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. Currencies are often traded on margin. Some currency brokers actually allow leverage up to 500:1. This amount of leverage can very quickly blow an entire 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 ,000. 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 for retail traders. With stocks you usually have a set fee per trade. Many penny stock brokers 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 earn 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 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 money.
One thing you can do is try a fantasy 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!
