Which is riskier penny stocks or currencies
Is trading penny shares riskier than currency trading? This is a hard 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 leverage can very quickly blow up an account.
Penny stocks can fluctuate extremely quickly and also quickly eat into a trading account.
One big advantage of currencies is you can easily choose how much leverage you want to use. If you have an account with k. You can simply place trades that equal your ,000 or borrow money.
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 penny stock brokers also charge additional fees for trading penny stocks. This can mean you have to earn high returns just to pay the greedy stock broker their fees.
If you trade forex with many retail forex brokers, they do not charge commissions. They make 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 good 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 bankrupt. You could have heard of the broker refco, they went bankrupt a few years ago. Many account holders lost all of their money.
One thing you can do is try a fantasy 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!
