When is investment considered to be "at-risk?

Why are spot foreign exchange trades not considered investment products?

• Mentioned in a Bloomberg article is the fact that currency markets aren't regulated by the government, as stocks and bonds are in their markets. "Unlike sales of stocks and bonds, which are regulated by government agencies, spot foreign exchange trades- buying and selling for immediate delivery, not a future date- aren't considered investment products and aren't subject to specific rules." I noticed the article mentioned the term spot foreign exchange trades. Does this mean trading currency in general is not considered investing?

• Answer:

  Currencies aren't considered investments because unlike stocks and bonds which have a positive bias in the long term, currency trading (aka forex trading) is a zero sum game. Your gains are my losses and vice versa. Consequently, over 90% of forex traders lose money. Since the nature of forex isn't intended as an investment, but rather as a facilitator of trade there isn't much of a need to regulate the market to protect "investors". Perhaps more importantly, however, the six most liquid currencies that are generally traded on forex markets (US dollar, Canadian dollar, Japanese Yen, Euro, British Pound, and Swiss Franc. Note- the Chinese RMB isn't dealt with by forex traders since it's largely controlled by the Chinese government by pegging it to the dollar) are all traded in such large volumes that it's nearly impossible for individual speculators to have much of an effect on their value (multinational companies also use the market to exchange currencies in large quantities). Consequently, their prices merely reflect supply and demand. Keep in mind also that regulating the currency would in effect be a means of capital controls which is an impedance to free trade.