A notable distinction of the forex market is the only financial trading market open 24 hours a day during the week. Forex trading differs from penny stock trading in that the forex market is highly regulated. Unlike penny stocks, currency information is freely and widely available.

What draws many investors to the forex market is the huge amount of leverage offered. Of course, leverage is a two-edged sword.

It amplifies losses just as quickly as it amplifies profits. You have to maintain a healthy respect for the high risk that accompanies the opportunity for high profits that leveraged trading makes possible. The question of whether you want to be a fundamental forex trader or a technical trader depends largely on your preference for a trading timeframe. Most forex traders are technical traders who primarily engage in day trading or another short-term trading approach.

The fundamental factors that impact currency values include interest rates, employment figures, consumer prices, and gross domestic product GDP. Becoming a good fundamental forex trader necessitates learning which economic factors have the biggest effects on the specific currencies you trade.

The first requirement for technical forex day trading is having the time available to monitor the market for trading opportunities throughout the day. You also have to have the necessary temperament for executing rapid trading decisions and the ability to conduct market analysis quickly. Some forex brokers offer low bid-ask spreads but charge commission fees on each trade.

Transaction costs are also affected by the amount of trading you do. Finding the best deal requires taking the time to compare the transaction cost formulas that different brokers employ and calculating your probable transaction fees based on your projected monthly trading activity. The choice of a forex brokerage firm is critically important. The forex market is, unfortunately, littered with unscrupulous brokers that may sabotage your trading with unfavorable order executions or make it nearly impossible for you to ever withdraw any profits you make.

Many forex traders utilize offshore brokers that offer much higher leverage. But the problem with doing business with a brokerage firm located half a world away is that you have little practical recourse if that brokerage firm defrauds you. Before choosing a broker, check out some online broker reviews that can be found in the article Best Lowest Spread Forex Brokers.

Indeed, you can. Learning to become an expert forex trader requires a large investment of time, education, and experience. One decision a trader faces is whether to employ a trading strategy that takes trading signals from a 1-minute, 5-minute, minute, minute, hourly, 4-hour, or daily chart.

Another part of the learning curve in forex is learning the individual patterns of price movement that characterize different currency pairs. With technical analysis, it can take years to develop a high level of skill in interpreting and utilizing various technical indicators. Finally, becoming a master at trading high leverage financial instruments requires mastering trading psychology and developing an extremely high level of self-discipline. Excellent sources of forex market information, including real-time news, trading strategies, and market analysis articles, include sites like dailyfx.

Penny stocks and forex both offer the opportunity to get started investing with just a little bit of money — and the potential to make a lot of money in a short period of time. The choice of whether forex or penny stocks is the best market for you is, of course, going to be a personal one.

Here are some of the primary factors to consider in making your choice:. Forex trading might be a little more beginner friendly just because there are significantly fewer investments to choose from.

Most forex brokers only offer trading in currency pairs, and the majority of forex trading is done in the half-dozen or so major currency pairs. Neither market is better. The capital requirements are similar as long you do not day trade. Both can be traded with leverage to archive high return rates but also come with high loss potential. About the author : Alexander is the founder of daytradingz. com and has 20 years of experience in the financial markets.

Knowing this is essential as it helps determine the power of your risk management. The name of the game in Penny Stocks centers around which stocks you choose, as well as following the right strategies that can help you achieve great success. To put it very simply, success in Penny Stocks is about knowing how to select the right stock based off of examining patterns , then implementing strategies that actually work, and making sure to incorporate proper risk management into your account through stop orders so you take minimal losses.

Why Penny Stocks? Why day trading?? And now that I have so much experience in penny stocks, I would rather use my time to maximize my profits, because my strategies have worked so effectively, that they have become second nature to me, even as the market adjusts.

In the world of Blue Chip stocks, a lot of the trading is done by algorithmic traders and large hedge funds. It makes getting into the field difficult for a beginner to truly realize profits. However, the Penny Stock market provides a much more level playing field, as long as you know the ins and outs of what to do, which is why having the right mentor is so important.

