Forex Trading – Gambling, Betting or Speculating?

Very often when talking to people about running a forex business, I am challenged by people saying that forex trading is nothing else but gambling. There used to be a time when I would bite at the hook and launch into a defence of forex trading. Now days, experience has shown me that sometimes it was the very words that I used were being understood differently by people. Once I accepted this, it was easier to be able to define an appropriate response.

So lets look at the three words, gambling, betting and speculating.

Gambling

This single word is probably the largest cause of confusion in this debate. As an analogy, consider the word running – and let us limit this to the use of the word as a physical exercise.

The person who goes for a jog for 30 minutes in the evening after coming home from work is running. The athlete who sprints the 100m in 10 seconds is running, the person who takes runs for 5 hours to complete a marathon is running.

At its highest level gambling can be seen as the engagement of any activity which involves a risk and is associated with the prospect of potential gain. If this definition is used then yes forex trading is gambling. But then so is investing in stocks and shares, even leaving money in a bank can be seen as gambling- it rarely happens but banks do fail.

For the purposes of this article, gambling will be defined as the staking or risking of money, on the outcome of something involving random occurring events. For example, the toss of a die, the roulette wheel, the purchase of a lottery ticket. In this decision, there are no prior events that have any bearing on the outcome.

Forex trading is nothing like this.

Betting

The definition here will be to stake or risk at any event expecting an outcome where the outcome is not totally random but is influenced by other variables. The latter part of that sentence is important as it adds an additional element to the definition for gambling.

As an example, someone may decide to bet on a team winning based on the fact that two of their key players have returned from injury. Or perhaps the world number 1 in tennis is playing the world number 134.

There are a number of traders find themselves in this position. A forex trader expect currencies, for example, to become stronger based on improved economic data. A stock trader expects a stock to increase in value based on a companies performance.

I would even go so far as to say that many people who invest their money into stocks and shares, in pension funds etc are actually betting that they made the right choice. In sporting events say, the success or failure of a result is known within a few hours, when investing in stocks and shares the time line is considerably longer.

I believe that the majority of forex traders who adopt this approach can have their trading approach defined as betting.

Speculation

I would like to propose a definition that speculation is an action that involves a certain amount of risk, in order to make a financial profit, that is supported by considering a variety of factors which the trader believes support the decision taken.

In other words, when you speculate, you base your decisions on evaluating a variety of different information sources, you rely on your knowledge and analysis of past events. It is this active engagement in the decision-making process that is based on actual facts whether they be events, announcements or the technical analysis of chart patterns that defines speculation from betting or gambling.

All successful professional currency traders and those who run a home forex business trade in this manner. These skills can all be acquired and then need to be put into practise.

Kaz Kowalski has been highly successful as a project management consultant working on a number of high profile projects in blue chip companies across a variety of industries including Banking, Information Technology and Telecommunications. He has utilised his analytical ability to review and determine the profitability and effectiveness of different home business opportunities in building viable and profitable business models. As a result of his analysis, he has concluded that a Home Forex Business has significant advantages over the majority of other home business opportunities.

Ten Tips For Betting on The Stock Market

Buying and selling shares through a stockbroker is not the only way to play the stock market. Spread betting allows you to gamble on the movement of indexes, such as the FTSE100, or on the price of individual shares.

The bookmaker quotes you a price for a certain date in the future and you bet on whether the actual share price or index will be higher or lower. You can also gamble on exchange rates and commodities.

Financial spread betting started in the 1970s when investors wanted to speculate on the price of gold without having to find large amounts of money to buy the metal.

As with any form of investment, it is important to be aware of the risks associated with spread betting. Volatile market conditions can bring substantial gains or losses, so bookmakers advise their clients to speculate only with money they can afford to lose.

Is spread betting right for you? And what are the important points to consider?

1. What is a spread bet and how does it work?

You contact the bookmaker and ask for a quote on a particular index or share. For example, you may ask for the FTSE 100 in June. You will then be quoted a spread of, say, 6,870 to 6,880. If you think the market will be lower, you sell points. If you think it will be higher you buy points. You then bet anything upwards of Pounds 2 a point. If the market closed at 7,100 and you had bought at Pounds 5 a point, you would win Pounds 1,100. If it closed at 6,800 you would lose Pounds 350.

2. What advantage do bets have over shares?

You do not pay tax on any winnings and there is no stockbroker’s fee or stamp duty.

You can also spread bet on shares that have yet to float, such as internet firms.

For example, IG Index initially offered 350p-360p for Lastminute.com, but revised the spread sharply upwards when investors bought enthusiastically. At one point the spread was quoted at 620p- 630p before settling back to 570p-580p last week.

The other big advantage is that you can make much more money from rises or falls in share prices.

For example, if a share costs Pounds 10 and you bet Pounds 10 for every penny increase, you would make Pounds 50 for a 5p increase in the share price.

