Forex or stocks, which one is more risky

hi everyone, am a newbie still in learning and out of curiousity, i would like to know which is more risky, forex or stocks

Forex, easy. However, do not let this deter you as the risk is part of the reason why forex is so lucrative. If you can master forex (or even become profitable), you will acheive great wealth, faster than you can in stocks (with the exception of your lucky penny stock that gains 10000% in a day).

Stat with it and learn as much as you can; it is certainly worth it.

andersenws

It's about moment you are buying. On forex you can profit both on increasing or decreasing movement. Forex is more corrective (retracement) market. Forex has leverage effect. You can win with hard work really much, but with litlle less working you can loss a fortune. In stock you must give much many to have much many, it is another filosofy than forex. But in all honesty poeple are maybe losing the most on forex market, becouse of income it propose (do you think it is paradox?). Forex is fast way in both directions, in stock you have only one way. Maybe you are talking about stock indexes, then it's alteranitve to forex. Maybe rather eysier in the beginning. If you don't have special talent you wil lose in forex continuously in the beginning. Dont give it up. You must learn how to do the things right.
You must find what suits you. If you are positional, swing, minute trader... Then find a menthod. Develop it (and share it with community which gived to you so much!;-). Be patient, dont push the trigger occasionaly - have discipline. All you know.
Hope you will joy the community!

roughly how much do you guys make per month and is it consistence?

You should always remember that profitality itself is only a figure,
and you should also take into account such factor as risk level. The more
profit you want, the more risky will be the business. Good examples here are
financial markets, futures trading is less risky and less propfitable, stock
market is more risky and more profitable, Forex is the most risky and most
profitable. In financial markets, you can find ur point of equilibrium
between risk level and profitality.

I'm a student right now (both of forex and in the traditional sense), so I'm happy to break even or just make a little spending money each month. Nothing to live off of, that time will come later, when I feel more comfortable with the market and my system, and when I can fund a larger account.

Remember the cliché: 95% of forex traders lose, so if you break even, you are better than 95% of everybody else.

This forum has a wealth of knowledge available, and if you take advantage of it before you drop a single penny into forex, you might be able to avoid many of the mistakes all the other beginners (myself included) have made.

andersenws

risk is not a function of the market, it is a function of the trader.

risk is controlled by position size and strategy, and position size and strategy is controlled by trader. to call any market risky or unrisky is naive.

Well thanks for ruining my replies, Merlin

Yes, merlin is correct. However, the reason people say forex is risky is because most new traders do not understand how much they can lose and how quickly they can lose it, thereby putting themselves at huge amounts of risk.

Can you at least give me that Merlin?

andersenws

Thanks guys for the help , one more question; is there any good book on forex risk management?

I dont believe either of the markets carries more risk than the other. There are so many different ways to trade the markets. If you go into stocks, will you trade pennies as mentioned in another post, or mega caps by sector? In forex will you scalp, position trade etc?

I personally traded penny stocks for a while.. I lost a lot doing it. I still trade stocks, though only large or mega caps and only after I do plenty of DD on the sector I am trading. I also trade FX, I do not try to scalp for 5-10 pips, I trade longer term. By long term I mean over a week.. even longer if it makes sense.

Stay away from spontaneous trading in both the markets and you will be much better off.

same idea wit u...

People say forex is tougher to trade than stocks. I've only traded forex so I can't compare them. In a sense forex is riskier because you have leverage. Leverage in forex can be anywhere from 20:1 up to 400:1. Trading stocks you can trade on margin with what, 2:1 leverage? Using leverage is a great way to build wealth, but it can be dangerous becuase it magnifies both profits and losses.

I'm new to Forex, but I say Stocks, by far, are riskier. And the reward is smaller as well. Sure, stocks were all the rage during the dot-com boom, but if you're an average Joe, with a small pot to play with, it's gonna take you a WHILE for you to get rich today (it's mostly a bear market in the stock market right now.)

