{"id":530976,"date":"2022-08-05T12:34:05","date_gmt":"2022-08-05T10:34:05","guid":{"rendered":"https:\/\/ftmo.com\/?p=530976"},"modified":"2023-11-10T14:51:25","modified_gmt":"2023-11-10T13:51:25","slug":"gambling-is-not-the-right-way-to-make-money","status":"publish","type":"post","link":"https:\/\/ftmo.com\/en\/gambling-is-not-the-right-way-to-make-money\/","title":{"rendered":"Gambling is not the right way to make money"},"content":{"rendered":"
Trading in the financial markets is, in the eyes of the broad public, often perceived as some sort of gambling. Although this statement has little to do with the truth, there are plenty of traders who actually behave like gamblers when trading and unknowingly support this claim.<\/em><\/p>\n People are driven to gamble by the desire to make a quick buck. The problem is that a quick profit usually equals high risk and a low probability of success. And since financial markets are considered a risky markets where one can make a lot of money, many people automatically associate trading in financial markets with gambling.<\/p>\n However, the reality is different, and at FTMO we try to stress to our traders as often as possible that trading is not a sprint for quick money, but a marathon leading to consistent results over the long term. So what should traders look out for when trying to prevent gambling?<\/p>\n Choosing an untrustworthy prop trading firm can already be considered a type of gambling. Check the firm’s history, reputation and more. In the age of the internet, it is easy to obtain almost any information. Take the trouble to do a little research.<\/p>\n Look around social media, ask in groups, go through reviews from real customers. You should look for whether the company pays out money, what are their spreads and commissions, if they use their own technical solutions or if you\u2019ll have to rely on the services of their contracted broker you’ve never even heard of.<\/p>\n Will anyone even answer you with sufficient professionalism when you ask their customer support a question, or will you wait several days for an email? And does it actually care about the trading community or is collecting fees the only interest here?<\/p>\n Are you intrigued by the overly simple account terms, extremely low prices and nonsensical payout terms? Simple terms and millions of dollars available right from the start may look appealing, but past examples from some companies clearly show that this model may not be really sustainable. A trader who is tempted by the simplicity of the terms may make money on the paper, but may not see them in his bank account.<\/p>\n Let us now take a look at some examples of risk trading.<\/p>\n A classic example of gambling seen with many traders is overleveraging. Some traders feel that the larger the positions they open, the sooner they will make a fortune. Unfortunately, the reality is that such large positions often tend to increase trader’s stress due to a possibility of a large loss and ultimately result in a negative effect on the psyche, which in turn leads to more mistakes being done and initial trading plan sabotaged.<\/p>\n At the same time, trading of large positions (opened as a single entry or entered into gradually by further reinforcements of the trade) limits the trader’s options as in the case of trading for FTMO, a trader has to think about the Maximum Daily Loss objective. With each additional position being open, the trader increases the risk of exceeding the Maximum Daily Loss limit in case markets do not go their way. Thus, they have to reduce their Stop Losses (in points\/pips) or simply cannot open another position that could potentially be profitable.<\/p>\n<\/a><\/p>\n
Overleveraging<\/h2>\n