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Best Brokers for Penny Stocks

Penny stocks are a high risk but that can yield a high reward. Choosing an appropriate broker can help you make the right penny stock picks more effectively.

My first experience trading in Penny stocks was way back in 2011. Fresh out of college, I had all of the necessary confidence to invest in the (penny) stock market. Growing up in the 90s, and sheer curiosity led me to see the current state of Blockbuster Video.

Quick Look – Best Overall

As the internet does, it led me on a strange path through message boards, penny stock chat rooms, and general investment sites. Somewhere along the line, I caught wind that DISH was in the process of launching a competing service to Netflix through Blockbuster. Interesting, I thought – especially because Blockbuster was trading for pennies at the time.

Long story short, I bought in for $3,000 at around 3 cents a share in late June 2011, giving me roughly 100,000 shares of my childhood memory.

Leading up to the day DISH made their announcement the stock rose to roughly 35 cents a share.

For a moment there, I thought I was going to be rich. Unfortunately, the SEC suspended trading temporarily of the stock, and then Blockbuster told investors that the stock had no actual value.

This is the Nature of Penny Stocks. I could have sold, and made a nice profit, but I held on too long virtually losing all my investment in the process. For the record, I was using E-Trade as my broker at the time.

Choosing a broker

If you are already familiar with penny stocks and how to trade them, the next step is choosing a broker. Sometimes it can be hard to cut through the brokerage banner ads, personal opinions, and what really matters.

What to look for in a penny stock broker

Low account minimum – For obvious reasons you want to pick a broker that will allow you to start off with a lower balance. Not always, but typically investors looking to start investing in penny stocks do not have a large amount of liquid capital to move around. Therefore, you should choose a broker with a lower account minimum balance requirement, such as E-Trade or TD Ameritrade.

Excellent research platforms – Penny stocks are not always reported on in the media, and often are subject to fraudulent marketing schemes, otherwise known as “pump and dump”. In order to effectively pick stocks, you want to choose a broker that has reliable and quality research reports.

No hidden fees – The last thing you want is to be gouged by hidden fees. When you are actively trading large amounts of stocks, sometimes the margins you are getting on your returns are quite small. Hidden fees can easily cut into that, and most of the time are completely avoidable.

Volume discounts – Do whatever you can to drive down costs. If a brokerage can offer you volume discounts (like Ally Invest) and you plan on having a large volume of trades, it may make sense to go with that brokerage.

Best Overall

Lower fees, reputable companies, and amazing research reports. TD Ameritrade and Ally Invest are at the top of our list. They cover all the bases necessary to put you in position to make sensible penny stock trades.

Commissions

$6.95

Best For
  • Beginner investors
  • Advanced traders
  • Investors who want portfolio-building advice.
Commissions

$4.95 volume discount available

Best For
  • Active traders
  • Beginners looking to start trading
  • Low fees
  • Penny stocks

Best options for low fees

Robinhood obviously takes the cake here, with their free trading service. E-Trade also provides low fees with volume discounts available, but Ally Invest has those low fees from the start. Ally and Robinhood brokerages will not hit you with unexpected hidden charges.

Commissions

$4.95 volume discount available

Best For
  • Active traders
  • Beginners looking to start trading
  • Low fees
  • Penny stocks
Commissions

Free

Best For
  • Low cost stock trading
  • Beginners looking to start trading
  • Investors on the go

Best for experienced traders

Still providing lower commissions for trading, these two brokerages do require more of a minimum balance. That being said, they offer a great platform for experienced traders, so a minimum balance in your account likely will not be an issue.

Commissions

$4.95

Best For
  • Beginner investors
  • Advanced traders
  • Investors seeking commission-free etfs
Commissions

$3.00 broker assited orders an additional $6

Best For
  • Active traders
  • Experienced, knowledgeable traders
  • International traders

Compare all of our top penny stock picks

See the table below to compare and contrast the features that matter to you most. We also have a number of other brokers on our complete compare page.