These are the things that I don't like about the stock market:


1. The dreaded gap. A friend of mine had 6k in a stock one day, and then he woke up in the morning, right when the market opened, and his stock was at 4k. Why? All because the company he invested in had some type of scandal come to light right after the market closed, and the next morning…BOOM, the dreaded stop gap was at his door. Nothing you can do about that.

2. The only stocks that can really be on par with the gains of the Forex, are penny stocks. And penny stocks are like a 3rd world market, full of corruption, deceit and theives. Boiler rooms work day and night to pump up stocks only to dump them at their advantage. And nine out of ten penny stock companies are scammers themselves.

3. If you think you’re gonna get in and out of stock trades like you can with currency pairs, forget about it. SEC rules state that with a standard cash account, the buyer and seller of a stock must wait 3 business days before he can buy a new stock (supposedly so that the business transaction can settle…)

4. The only other way the little man can really make Forex-like returns on the stock market is if he Day Trades. And you need at least 25k to open up a Day Trading account! Compare $25,000 with the $250.00 minimum that you can open up a Forex account with, now which one is riskier? (And 90% of new Day Traders end up losing their money, just as fast as %90 of the new Forex traders do.)

5. The stocks that have the potential for the biggest gains have the poorest liquidity. For example, I bought a penny stock once, and it took me nearly TWO WEEKS to get out of it! Imagine having your money locked in a currency pair for that long, and not knowing what’s going to happen to it! Now that is risky! Doesn’t matter if you have a Stop-loss order on it or not, cause there’s NO ONE AROUND TO BUY IT!

6. Taxes. You pay more taxes on stocks than you do with the Forex. This further diminishes your gains.

I'm not trying to OVER-demonize the stock market, because it can still be VERY lucrative (Hell, about a month ago, I bought this revolutionary-stem-cell research company’s stock, and I nearly tripled my money in less than 24 hours.) Personally, I will never write off the stock market, but it wont be my main forte from here on out. People talk about the leverage in the Forex being risky, but as far as I see it, leverage is what you make of it. Leverage is not some Boiler Room Scam working against you, nor is it some Enron-style corruption. Saying that the Forex is highly risky, because of the high Leverage, is like looking at your car and saying that it is risky because it can go 160 mph. You don't HAVE TO go that fast...and if you chose to...do it on a safe highway...when the cops aint around.

Remember that you can trade stocks with leverage using warrants or CFDs...
So you can become rich very quickly if you are at the right side of the market. I think the risk is similar, and the method to achieve wealth too.
For me that´s all about discipline and a good strategy.

The traditional investment in stocks may also be interpreted as a long term investment,in that way the risk is lower,because the fundamentals can play an important role in my opinion.


PS: English is not my native language,so my post can contain errors...

I want to ask? When considering a trading site for Forex what tool and enstruments do I need. What quality standars are there to go by?

Al kind of financial markets has the same level of risk. It does not matter if you trade stock, commodities or currencies. If you make the trading gambling, you will lose your money either way. Some will say that forex is more risky because of the high leverage you can use, but I disagree with that because it is up to what leverage you use. Besides, the volatility in the stock markets is much larger that the forex market so it definitely not safer…

Guys, do you know a good penny stocks broker ? I live in Romania !

Trading without proper knowledge is always risky, whatever trading sector you are using that doesn’t mean much! But I seem, Forex trading is much flexible than stocks, because it’s open for 24 hours and low trading cost as well.

Not good question. Risk is everywhere, you cannot avoid risk in Stock as well Forex . if you interested about Forex trading , please go first of all about learning Fx in Babypips school and can practice a demo account at any broker , devoid of real trading principle Forex could be dangerous . always remember 90% are loser in Fx . so rorex is risky or not ? this question sounds not good actually

Please don’t discourage someone about this market place. Forex always contains great risk and there is every second uncertain, but if you can observe some inevitable part of trading with patience then it can be a reliable source to earn money very rapidly. so, choice is your now.