Hi there,
Is there any similarities between Forex Trading and Penny Stock Trading.
Which one is the best for new traders?
Trading penny stocks is about as different as one could possibly get from trading currency pairs. The only similarity between the two is that they may be traded.
Forex is the most liquid market in the world. You do not have to worry too much about a market order going unfilled. In the micro-cap/penny stock world, you may wish to sell your shares and then you may end up waiting. Minutes. Hours. Days. Just because you have a desire to sell doesn’t mean that there is anyone else in the world willing to buy.
Because of the liquidity issue, customary charting (technical analysis of almost any form) is almost useless. Giant gaps is price, both up and down, are the norm in penny stocks whereas gaps are rather infrequent in forex compared to other markets.
There is little information that is not known to traders using fundamental analysis in trading currencies. Interest rates, yields, GDP, NFP, etc. are all announced. Price often does screwy things during news releases in forex but the info is at least released. OTCBB and Pink Sheet pennies, unlike other stocks, are not regulated. They have no annual or quarterly filing requirements so concrete information on them is limited to non-existent.
Currencies are not going anywhere. No matter how bad the USD looks (or any other major currency) it is not realistic to expect it to disappear overnight. Penny stocks that you have just purchased may or may not be around tomorrow. Many of them ended up being broker traded stocks because they were de-listed from major exchanges. They could just as easily disappear entirely.
The only positives I can think of are that if you know what you are doing and all of the planets align you can sometimes see gigantic gains trading penny stocks in a very short period of time and you can do so without using any leverage.
Well Forex trading, is the simultaneous buying of one currency and selling of another at current prices.
Thanks a lot for answers
i started off with pennies and got bored so i went to forex
Penny Stocks can have real liquidity issues.
There was a scam a few years ago where someone emailed you buy calls for Penny Stocks. They had already put in their buy orders, then create a demand by emailing a client list advising to buy. Then they sell first, and then tell everyone else to sell. When you have no buyers at a price, it goes down and you get ripped off while the person selling the scam makes a fortune.
I did look in to it a few years ago, saw their results, which was accurate, but it was also their buy/sells when the market would take them at that price, before everyone else rushed to buy/sell.
You can’t pump and dump currency.
Yeah Same here. I like to trade with high liquidity. So forex is the best option.
There’s a trader named Timothy Sykes who specialises in penny stocks. Google him, or look him up on Youtube. He featured in the first season of Wall Street Warriors. He espouses that you look out for “pump and dump” schemes, and short the penny stock when it’s “pump” phase has peaked.
But I much prefer forex.
If you like technical analysis, forex is much better than penny stocks. If you’re the creative and investigative type, however, then perhaps you may find penny stocks suitable. But to me, penny stocks are more like gambling, and it’s very hard to quantify your edge.
both addicting and both give your thrills
If you get your thrills off either of them, then it is time to withdraw you money before you eventually lose it all. Getting thrills shows you have emotional involvement in the trade. You will be tempted to chase losses with revenge trading, move stop loss limits etc. Not healthy at all, for you or your account balance
Penny stocks are generally very scammy. How many of them become successful companies?
Some companies that trade as pennies become successful but these are far and few between. It is much easier to find once successful companies that have been delisted from exchanges that now trade for pennies. The allure of trading penny stocks isn’t finding a $0.30 company that will one day become a hugely successful one and trade for $50, it is finding a $0.30 company that will jump up overnight and trade for $0.60 – considering how thinly traded they are to begin with is not all that uncommon. The $0.30 company, however, is just as likely to drop down to $0.15.
I am sure there are some traders that can focus on pennies, know what they are looking for and reap huge profits from the sheets. I just ain’t one of 'em.
Because the pennies are unregulated, scams and fraud such as pump and dump are quite prevalent. The only advantages I can think of that a trader familar with other markets could make use of would be 1) watching volume (it would show others, possbly in-the-know, are suddenly interested) and 2) closely following a basket of company press releases for things like a new contract with a vendor or new hiring (as time consuming as it might be) which may indicate company expansion (and profiability) in the works.
Not much to go on in any event.
Both are different and beneficial in his own places. But in Penny Stock marketing, if you have a knowledge for the market you can get much profit from it. In other side forex trading is less risky but profit is also low. For getting good profit you need to follow the good otc markets website for accurate results. In the End i must say more risk more profit.