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Is Gambling A Threat To The Forex Marketplace?
Since America loosened its federal laws on sports and online casino gambling in 2018, there has been no shortage of speculation (pun not intended) on how the change will affect things. For sure, it will create an injection of cash into some states’ economies, lead to new jobs, and have an impact on the way sporting events are covered. Beyond these changes, though, what else is there to look out for?
For one thing, betting on sports and in casinos is, in its simplest form, a way of trying to benefit from informed speculation on an outcome. The same is true of, for example, investing in the stock market. Now, while stockbrokers and hedge funds will keep their eyes firmly fixed on the lines and charts from Wall Street, one has to wonder whether more casual speculation such as day trading and - as we’ll see here - Forex markets will be affected by the change in iGaming laws.
Is Forex trading just a form of gambling?
If you wanted to make the point, you could certainly put together a case for Forex trading being a - perhaps more exclusive and esoteric - form of betting. Is there a meaningful difference between predicting that the Polish Zloty will fall against the US Dollar, and predicting that the New York Giants will lose against the Tampa Bay Buccaneers? To some people, the answer may be “no”. To others, including some of the world’s most august financial institutions, it would be “yes”. It seems unlikely that investment banks will be putting much of their resources into betting on the winner of The Voice any time soon, for one thing.
Could legal gambling replace Forex trading for casual traders?
Speculation is speculation, whatever form it takes. While anyone making money from Forex trading is likely to point to the analysis of trading patterns and technical indicators, a regular bettor will justifiably argue that a lot of analysis can go into betting, and even to finding the best bookmaker offering the most lucrative promotions. This is not untrue - indeed here are some examples - but no amount of analysis can prepare you for a star quarterback tearing their ACL on the first drive of a game, which makes gambling a more complicated thing. Are some Forex traders going to get into sportsbook betting as a displacement? Probably. Just not in huge numbers.
But could experience in Forex help to inform betting?
Let’s get one statement out of the way - you’re never going to take the risk out of betting. You’re never going to take the risk out of any form of investment, if we’re being brutally honest. However, there are transferable skills that can allow a skilled Forex trader to calculate where value can be had in a sportsbook betting scenario. As long as you’re following sound principles and never risking more than you can afford to lose, a good Forex trader can become a smart sportsbook bettor. Overall, though, there is no reason to imagine that sportsbook betting will strip away clients from the Forex markets.
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