Currency Trading vs. Casino Gambling

The first aspect of our leverage myth refers to the belief that a high leverage can work in favor of the trader, and even comhpensate for losses in periods when trading does not give te expected results. A trader that is aware of what leverage can do for him may tend to increase the size of his trades as losses accumulate, hoping for a recovery in the very last moment. This approach can only work against the trader, and usually leads to margin calls and huge losses in trading accounts.

Whenever a trader tries to apply a casino player mentality to trading (on purpose or not), the probability of his success is in fact much lower than if he were gambling in a casino with a 50%/50% chance. The explanations are complex, and we cannot go into details here (our money management courses explain this thoroughly). Still, something is certain: the higher we set the leverage, the more our trading resembles casino betting. And I doubt any serious forex trader would like his results to be a matter of sheer luck…