Does Forex Trading Require Random Decision-Making?

Forex is a lucrative business, but the industry is not without its challenges. Nevertheless, there is ample opportunity for you to earn money in currency exchange, and if you have decided to start Forex trading, then congratulate yourself, for you have entered the largest financial market in the world that boasts a daily volume of $3 trillion+ in futures and equity.

For starters, it is easy to enter the world of Forex trading. There may have been barriers in the past, but now with the common internet connection and bandwidth, anyone can become a trader. Not to mention, with the backing of the largest financial institutions in the world, you can get started with Forex trading for as little as $1.

But the question that we seek to answer today is this: Is Forex trading random?

Randomness and Gambling in Forex Trading

There are many people that promote the myth that all forms of trading (Forex, stocks, bonds, and futures etc.) are nothing but a gamble. But while there is no hard and fast formula for achieving success with Forex trading, as we shall discuss shortly), it is simply unfair to equate it with gambling. Since Forex solely deals with the performance, structure, and behavior of currency markets and their relationships as a whole, it is nothing but macroeconomics in its purest form.

And while short-time fluctuations in the market may look random, the truth is quite the opposite. Forex trading works like this: when you order a trade, someone has to make a counter trade to it. While there is a certain range of probability, in the long run, you can predict the movements of currency pairs. In short, there is nothing random about Forex trading.

However, this is not to say that Forex trading isn’t risky. All activities that involve trading or investing come with a certain degree of risk, and there is always a chance that you will lose out on your investment completely.

How to Approach Forex Trading?

To begin with, there is no single strategy out there that will continue to earn money at all times without fail. The path to success lies somewhere between strict adherence to a particular strategy and randomness. In fact, successful Forex traders are those that adapt their strategies to current market conditions. They are always changing their game plan instead of acting impulsively when they are ‘on a roll’.

With sound risk management strategies, you can significantly diminish your chances of incurring heavy losses. Of course, one way to do this is to never put all your family’s money on the line, even if you think that have this trade in your hand. The good thing is that the latest trading systems online actually prevent you from losing more than you invest.

But you should still exercise caution. The best way to engage in Forex trading is to educate yourself, give it due time, and adopt a trial-and-error approach. This will improve your chances of succeeding in currency trading while saving you from heavy losses.