Forex Trading Blog

Is trading penny stocks riskier than currency trading? This is a tough 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 easily blow up a trading account.

Penny stocks can fluctuate extremely rapidly and also 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 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 online penny stock brokerages 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, they do not charge commissions. They make money with 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 discount stock brokerage 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 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 virtual stock trading account before trading a real account.

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

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