Penny stock trading is attractive to many investors. It has the hope and sometimes the potential to show huge returns, and quickly. There have been a number of success stories that keep the interest alive.
Penny stocks tend to be volatile, and if you are on the right side of that movement, you can see some success in trading them.
Best Penny Stock Brokers:
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.
Best Penny Stock Brokers – Summary
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.
Lower fees, reputable companies, and amazing research reports. TD Ameritrade and E-Trade are at the top of our list. They cover all the bases necessary to put you in position to make sensible penny stock trades.
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.
It’s the little things. Moomoo’s conditional alerts generate automatic notifications based on price movement and change in indicators. The powerful app also offers high-grade account protection. The powerful app’s intuitive investing platform is perfect for both brand-new investors and professional traders.
- Charts and technical indicators, including candlestick, bar and MA, BOLL, MACD, KDJ
- Integrated research ratings
- Capital trends
- Graphical financial reports
Plus, it’s commission-free for U.S stocks, ADRs, ETFs and options. Learn more about Moomoo.
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.
Compare All of Our Top Penny Stock Broker 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.
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