9 Best Penny Stock Brokers for Online Trading in 2022 • Benzinga
Retail investors have the option of investing in all types of markets, including penny stocks. Penny stocks are stocks that trade below $5 and can be valued as low as pennies per share. They allow investors to hold thousands of shares for a small amount of capital, but while that may sound attractive, these stocks can be considered high risk.
Many penny stocks are traded over-the-counter (OTC) because they do not meet the specific requirements of major exchanges. With the absence of regulatory requirements and increased risk, finding the right penny stock broker is crucial.
Brokers for Penny Stocks
Best Penny Stock Brokers
It can be difficult to find the right stockbrokers. Here is a list of Benzinga’s favorite brokers and information about what they offer.
Webull’s platform offers up to 4x the buying power of day-trade and 2x the buying power overnight with a margin account. With technical indicators, economic calendars and ratings, the platform is designed for intermediate and experienced traders. It charges an annual margin rate of 6.99% to 3.99% and requires no minimum deposit. Webull does not charge commission fees.
Intermediate Traders and Investors
E*Trade is a great platform that charges $0 in fees when buying stocks. However, if you wish to use broker-assisted trades, you may be charged an additional fee of $25 plus commissions and fees. In the case of OTC stock trading, a commission of $6.95 applies, which is competitive. In addition, E*TRADE also offers educational resources to help you develop your trading.
Benzinga is compensated if you access certain of the products or services offered by eToro USA LLC and/or eToro USA Securities Inc. The testimonials contained in this communication may not be representative of the experiences of other eToro customers and such testimonials are not no guarantees for the future. performance or success.
eToro lets you invest in cryptocurrencies and ETFs, but it’s also a great place to invest in stocks. As you add stocks to your portfolio, you can be sure that your net worth is growing and you are building wealth for the future.
While penny stocks alone won’t make you rich, it’s worth using a platform that helps you build a more diverse portfolio. eToro also allows you to:
- Invest in full or fractional stocks for as low as $10 – perfect for penny stocks
- Engage with real experienced investors regarding strategies
- Mix your crypto holdings with stocks and ETFs
- Review detailed charts, indicators and analysis
- Pay no commission
Robinhood Markets Inc. (NASDAQ: HOOD) is a well-known broker championed by many retail clients. The commission-free broker is designed for new traders, while its online application is primarily designed to be easy to use. The downside of Robinhood is that it doesn’t offer OTC stocks. The only penny stocks provided are those listed on Nasdaq or NYSE.
Interactive Brokers is another well-known platform that can be beneficial for trading penny stocks. However, before you can trade these stocks, you must apply for penny stock trading authorization through the platform. Also, the company charges a low commission for trading penny stocks.
Cheap options trading
The Tradier platform has a plethora of information and tools that traders can use. It offers commission-free stock trading, although it has a subscription fee of $10 per month. With a range of indicators and charting tools, it is very beneficial for active traders.
Short sale over $25,000
Cobra Trading, a direct access broker, is an excellent platform for trading penny stocks, including OTC stocks. The fees are low and it offers discounts to high volume traders. However, all transactions are charged a minimum commission of $1.
TD Ameritrade is an excellent online trading platform that includes buying penny stocks. The company is commission-free, no platform fees, no data fees, and no transaction minimums. For OTC Bulletin Board (OTCBB) stocks, there is a fee of $6.95 per trade. TD Ameritrade has a user-friendly and easy-to-navigate website.
Tradestation does not charge a fee for trading stocks or penny stocks, but this benefit only applies to the first 10,000 shares per trade. Its two mobile apps offer commission-free stock trading. Also, depending on the account you are setting up, there is a minimum deposit for its TS Select account of $2,000.
Charles Schwab Corp. (NYSE: SCHW) offers penny stocks from its standard trading accounts. Additionally, you can trade OTCBB securities and pink securities online through the company’s website or mobile app. It charges $4.95 per trade and sets a broker-assisted service fee of $0-25. It is a great option for traders at all skill levels.
Why do you need a Penny Stock Broker?
The importance of a good broker cannot be underestimated – finding one that is safe and reliable is essential. Unfortunately, penny stocks must meet a list of requirements to join the major exchanges and therefore most are traded over-the-counter.
Fee structures and commissions will vary depending on the broker you choose, and due to the low liquidity of penny stocks, bid-ask spreads will also be determined by different brokers and stocks. Therefore, it is essential that you ensure that the broker is regulated and meets your needs. Additionally, some penny stock brokers offer additional perks and training that can be helpful to anyone. An important point to note is that you should research the broker beforehand.
How do you choose a Penny Stock Broker?
Choosing a penny stock broker can be a lengthy process due to the vast selection of brokers on offer. However, the steps below can help speed up the process.
Select a broker.
Different brokers have different registration, deposit and withdrawal requirements. The assets it lets you trade also vary. Since penny stocks are usually traded over-the-counter, check to see if the broker offers the stocks you’re interested in.
Most importantly, make sure the broker is regulated in your area.
When buying or selling shares, there may be fees. Even if the broker says it is commission free, there may be other costs associated with using the broker, so investigate potential hidden charges. If the broker charges a commission, this can impact potential profits, so take that into account as well. Fixed fees are much better when buying a large number of shares because they are fixed at a fixed price and do not depend on the amount you buy, which can impact your results if you trade important positions.
Also, the spreads can change and be high due to the illiquidity of some penny stocks. The small market capitalization and low liquidity of many penny stocks means that brokers have a large spread.
Look for strong security and avoid scams.
You should analyze individual penny stocks and conduct thorough research as there may be many scams out there that promise low costs and high returns. Make sure you avoid this situation by only trading with a broker you can trust and who understands the business you are investing in.
The Qualities of a Good Penny Stock Broker
The qualities of a good penny stock broker involve many different factors. Once you have found a list of safe and regulated brokers, examine them in more detail.
- Easy navigation: A user-friendly platform initially may not seem important, but you will save yourself a lot of hassle in the long run if you choose a broker with this feature. Look for a platform that allows you to quickly enter and exit trades, manage your portfolio, and answer any questions or issues you may have. A user-friendly platform is easier to manage and can save a lot of headaches in the future.
- Technical tools: Analysis and research are vital for traders and investors. Having additional technical analysis tools can help you learn more and test and implement new trading strategies. Of course, not everyone uses technical analysis, but having a variety of indicators can significantly benefit those who do.
- Great stock selection with cheap fees: If you are interested in trading penny stocks, then one quality to look for is a broker with plenty of penny stocks to choose from, with low fees.
- Exterior access: A useful addition can be linking external platforms to the brokerage, making managing your portfolio, charts, and any additional research more accessible. This quality can be important when managing a large portfolio.
Penny Stocks are risky
Penny stocks can be high risk. However, with high risk comes the potential for high return due to the number of stocks you can buy at low prices. Just be aware of the increased risks of failure due to their highly volatile nature and lack of liquidity. Therefore, if you are trading penny stocks, you want to at least make sure you have a broker you can rely on.
Frequently Asked Questions
Can you get rich investing in penny stocks?
Individuals can make money investing in penny stocks, but it requires extensive research and understanding of the stock. Remember that you are at an increased risk of losing money when trading penny stocks.
Is penny stock trading legal?
Like any other market, penny stock trading can be traded on many platforms and is completely legal.
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