Which is best, shares or forex
Posted by admin | Under Options Trading Misc Friday Jan 8, 2010Is trading penny shares riskier than trading forex? This is a tough question to answer. Personally I think they are too different to say which is the most risky. 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 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 size of 10k. You can easily place trades that are equal to your 10,000 or use leverage.
One advantage of currencies is that there are no trading commissions. With stock trading you usually have a set fee for a each trade. Many 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, 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 highly risky. Be sure to take your time selecting a brokerage firm. For stocks a 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 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 awful you would feel if you lost your entire trading account because of your broker going bust!
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