Otherwise, hopping into the Penny Stock field without knowing what to do can leave you facing a lot of risks to your account, and you could end up blowing your account. Forex, or the Foreign Exchange, is the exchange of global currencies, and the market for trading these is called the Forex Market. It is one of the most active markets out there where traders exchange currency for profits. Currencies being converted every day tends to make the price movements of certain currencies pretty volatile.

Exchange rates can vary constantly. Nowadays, because of online forex trading, almost anyone can do this type of trading from the comfort of your home without having to go to a foreign exchange agency. Investors usually borrow money from brokers to invest in currency. This is known as leverage. By taking leverage, investors are able to trade large values in currency. But it also amplifies risk to a great extent.

Exchange Rate Risk arises because of the disparities in currency values. Worldwide demand and supply of currency are volatile in nature and therefore every currency is prone to price changes. today, you pay approximately 77 USD for it, but tomorrow if the exchange rate changes then you might have to pay much more. Companies that have operations in multiple countries are subject to exchange rate risk all the time.

When it comes to a Forex Trader, however, the risk is so much worse. You have so many factors to look into when it comes to currency, from:. And so much more. One of the reasons people choose Forex Trading is because you can borrow more money than you can from a day trading brokerage for penny stocks. But the catch is, this same leverage can amplify losses just as easily as it can increase profits.

When you carry that much leverage, especially when charting unknown waters, you can potentially run the risk of losing all of the money you invest in a matter of days. While the upside is great, if there is one, you will find less risk when it comes to penny stocks, which makes it a better choice. The reason penny stocks is a better choice is because day trading successfully is a math problem that is tied into human psychology. Once you understand the fundamental elements of how the stock market works by working with a mentor, you can trade successfully without having to pay attention to all the moving parts, because the entire stock market just becomes a matter of reading graphs and understanding how they are designed to maneuver.

The Risk of Ruin when it comes to Forex is extremely high. There have been so many people who have reached a point where they have to quit trading altogether, just from being wiped out in the Forex markets.

Even if your long-term plans would have worked out eventually, sometimes you simply cannot take the short term losses that come with Forex. Apart from these, there are many more types of risks that affect Forex trading and a majority of them affect banks rather than individuals, but these risks I mentioned affect enough traders for it to be a not so great option. Success while trading in Penny Stocks depends quite a lot on the company you choose to trade with.

At other times, it could be a super new company with absolutely no track record. Most of these companies are on the OTCBB and the Pink Sheets. It can be tricky to find out all details about a company before you decide to invest in them… But to hedge the risk, I usually advise my students to only invest in stocks on the Nasdaq.

But even so, Penny Stocks still attracts a lot of traders. Although also risky, Penny Stocks are almost always the better choice for new traders because:. It is possible to mitigate the risks associated with Penny Stocks and make immensely good profits. Selecting the right stock is key. When you select the right stock, there is potential for high rewards.

A mentor who has had enough experience trading Penny Stocks and found success in it is able to steer you in the right direction. Most new traders enter the market with limited capital. Penny Stock Trading allows you to find success even with limited funds. With research, knowledge building, and a focused strategy, Penny Stocks can yield similar results to Forex, with a lot less risk associated with the trading methods.

What is required is the right attitude and guidance. No matter how small your account, you can achieve big returns with Penny Stocks and that is the beauty of it. Beginners should start with paper trading first and practice to figure out the risks, how to work around them, their own style and strategy and to get a feel of things.

With paper trading, you can figure out the risks involved and reduce your chances of loss during actual trading. The idea is to focus on risk management, thereby making Penny Stocks a risk-averse option for you to make profits. With proper risk management, the appropriate strategies, and the right mentor, risks in Penny Stocks reduce to the extent that they present the best option for new traders.

Being a mentor for new traders is a huge endeavor for me which I take very seriously. That is why I recommend Penny Stocks as the right choice for new traders as with the right mentor, there is no limit to the number of profits you can make. How much, exactly? Penny Stocks Trading is a full-fledged career which, if you take it seriously and put in the work , can completely transform your life and help you achieve financial freedom.

The right mentor will not only teach you the tricks of the trade but also keep you motivated, focused, and keep your head in the game. Being focused and trading based off of logic as opposed to emotion is extremely important if you want to avoid risks associated with Penny Stocks and avoid potential losses.

