds, precious metals commodities, and oil. You would not strip a car engine down if you had not been to college to learn about car mechanics and you would not attempt to build a house without first learning how to do so, and you would not try and operate on a human being without first learning all the processes, having been to university. And the forex market is exactly the same: you must learn about economics and the fundamentals surrounding the government’s financial policies of the countries whose currencies you wish to trade in. You will need to learn how to look at trading charts, in what is called technical analysis, to learn how currencies, which are always traded in pairs, are moving against each other, in order to successfully find the trends and trade them accordingly.

Therefore the effort that you put into accumulating the relevant knowledge is the only way that you will be able to successfully and consistently make money trading Forex. Once you have learnt everything that you need to be able to trade successfully, you will then need to backtest your results and forward test them on a demo account before you risk losing your hard-earned money trading in the marketplace for real. Therefore there is no quick fix strategy on how to make money trading; anything short of what is necessary means that you will simply be gambling. And the forex market can be deadly if you slip up.

So how does this market work? The Forex or FX market is an international exchange that is un-centralized, which means that nobody is in charge of it, and where currencies are bought and sold against each other in pairs. We are over 5 trillion dollars being traded from Monday to Friday, 24 hours a day. It is the most liquid business on the planet. There are specific windows when the volume is higher than at other times during the day, and these are the best x to seek out trans in currency pairs and where traders look to latch onto a trend because this is where the real money can be made due to the increased volume going through at these particular times.

Example B, Just like other commercial areas, fluctuations in currencies are largely driven by supply and demand. If you have too much of a product, it tends to be cheaper, and where a product is difficult to obtain, it becomes more expensive, and this can be true with currencies.

Example C, So when there is a surplus of a particular currency, it becomes cheaper to obtain And may fall against a particular counterpart currency.

Example D and the opposite is true when demand for a currency increases and there are fewer sellers, in which case the price of the currency will become more expensive against its counterpart currency, and the value of the currency will therefore rise.
So how do we apply this demand and supply scenario to the forex market? Each time a currency is bought, surplus demand is created within the market, which subsequently pushes the price of balance, and the price will rise.
And each time I currency is sold, a surplus supply is created. And this time the opposite is true, it throws the market price off balance and pushes the price down.

The Amount that the price moves up or down during these situations is dependent on the amount of volume going through at any particular time, and this fluctuates during the day, and where during those periods where extra volume is experienced during the busiest times of the trading day. Therefore the biggest likely market moving generators tend to be central banks, large financial institutions, large hedge funds, sovereign wealth funds, and whereby the retail sector has a much smaller impact on price fluctuations due to the fact that they only make up a very small part of the forex market.
These constant price fluctuations in the forex market are the main driver for how traders make money in trading. The economic events in the world are constantly changing, where government policymakers adjust their financial policies in relation to the swings in the fortune of their countries’ which affects their gross domestic product and whereby economic data releases, which come out on a weekly and monthly basis are the main drivers as to why there are consistent movements in price action pertaining to the balance of supply and demand for each currency.

Because currencies are always traded in pairs when trading, you are betting on the value of one currency against another moving up or down based on the underlying supply and demand for each currency.