Let’s take a look at a more specific example of blackjack odds to better understand it.
One of the most important characteristics of blackjack, as well as any other casino game, is that no matter how professional a player is, the house will always win in the long run. Granted, some people will win big prizes, however, the total losses will eventually equalize those winnings and turn the balance wheel towards the casino. In casino, the more you play, the more you lose.
In gambling, the house always wins, because the gambling house has an edge over its customers. In blackjack, a player has to always act first when the first round of dealing is over. And when they hit a card (demand another card from the dealer) and bust, i.e., the card values go over 21, they lose, even if the house busts as well. It is interesting that a chance of this to happen is about 28%.
Another detail that needs to be mentioned is that every hand value has a specific probability of busting a player. For example, if a player has a hand value of 11 or lower after a starting hand, there is a 0% probability that they will bust. Immediately above the value of 11, this probability increases massively: 12 hand value – 31% chance of busting, 13 hand value – 39% chance of busting… By the value of 20, the probability of busting is 92% and at 21, a player will definitely bust by hitting an extra card.
Now, players can use different techniques like doubling down to increase the payouts, splitting the pair, etc. to reduce the odds that are in favor of the house. But even by doing that, the house will still be in a better position.
Trading Forex isn’t gambling – Here’s why
Unlike gambling, there is no “house” in Forex trading. Your competitor on the market is another trader who has his/her own interests. What's more, not all market participants are interested in making money. The list of Forex market participants include: commercial banks, central banks, retail and institution traders, governments, multinational corporations, etc. Multinational corporations do not focus on losing money when exchanging currencies. They trade currencies out of necessity, as they are operating in multiple countries and need various currencies.
In trading, your biggest adversary is yourself: In order to make money trading, you need to plan a trade and trade a plan. You have to think before you make a decision, and don’t let greed get the better of you. Self-management is highly important for trading profitably.
What differentiates Forex and gambling is that traders aren’t passive participants of the process where they’re intentionally put in a worse position by the market. By using various strategies and tools, traders have the ability to turn the odds to their advantage and get ahead of the market, and grow trading balance.
When talking about Forex vs gambling, it's critical to note that there are many Forex traders that consistently make money. Hedge funds and investment funds are actively participating in the process. You will not see a pension fund that hires professional gamblers to make money gambling. On the contrast, there are many institutional traders working for wealth management companies.
How can a trader turn the odds in their favor?
There are different approaches and techniques in trading that enable people to make more conscious and well-thought-out decisions. Let’s have a look at some of the most popular ones:
- One of the most widely-used approaches is to incorporate technical analysis into trading. With this method, traders can further outline Forex and gambling differences by minimizing the randomness of a trade. Technical analysis allows people to observe prior price movements, analyze them, and speculate in which direction the market will move. And there are lots of technical indicators that make this possible;
- A trader can also conduct a fundamental analysis with the help of different economic indicators. By using this method, he/she can observe the current state of a company, market, or a country, assess their strength, and determine, whether the price of an asset will increase, decrease, or stay the same;
- There are also various risk management strategies that reduce the chances of losing too much and make the portfolio more stable. For example, a trader can diversify their portfolio by using different trading instruments.
- Traders can search and develop trading strategies, test and backtest them using trading platforms to see which strategy can give them an edge over other market participants.
Obviously, these aren’t the only strategies that help traders dial the odds in their favor. Besides, even they won’t be able to offer the exact point where the price will go next – they are useful as much as they make speculation a bit more accurate. But more importantly, they enable traders to trade more consciously on Forex, unlike gambling.