Is Forex trading gambling or an investment package?

By: Damian Okonkwo

The forex market has witnessed a lot of abuses today from high-risk traders who have turned the platform into a gambling zone. Many today now deny that the forex market is an investment package. For some, it is a bogus Ponzi scheme. This is a misconception of the purpose of the forex industry which has been designed as a tool to hedge against inflations.

Is Forex trading a gambling zone？

Anyone who trades the forex market without a proper understanding of the fundamental factors that move the Forex Market is a gambler. The Forex Market is ontologically designed to be an investment package for individuals, companies, and governments. However, the desire to make quick money by scalpers has dented the image of the forex industry. Forex is a tool for hedging against inflation and maximizing profits. And never a place for gambling.

What is the basic knowledge every forex trader must have？

To profit immensely from the forex market, the trader must first select his preferred pairs to trade and next master the factors that those pairs. Next is to study how those fundamentals have moved the market in the past (price action) to enable him to make an intelligent forecast for the present time. These two factors are known as fundamental and technical analysis.

What are the factors that move the Forex Market？

Many factors move the Forex Market which every trader must study and understand their impacts on the market such as:

A. Economic Factors: Several economic factors affect the performance of the country's currency such as Interest rate hikes, Consumer price index (CPI) Non-Farm Payroll (NFP), Tapering, and Personal Consumption Expenditures (PCE), Monetary Policies, etc. Every trader must pay attention to the news regarding these and take positions based on their outcome.

B. Political Factors: Political crises are usually very negative for the country's currency. Also, during moments of elections and underperformance of the existing government, the performance of the country's currency is impacted negatively.

C. Natural disasters: Natural disasters such as Climate change, global warming, and other natural disasters bring a lot of setbacks to the economy.

D. An outbreak of diseases or War: Wars often lead to the destruction of the progress made so far. A pandemic could cause a slowdown in economic engagements which affects the economy drastically.