Even though Forex trading is not the same as gambling, as traders we can learn a lot from the gamblers because both of these fields are quite similar to one another.
Do not trade what you’re not willing to lose
This is all about risk management, whereby you should not make a trade that may dig too deep into your capital. When a gambler places a bet, they confirm that the odds balance the risk they are taking versus the rewards. Which is why a good gambler would not place too much money on a team that had odds of, say, 11/10.
The risk there is just too high for a meagre return. When trading the Forex market, determine first if the reward outweighs the risk, then choose an appropriate amount to risk that won’t be too costly. It’s one very important lesson we can learn from gamblers.
Never get sentimental about an asset
Gamblers make the most money when they bet against a bigger team because the odds will be in that team’s favour. So, why would a gambler bet against a team that is expected to win by so many? An unbiased analysis of performance.
Imagine a top team with top players that has been out of form for the past 3 games, most people would still bet for it to win out of sentiment, but good gamblers know to judge performance without sentiment, and they are often right.
When it comes to Forex trading, we can also use this kind of critical analysis of performance to predict where markets will go. As a trader, you should never be sentimental about any currency’s strength, but let the analysis be completely unbiased and you will be able to see what is really happening through clear glasses.
Also, the same should be said about brokers. It is impossible to trade profitably if your broker is not one of the best and does not offer you generous conditions. This is why you should use critical analysis in order to find the one that does fulfill your trading needs.
The past often determines the future
If a pair of teams have faced off numerous times in the past with one of the teams consistently beating the other, chances are higher the same trend will continue. Technical analysts make use of this principle every time they try to determine a trend in the markets, and other traders can learn this from gamblers too.
Pick your battles carefully
Today, with the internet and online casino software companies, you can bet on any sport, league and team in the world. However, gamblers know not to bet just because they can, instead choosing what they know. Which is why a gambler who bets on football will stick to that and they will rarely bet on, say, horse races or basketball.
The same should be true to your Forex trading – stick to the currencies you know and don’t just be swayed by exotic currencies because you think they may be interesting. Find those that you understand well and master all their intricacies.
Do your research
A good gambler will be able to tell you if a team’s player is injured, or if the coach has been replaced. Insight in the field helps to make better predictions. As a Forex trader, you should be aware of everything that is going on with the currencies you’re trading, otherwise you’re just shooting in the dark.