Penny stock trading or currencies

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Is trading penny shares riskier than trading forex? This is a hard question to answer. Personally I think they are too different to say which is riskier. Forex is often traded on margin. Some currency brokers actually allow leverage up to 500:1. This amount of leverage can very quickly blow up an account.

Penny stocks can fluctuate extremely rapidly and also eat into a trading account.

One big plus of forex is you can very simply select 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 advantage of currencies is that there are no trading commissions. With stocks you usually have a set fee per trade. Many penny stock brokres 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 currencies through many retail forex brokers, they do not charge commissions. They make their money their the buy and sell (bid/ask) rate spread.

Trading both penny shares and currencies is very high risk. Be sure to take your time when choosing a broker. For stocks a online 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 very careful with currency brokers though, they are often not heavily regulated and they have been known to go bust before. You may have heard of the broker refco, they went bust a few years account. Many account holders lost all of their funds.

One thing you can do is try a demo stock trading account before trading a real account.

Think of how bad it would be if you lost your entire trading account because of your broker going bankrupt!

 

 

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January 1, 2010 · Filed Under Currency Trading

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