It has been speculated that there is a link between CFD / Forexs and gambling due to the similarities in their executions. With gambling, you should be making a calculated guess so that you attain a particular result. What you want at the end of the gamble is for your guess to be correct so that you ‘win your bet’ and receive a pay-out. The same principle applies in CFD / Forexs trading, where you make a calculated guess about the movement of an asset in the future. If you are correct about this movement then you will benefit but if you make the wrong call, then you will lose your investment.
Despite these similarities, CFD / Forexs trading and gambling are not the same thing. Here are the main differences: –
- The odds when trading in CFD / Forexs are not fixed. They are very much dependant on what is happening within the market on a daily basis, and it is from this information that you choose how high or how low your CFD / Forexs trade is going to go. With gambling, you are dealing with fixed odds as you are limited to making a choice based on cards or numbers for example.
- When you choose CFD / Forexs trading, you are always aware of what the odds are, and therefore, you can say that you can play these odds so that they are consistently in your favour. This makes it easier for you to forecast a possible win. However, when you gambling, the odds are consistently against you as the intention is to do what is necessary so that you do not get a pay-out.
- The types of assets when trading CFD / Forexs and gambling are quite different. With CFD / Forexs, your assets include commodities, indices, stocks and forex. All these are active within financial markets around the globe. With gambling, you are dealing with casinos and sports betting, which do not have any real standing in financial markets.
- With both CFD / Forexs trading and gambling (particularly sports betting) it is possible to be in the money or out of the money. This is because for both, before you choose to trade, you gather information that will increase the possibility of making a successful trade. You are able to do this legally which is not the case with other types of gambling.
- The level of skill that you have will affect the way that you trade CFD / Forexs or the way that you gamble. With CFD / Forexs however, traders of different levels of skills are given access to the same opportunities, and they can trade on the same platforms. The difference is that they have the freedom to decide how much they are willing to deposit into their accounts and the amount that they are willing to put into each trade. With gambling, this is not the case. Where poker players are looking to make wagers, they will be divided into different groups based on their level of skill and it will only be possible to interact with others who have the same skill levels. Furthermore, there may be a cap placed on how much can be wagered, and the gap between the minimum and the maximum amount is much narrower when you are gambling, than when you are trading CFD / Forexs.
- When planning your strategy for CFD / Forexs trading, you can refer to historical data and charts to identify patters that will help you make better investment decisions moving forward. With gambling, it is close to impossible to do the same, as gambling involves some strategy, though for the most part, it is based on luck.
Binary options traders are protected on leading trading sites because these sites are regulated. There are some gambling sites that are regulated to ensure that high-quality standards are maintained, though this regulation does not offer the same support that is given to CFD / Forexs traders.
Another key difference between CFD / Forexs trading and gambling is the way that they are recognised by governments. When you benefit from CFD / Forexs trading, you are considered to have secured earnings which are taxable. However, when you gamble and make a return, this is considered to be winnings, and many times is not taxed.