I suppose that depends on you, your past, your skillset, and what you plan to achieve in the future. Yet the real answer is often an obvious one once you dive a little deeper into the differences between the too. Both Penny Stocks and Forex Trading are the kinds of investment opportunities that catch the attention of beginners even though they are very different from one another.

Today, we will go through these differences so you finally know the right answer for YOU! Are you better off trading the stock market or the forex market? When I first started, I also contemplated between Forex and Penny Stocks Trading.

According to books and the internet, these seemed to be the most popular and coveted choices. I learned a lot of things in my initial research, but because there is so much information out there, I found it all overwhelming. When I first started to study the markets, still in college, I needed to make a choice.

I needed to know what kind of trader I would be. It is noteworthy to mention that both methods of trading do promise big profits with relatively small investments, and both include considerable risk. Stocks with much smaller market caps than the Apples and Amazons of the world. It tells us the size of the company and how flush it is with cash. Penny stocks belong to companies with a much smaller market cap than a company like Apple. Penny Stocks work well for investors that have a limited amount of money to invest, but still have the ability and freedom to take some risks.

They are inexpensive and have the potential to produce big returns which is what makes them so popular especially to new traders. There is a subcategory of penny stocks called small-cap penny stocks. Knowing this is essential as it helps determine the power of your risk management. The name of the game in Penny Stocks centers around which stocks you choose, as well as following the right strategies that can help you achieve great success.

To put it very simply, success in Penny Stocks is about knowing how to select the right stock based off of examining patterns, then implementing strategies that actually work. Make sure to incorporate proper risk management into your account through stop orders so you take minimal losses.

Why Penny Stocks? Why day trading? And now that I have so much experience in penny stocks, I would rather use my time to maximize my profits. My strategies have worked so effectively, that they have become second nature to me, even as the market adjusts. In the world of Blue Chip stocks, a lot of the trading is done by algorithmic traders and large hedge funds.

It makes getting into the field difficult for a beginner to truly realize profits. However, the Penny Stock market provides a much more level playing field, as long as you know the ins and outs of what to do, which is why having the right mentor is so important.

Forex, or the Foreign Exchange, is the exchange of global currencies, and the market for trading these is called the Forex Market. It is one of the most active markets out there where traders exchange currency for profits. Currencies being converted every day tends to make the price movements of certain currencies pretty volatile. Exchange rates can vary constantly.

Nowadays, because of online forex trading, almost anyone can do this type of trading from the comfort of your home without having to go to a foreign exchange agency.

This is what attracts traders as the chances of profits are high. BUT… as I mentioned earlier, there is a high risk attached to this! Forex is considered the most liquid market in the world with a large trading volume. Trillions of dollars get exchanged every day. Investors usually borrow money from brokers to invest in currency. This is known as leverage. By taking leverage, investors are able to trade large values in currency. But it also amplifies risk to a great extent.

Exchange Rate Risk arises because of the disparities in currency values. Worldwide demand and supply of currency are volatile in nature and therefore every currency is prone to price changes. This risk can become considerably huge with currency value volatility and fluctuations. This unpredictability is what leads to Exchange Rate Risk. Companies that have operations in multiple countries are subject to exchange rate risk all the time.

In simple terms, leverage risk focuses on borrowed funds. One of the reasons people choose Forex Trading is because you can borrow more money than you can from a day trading brokerage for penny stocks. Forex Traders often use leverage to increase profit potential. they borrow money from their broker. But the catch is, this same leverage can amplify losses just as easily as it can increase profits. The greater the leverage, the higher the risk.

When you carry that much leverage, especially when charting unknown waters, you can potentially run the risk of losing all of the money you invest in a matter of days. While the upside is great, if there is one, you will find less risk when it comes to penny stocks, which makes it a better choice. The reason penny stocks is a better choice is because day trading successfully is a math problem that is tied into human psychology.

Once you understand the fundamental elements of how the stock market works by working with a mentor, you can trade successfully without having to pay attention to all the moving parts, because the entire stock market just becomes a matter of reading graphs and understanding how they are designed to maneuver. The Risk of Ruin when it comes to Forex is extremely high. There have been so many people who have reached a point where they have to quit trading altogether, just from being wiped out in the Forex markets.

