How To Trade

Gambling or Investment?

Think of a racetrack. Two horses are going to race. One is black, one is white. You like the look of the black horse and decide to place your bet. You will win if the black horse gets ten lengths ahead of the white horse. You will lose if the white horse gets twenty lengths ahead of the black horse.  The bookmaker takes your bet. The race starts. The horses keep running for a little while until the black horse gets ahead by ten lengths and the race stops. You have won. How much? Depends on the amount you have staked. This is gambling. Incredibly, 90% of forex traders are gamblers and, like most gamblers, they win a few bets but overall, they lose.

In the next race, a sleek black horse is racing a thickset white carthorse. No contest, the gamblers think as they place their bets on the black horse. Now the investor comes to place his bet. He bets on the white horse. He bets that the white horse will win if it gets ten lengths ahead of the black horse. He will lose if the black horse gets fifty lengths ahead of the white horse. The race starts and the black horse streaks into the lead. Ten lengths, twenty, thirty. Then an incredible thing happens. The white horse starts to cut into the lead and steadily makes up ground on the black horse, passing it and plodding into the lead. The race is over and the investor has won. The gamblers, betting on a "sure thing" have lost. 

Why did the investor win? Because he did not just look at the horses. He checked out the track and the weather. He knew that soon rain would fall onto an already damp, muddy track. He waited and placed his bet to start the race just before the rain started. He had calculated that although the black horse would get ahead from the start, the soggy track would soon cut the speed of the black horse and the greater stamina of the white horse would pull it through to win eventually.

This is, of course, an overly simplistic example. But we hope you get the point. Be an investor, not a gambler. With the EzeFX package you can join the 10% of forex traders who win. Why be a gambler? Get EzeFX today.

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