Forex, Cfds and Other Derivatives: Investments or Gambling?

Abstract

The attractions to investors of forex and other derivatives derives from their simplicity: to bet on the direction of a price change. Unfortunately, many ‘investors’ do not realise that short term price changes are not predictable and, inevitably, they will lose their money. This paper explains why this is inevitable. It also argues that the regulation of forex should be handled by a gambling regulator (in the UK, the Gambling Commission) rather than a financial regulator (in the UK, the Financial Conduct Authority) as forex trading is a bet and not an investment.