Even if your long-term plans would have worked out eventually, sometimes you simply cannot take the short term losses that come with Forex. Traders with not enough capital may experience these losses. Apart from these, there are many more types of risks that affect Forex trading and a majority of them affect banks rather than individuals, but these risks I mentioned affect enough traders for it to be a not so great option.

Success while trading in Penny Stocks depends quite a lot on the company you choose to trade with. At other times, it could be a super new company with absolutely no track record. Most of these companies are on the OTCBB and the Pink Sheets. It can be tricky to find out all details about a company before you decide to invest in them… But to hedge the risk, I usually advise my students to only invest in stocks on the Nasdaq.

But even so, Penny Stocks still attracts a lot of traders. The Top Reasons Why Investing in Penny Stocks is Better for New Traders. Although also risky, Penny Stocks are almost always the better choice for new traders because:.

It is possible to mitigate the risks associated with Penny Stocks and make immensely good profits. Selecting the right stock is key.

When you select the right stock, there is potential for high rewards. This is why I always stress the importance of working with a mentor. A mentor who has had enough experience trading Penny Stocks and found success in it is able to steer you in the right direction. Most new traders enter the market with limited capital.

Penny Stock Trading allows you to find success even with limited funds. With research, knowledge building, and a focused strategy, Penny Stocks can yield similar results to Forex, with a lot less risk associated to the trading methods.

When I first began, I did not have all the money in the world to invest. But I did have the drive, conviction, and commitment to make things happen. Even today, that is my mantra as there are no magic formulas to success with Penny Stocks. What is required is the right attitude and guidance. No matter how small your account, you can achieve big returns with Penny Stocks and that is the beauty of it.

Beginners should start with paper trading first and practice to figure out the risks, how to work around them, their own style and strategy and to get a feel of things. With paper trading, you can figure out the risks involved and reduce your chances of loss during actual trading.

The idea is to focus on risk management, thereby making Penny Stocks a risk-averse option for you to make profits. With proper risk management, the appropriate strategies, and the right mentor, risks in Penny Stocks reduce to the extent that they present the best option for new traders.

Being a mentor for new traders is a huge endeavor for me which I take very seriously. That is why I recommend Penny Stocks as the right choice for new traders as with the right mentor, there is no limit to the number of profits you can make. How much, exactly? The right mentor will not only teach you the tricks of the trade but also keep you motivated, focused, and keep your head in the game.

Being focused and trading based off of logic as opposed to emotion is extremely important if you want to avoid risks associated with Penny Stocks and avoid potential losses.

Because I want new traders to find the best opportunities for success and avoid the mistakes that I made initially, I created the Freedom Challenge. And if you would like to dive deeper and explore Penny Stock and Day Trading in greater detail, be sure to check out my Investing for Beginners series, YouTube Channel , and Day Trading Newsletter. Join The Freedom Challenge. This is my flagship program for traders who want to level-up and turn Day Trading into their primary income stream.

Subscribe To My Youtube Channel. This is where I share practical day trading tips and training on how to trade, as well as behind-the-scenes insights into the trades I make. Join My Newsletter. I write these emails for people who want to learn the basic Day Trading Tips and the practical steps they should take to get started. Are you on Twitter?

You have so many factors to look into when it comes to currency, from: How well a country is doing financially How their businesses are performing What their Gross Domestic Product is like How the people in the country are living What their political systems are like and if any of these factors are facing changes How they are doing business internationally and with what countries How much debt a country is carrying How their manufacturing and agriculture businesses perform And so much more. Paul Koger - September 7, 7. Pink sheet traded stocks are not required to register with the Securities and Exchange Commission , or SEC, and are much less stringently regulated in terms of the public information they are required to provide. Exchange Rate Risk arises because of the disparities in currency values. Penny stock trading a highly attractive option for some traders due to their exciting nature and the potential for large profits with a low initial investment. Previous: The 10 Most Expensive Precious Metals In The World. Most of these companies are on the OTCBB and the Pink Sheets.

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