Penny Stocks vs. Forex: Which Is More Profitable?

 

Most Americans do not have a lot of extra cash laying around. Times have been tough, and for many years, a large majority of Americans have been living paycheck to paycheck. This is a sad reality, but a true one.

One way to increase one's financial standing is to invest. However, it can be difficult to invest if you don't have that much capital to work with to start. Both penny stocks and forex trading can provide an opportunity for low capital investors to start building profits.

If you're considering one method or the other, what do you need to know about penny stocks vs forex? Read on and we'll walk you through everything that you need to know.

 

Penny Stocks

In both penny stocks and forex trading, there is an opportunity present that would allow a consumer to take a small amount of money and invest it with relatively low risk. It is an opportunity to trade without putting your existing financial situation at risk.

Penny stock trading is any and all trading where the share prices of a stock are under $5. Some of these stocks might be part of the more traditional exchanges such as the NASDAQ. However, most people think of penny stocks as those off of these exchanges, tradable through pink slips and popularized through films like The Wolf of Wall Street.

Trading penny stocks comes with its own risk and rewards. On one hand, the price of owning these various stocks can be minimal. However, the effort required to turn a significant profit off of penny stock can be much greater than that of higher-priced stock options.

An individual trading penny stocks will need to do a lot of research and stay atop news regarding the companies that they are trading. This can be difficult because many penny stock companies are not registered with the Securities and Exchange Commission, which means they are not required to provide as much information to the public.

An investment in a penny stock company can be very speculative and might not pay off. However, with the proper research in hand and a good head on your shoulders, it might be possible to break through and make a decent profit on an originally small investment.

It can take some time to figure out how penny stocks work, but once you get the hang of it there is certainly some money that can be made.

Forex Trading

While it also requires a low amount of capital to get started, the realities of forex trading are very different from that of penny stocks. Forex trading is actually considered a different kind of asset trading than stocks.

It is more similar to investing in a currency than it is investing in a particular stock. Forex trading involves the purchasing of one form of currency while simultaneously selling another. It involves keeping a close eye on market values around the world.

The popularity of the system exists because one can get started with a very low amount of capital and potentially make great returns. The returns on a trade can also be quite immediate.

The major difference between penny stock and forex trading is that the forex market is heavily regulated. That means the public information that is available on the various currencies available is very easy to access. There is not a lot of digging around required, just smart strategizing.

This makes forex trading less speculative than penny stock trading is. However, some people prefer penny stock trading for the same reason: the idea of finding a diamond in the rough, one that no one else might be aware of, is highly appealing.

Which is More Profitable?

If you have a little money set aside to start investing, you'll likely need to decide between trading penny stocks vs forex. You don't want to split your time between the two, as both will require some time from you to become proficient.

Splitting your concentration can leave you in a real master of none scenario.

Which is more likely to bring you the profit you crave? There's no easy answer to that one. It has more to do with your personal desires and abilities. Penny stocks have the potential to have a higher profit margin due to one's getting in on the ground floor.

However, the highly speculative nature of penny stock trading means if you don't find a winner, you might never see those profits at all.

Forex trading is more of a sure thing even if the profits might not be as high as if you picked the right company out from one of the pink sheets. In this way, it's kind of a toss-up.

Instead of thinking of your decision in terms of maximizing profit, it's best to think about it in terms of yourself and the work you want to put in. You will need to put a lot of work in, so your best chance at making a profit will be picking which form of work you think you'll commit yourself to better.

Trading Penny Stocks vs Forex

If you're trying to make a decision between getting into penny stocks vs forex, you'll need some basic information about both forms of trading to make up your mind.

There are advantages to disadvantages to both and plenty of money to be made. At the end of the day, you'll need to make up your own mind in regards to which choice will be right for you.

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