Is trading penny shares riskier than currency trading? This isnt an easy question to answer. Personally I think they are too different to say which is the most risky. Forex is often traded on margin. Some Forex brokers actually allow leverage upto 500:1. This amount of debt can very quickly blow an entire account.
Penny stocks can fluctuate extremely quickly and also quickly eat into a trading account.
One big advantage of currencies is you can very simply choose how much leverage you want to use. If you have an account size of 10k. You can easily place trades that are equal to your ,000 or use leverage.
One plus point of forex is that there are usually no trading commissions. With stock trading you usually have a set fee for a each trade. Many of the best online penny stock brokers also charge additional fees for trading penny stocks. This may mean you have to earn good returns just to pay the greedy stock broker their fees.
If you trade forex with many retail forex brokers, theres no commissions which is excellent. They earn money with the buy and sell (bid/ask) rate spread.
Trading both penny stocks and forex is extremely risky. Be sure to take your time choosing a broker. For stocks a solid discount stock broker is often best suited. For currencies a good solid retail broker with a solid reputation and low spreads is often the best bet.
Be careful with forex brokers though, they are often not heavily regulated and they have been known to go bust before. You could have heard of the broker refco, they went bankrupt a few years ago. Many traders lost all of their funds.
One thing you can do is try a virtual stock trading account before trading a real account.
Think of how awful you would feel if you lost your entire trading account because of your broker going bust!
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Duration : 0:8:34
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Duration : 0:9:20
