Forex or penny stocks?

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

Penny stocks can move very rapidly and also 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 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 trade. Many of the best penny stock brokers also charge additional fees for trading penny stocks. This can mean you have to earn good returns just to pay the stock broker their fees.

If you trade forex with many retail forex brokers, theres no commissions which is excellent. 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 choosing a broker. For stocks a discount stock broker is often best suited. For currencies a good solid retail broker with a good reputation and low spreads if often the best.

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 money.

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!