what is the difference between a forex trader & a gambler?
A true trader takes decisions based on recent data & privileged information. A gambler on the other hand takes decisions based on past performance and hopes to be lucky. Many people say gamblers do not practice risk management, but I disagree, you can have risk management and still be a gambler.
If someone just opens a trade with no strategy and sets a stop loss he is still gambling because he does not understand why he opened the trade.
I suppose a good trader has limits such as daily loss limit, number of trades per day etc. while gamblers just go for it till they are spent out
Gambler is not a bad word:
Before you come after me for saying that, let me just say that there are many professional gamblers that are successful. They have a method of betting and they judiciously follow it, inshort they have an edge.
What is the real question?
The real question is what differentiates a good trader from a bad trader. The 1% from the 99%.
What is the answer to the question?
The answer is risk management. Good traders/professionals traders don't live or die by a single trade. They know their risk before hand and they abide by it.
They take the painful decision of a losing trades away from themselves by having a defined set of rules for entry and exit. The rules could be a fixed loss limit for losing days. And for winning days it could be the first opposite bar. Something that is objective.
How i believe it should be done:
Have a defined rule set to enter and exit and have a fixed hard cap on the loss.
Remember trading is a marathon not a sprint.
Gambler is not a bad word:
Before you come after me for saying that, let me just say that there are many professional gamblers that are successful. They have a method of betting and they judiciously follow it, inshort they have an edge.
What is the real question?
The real question is what differentiates a good trader from a bad trader. The 1% from the 99%.
What is the answer to the question?
The answer is risk management. Good traders/professionals traders don't live or die by a single trade. They know their risk before hand and they abide by it.
They take the painful decision of a losing trades away from themselves by having a defined set of rules for entry and exit. The rules could be a fixed loss limit for losing days. And for winning days it could be the first opposite bar. Something that is objective.
How i believe it should be done:
Have a defined rule set to enter and exit and have a fixed hard cap on the loss.
Remember trading is a marathon not a sprint.
Totally agree with @patrader. Life itself is a gamble, and so is forex trading. We just have to do it with controls & moderation.