Best Broker for Penny Stocks- Penny Stock Investing

What is a Penny Stock?

Penny stocks are usually referred to as stocks who market value is less than 5 dollars. However many penny traders usually refer to stocks trading at a fraction of a dollar as penny stocks. CompareBroker team has studied and compiled following list of brokerage firms which specialize in penny stock trading and OTCBB stocks. This also includes pink sheet stocks trading.

How to trade penny stocks

If you are a penny stock trader, you might not be holding the stocks for more than a few days. Some penny stock traders are day traders. Therefore, you need a penny stock broker that has a table trading platform. The second important thing to look for is the brokerage commissions. Since short term traders are usually more active than long time investors, hence a small difference in commission structure can amount to a large difference. There are many Penny Stock Brokers, we have compiled a list of best ones for you.

Buying Penny Stocks - Tips for Penny Stock Trading

Penny stocks trading is not suitable for everyone because it usually carries more risk as compared to medium and large cap stocks. Small fluctuation in the price of such stocks usually means huge percentage move, due to really low stock price. These fluctuations can cause serious damage to your trading account.

High priced stocks usually belong to companies which are more stable and hence supported by institutional investors. On the other hand penny stocks trading involves small companies and can be easily manipulated by big day traders or group of malicious traders. For example small negative press release can cause a major downfall in the stock price of such companies. Given the volatile nature of such stocks, we recommend investors and traders to be cautious while trading penny stocks.

Penny Stock trading for beginners

If you are a beginner, we would advise you to not go for penny stock trading. The risks involved are:

  • Low Liquidity: The volume of the stocks traded is very small. Sometimes, it may be possible that you want to sell your penny stocks, but there is no buyer for them.
  • High Volatility: The penny stock market is highly volatile, which means it's risky. Stocks can lose a major part of their value in a very small time.
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12% chose this
  • 126 retail outlets across US
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  • #1 Broker for Novices and Long Term Investing - Barron's 2013
  • Stocks Trading Fee: $9.99
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  • Per Contract Options Fee: $0.75
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Receive up to $150 in transfer fees when you switch to TradeKing
15% chose this
  • Best Customer Service: "SmartMoney's Annual Broker Survey
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  • Stocks Trading Fee: $4.95
  • Options Trading Base Fee: $4.95
  • Per Contract Options Fee: $0.65
  • Minimum Balance: $0.00
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Get up to $500 + 60 days of free trades
15% chose this
  • Free Independent research from leading sources
  • A saving account from etrade bank possible
  • Access to foreign markets
  • 31 retail locations in the US
  • ACAT available
  • Stocks Trading Fee: $9.99
  • Options Trading Base Fee: $9.99
  • Per Contract Options Fee: $0.75
  • Minimum Balance: $500.00
  • More Info...
Get $100 when you open an account
7% chose this
  • Excellent trading platform
  • Virtual Trading Available
  • Top notch mobile trading apps
  • Great education resources for all levels of traders
  • Stocks Trading Fee: $8.95
  • Options Trading Base Fee: $0.00
  • Per Contract Options Fee: $1.50
  • Minimum Balance: $0.00
  • More Info...
Exceptional Online Stock Broker with local branch offices
10% chose this
  • Over 500 physical offices for customer service
  • Easy transfer of an account from any other broker to Scottrade
  • Great emphasis on in-Person online education
  • Excellent Mobile Trading and Account Access
  • Stocks Trading Fee: $7.00
  • Options Trading Base Fee: $7.00
  • Per Contract Options Fee: $1.25
  • Minimum Balance: $500.00
  • More Info...

Penny Stock Trading : Best Brokers

  • Scottrade Penny stock Fees: $7 + 0.5% of the total value.
    Scottrade penny stock definition: $1 or less.

  • TradeKing Penny stock Fees: $4.95 + $0.01 per share on the entire order.
    TradeKing penny stock definition: $2 or less. When you purchase stocks priced below $2 per share, you must purchase at least 100 shares per trade.

  • OptionsXpress Penny stock Fees: $8.95.
    OptionsXpress penny stock definition: $1 or less.

  • TD Ameritrade Penny stock Fees: $9.99.
    TD Ameritrade penny stock definition: $1 or less.

  • Thinkorswim Penny stock Fees: $9.99.
    Thinkorswim penny stock definition: $1 or less.

  • MB Trading Penny stock Fees: $4.95.
    MB Trading penny stock definition: $1 or less.

  • Etrade penny Penny stock Fees: $9.99 if 0-149 trades per quarter; $7.99 if 150+ trades per quarter.
    Etrade penny stock definition: $1 or less.

  • Interactive Brokers Penny stock Fees: $0.005 per share with $1 minimum per trade for "smart" routed orders.
    Interactive Brokers penny stock definition: $1 or less.

How to trade Penny Stocks

For buying penny stocks, you need to start your research on hot penny stocks. There are several websites with penny stock alerts, news, and newsletter, where you can you the penny stock screener to find the right penny stock. After you have chosen the stock, you will next have to select one of the above listed penny stock brokers. Penny stock investing is already a risky game, if you don't have a broker that can support you, you will not be making profitable trades. While choosing a penny stock broker, pay special attention to the commissions being charged.

Best broker for penny stocks

TD Ameritrade stands out in the list of brokers for it does not charges extra commissions on penny stock trading. You have to pay the usual $9.99 to buy penny stocks.

Popular Brokerage Offers

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7% chose this

45 cents per 100 shares or 4.5 per trade