3. What can I bet on apart from shares?

You can speculate on anything from sport to politics. There are a whole range of innovative bets, such as the number of corners in a football match or the number of days that William Hague will remain leader of the Conservative party.

4. How much can I bet at any time?

The minimum bet is typically Pounds 2 a point, but the maximum can run into thousands of pounds a point.

Bookmakers either grant you a line of credit or ask you to deposit money.

5. Is there a limit on how much I can lose?

Bookmakers offer stop-loss facilities for those who want to limit their liabilities. You specify a level at which you want your bet to be closed.

For example, if a spread for a share was 150p-160p, you may choose a stop-loss price of 120p. At Pounds 10 a point, you would lose no more than Pounds 300.

But the bet is automatically finished if the stop-loss price is reached – even if the share or index subsequently recovers. Each bet is also monitored in case potential losses exceed the credit limit or the amount held on deposit. The bookmaker will alert you to any dramatic movement in prices. You can then close your position.

6. What can I do if I see that my bet is losing?

Although you may have bet on a price some way into the future, you can take your profits or cut your losses at any time. You contact the bookmaker, get the current quote and calculate your winnings or losses accordingly.

In the Footsie example, if you saw the market rising, after backing it to fall, you might decide to close your bet early. The bookmaker has in the meantime updated its quote to a spread of 6,910- 6,920.

You close the bet by buying 6,920 at Pounds 5 a point, which means there is a points difference of 6,920-6,870. Your loss, therefore, is Pounds 250. If the market rose dramatically before the end of your bet and you wanted to take your profits before any subsequent fall, you could close the bet at the current price and walk away with your winnings.

7. Will the bookmaker offer me any advice?

No. You have to back your own judgment.

8. Is spread betting suitable for everyone?

The bets can be useful for cautious investors as well as speculators. Someone with money invested in the stock market could bet that the market will fall, effectively insuring their portfolio at its current level.

9. How do bookmakers make their money?

The bookmakers build their profit into the dealing spread. They protect themselves against the risk of losing bets by hedging – buying options to cover potential losses. They claim it makes no financial difference whether people win or lose, so they prefer people to win and keep betting.

10. How do I get started in spread betting?

You contact a spread-betting bookmaker and open an account. Bets are made over the telephone and, increasingly, over the internet. You will receive written notification of every bet you make.

How To Bet In Roulette and Win

Online roulette is one of the most popular games played online. It’s exciting to play, the rules are very straightforward and it provides some of the most favorable winning odds and payouts at the casino.

There are basically two types of bets in roulette, Inside Bets and Outside bets. These type of bets take their name due to the position of such bets on the roulette table.

Of these two types of bets, the outside bets offer the best chances of winning but they also feature a lower payout to players. Additionally, you may also have to place a higher wager on the outside bets than you do on inside bets.

Roulette Outside Bets

One of the most popular type of bets is betting on Red or Black, also known as Even Money Bet. The reason why this type of bet is so popular is because the odds of winning are almost 50:50 although the true odds are really 1.111:1 and if successful this bet will return you bet at 1:1.

Many roulette players use this kind of bet if they want to wager to contribute to the wagering requirement of a free bonus or more commonly if they’re implementing a roulette betting strategy.

This type of outside bet offers players the lowest betting risk but also the lowest return on their wager.

Other popular outside bets, that feature the same payouts and odds of winning, are betting on the ball landing on numbers 1-18 or 19-36 and also an odd or even number.

If you’re looking for higher payouts then you can use the Column and Dozens bets. Both the column and Dozens offer a 2:1 return on your bet with a slightly higher risk of losing of 2.167:1.

Inside Bets

The Inside bets are the most attractive bets in roulette with the largest payout at 35:1. This massive payout is triggered if you successfully place a Single Number bet.

The probability of winning on a Single number successfully is 37:1 which gives the house a much larger edge. A Split Bet is when you place a wager on two adjoining numbers either vertically or horizontally and it offers a payout of 17:1 with a 19:1 odds against winning.

If the Single Number is too risky for your taste, you can opt for the Street Bet. This type of Inside Bet offers you a payout of 11:1 an a house edge of 5.26%.

A Street Bet is nothing more than staking on any three horizontal numbers for example 1,2 and 3 or 4,5 and 6. A Corner bet is another option that offers a good return on your stake with a higher probability of winning.

This type of bet is when you place a chip in the corner of four adjoining number in a block, for example 1,2,4 and 5 or 17,18, 20 and 21. A successful Corner bet will return your wager at 8:1 with a 10.53% probability of winning.

There are hundreds of websites out there that offer roulette secrets with testimonials from seemingly happy customers.

Don’t be fooled by these websites, they’re only trying to either sell you an e-book which is completely useless or they’re trying to steal your credit card details.

There is simply no way to cheat at roulette and win every time, not even in the long run. There are, however, other effective ways to improve your chances of winning and make your roulette sessions more fun.