Broker Best For Commissions Account Minimum Choose your platform
TD Ameritrade
  • Beginner investors
  • Advanced traders
  • Investors who want portfolio-building advice.
$6.95 $0
Get started securely through TD Ameritrade's website
1 Minute Review

This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools. Especially, with equity investing, a flat fee is charged, with the firm claiming that it charges no trade minimum, no data fees, and no platform fees. Though it is pricier than many other discount brokers, what tilts the scales in its favor is its well-rounded service offerings and the quality and value it offers its clients.

Pros
  • Superior technology
  • No account minimum balance
  • Excellent customer support
  • Premier data and news partnerships
Cons
  • Slightly higher commissions
  • Can be for more advanced users
Current Promotion

Trade Free for 60 days + Get up to $600 with Trade Architect from TD Ameritrade.

Ally Investment
  • Active traders
  • Beginners looking to start trading
  • Low fees
  • Penny stocks
$4.95 volume discount available $0
Get started securely through Ally Investment's website
1 Minute Review

If investors are on the hunt for a bargain broker, Ally Invest could be the one. With low commissions across the board, Ally Invest (formerly TradeKing) stops potential investors in their tracks with its especially low mutual fund commissions. Commissions on stocks and ETFs are notoriously inexpensive as well, and for more active traders or those with larger account balances, commissions can dip as low as $3.95 per trade.

Pros
  • Volume discounts available
  • Among the lowest fees in industry
  • Good for every experience level
  • Excellent customer service
Cons
  • No commission free ETFs
  • Lacks physical locations
Current Promotion

$3.95 per stock trade for Active Traders at Ally Invest

eTrade
  • Mobile traders
  • Traders looking for research and data
  • Investors looking for retirement planning guidance
$6.95 for fewer than 30 trades/quarter. $4.95 for 30 or more trades/quarter $0
Get started securely through eTrade's website
1 Minute Review

E-Trade is best known for its user-friendly browser, desktop and mobile trading platforms and its extensive research and educational information. E-Trade may not have the lowest commissions compared to discount online brokers, but customers certainly get their money’s worth from E-Trade’s comprehensive offerings.

Pros
  • Extensive resources
  • Full banking services
  • Easy-to-use platforms
Cons
  • Limited access to ETrade Pro
  • Higher commissions than discount brokers
Current Promotion

60 days of commission-free trades with deposit of $10,000 or more

Charles Schwab
  • Beginner investors
  • Advanced traders
  • Investors seeking commission-free etfs
$4.95 $1,000 waived if you set up an automatic monthly transfer of $100 through direct deposit
Get started securely through Charles Schwab's website
1 Minute Review

Known for high quality competitive trading platforms and a large selection of commission-free exchange traded funds and no-transaction-fee mutual_funds. Consistently winning awrds with J.D Power, Fortune, and Inventors Business daily. Charles Schwaab is praised for it's heritage of innovation, modern wealth management capabilities, and customer service.

Pros
  • $4.95 standard trade commissions
  • Powerful research tools
  • Low cost index funds (no minimums)
  • Excellent customer service
Cons
  • $1,000 minimum balance
  • No Forex
Current Promotion

$100 referral award for first-time clients

Robinhood
  • Low cost stock trading
  • Beginners looking to start trading
  • Investors on the go
Free $0
Get started securely through Robinhood's website
1 Minute Review

Robinhood is a free stock trading mobile app that serves both iOS and Android devices. They offer an easy to use interface and have excellent integrations to easily deposit money and begin investing.

Pros
  • Free trading for all stocks
  • Multiple integrations for banking deposits
  • No transfer out fees
Cons
  • Lacks research reports
  • Some features require premium paid upgrades
Current Promotion

Invite a friend and get a free stock

eOption
  • Active traders
  • Experienced, knowledgeable traders
  • International traders
$3.00 broker assited orders an additional $6 $500
Get started securely through eOption's website
1 Minute Review

eOption is best known as a no-frills broker that prioritizes low costs over advanced tools. The platform has all the functionality an experienced trader would need at a discounted price, but investors should look elsewhere for research and educational information.

Pros
  • Low stock and option commissions
  • Low margins
  • Automated trading
Cons
  • Commissions on ETFs & mutual funds
  • Limited research and educational tools
  • Bare-bones platform
Current Promotion

None at this time