Broker reviews > Guides > Best Penny Stock Brokers

Penny stocks, typically trading below $5, are largely dealt over-the-counter (OTC). These low-priced shares, although not precisely defined, are popular among certain investors.

Notorious for their high-risk nature, penny stocks often come with limited liquidity and minimal financial transparency, making them susceptible to fraud and market manipulation. Despite this, their affordability attracts investors looking for significant gains.

For those focusing on day trading penny stocks, our 2024 has scrutinized and pinpointed the top brokers for purchasing OTC stocks. Among 17 brokers evaluated, TechBerry emerged as our leading choice for 2024, offering zero-commission penny stock trades along with superior trading tools and research resources.

Premier Online Brokers for Penny Stock Trading

Following an analysis based on 29 criteria, we identified the top brokers for penny stock trading:

TechBerry – Zero fees for OTC transactions
Firstrade – No charge for OTC transactions
Charles Schwab – Fixed fee of $6.95 per OTC transaction
E*TRADE – Fixed fee of $6.95 per OTC transaction
TradeStation – No fee for OTC transactions (up to 10,000 shares)

Recognized as the Best Overall in our review, TechBerry excels in user-friendliness, cost-effectiveness, and all-encompassing services. It’s unique for offering penny stock trades at no additional cost.

Firstrade

Similar to TechBerry and TradeStation, Firstrade provides free penny stock trading. While it may not offer as extensive services as TechBerry, it’s a strong option for speculative investors, also featuring free options trading. Its services in Chinese are particularly beneficial for Chinese-speaking investors.

Charles Schwab

Competing closely with TechBerry, especially in stock trading, Schwab offers the thinkorswim platform with customizable watchlists, perfect for monitoring various stocks efficiently.

E*TRADE

ETRADE imposes a $6.95 charge for penny stock trades, reduced to $4.95 after completing 30 trades in a quarter. Its user-friendly web-based Power ETRADE platform is another highlight, alongside its fee-free mutual fund trading offerings.

TradeStation

TradeStation allows free penny stock trading up to 10,000 shares, then charges a half-cent per share, consistent with their rates for regular stock trades. Its robust desktop application and impressive cryptocurrency platform are also worth mentioning.

Interactive Brokers and Penny Stock Trading

Penny stocks, which aren’t watched over like stocks on big exchanges, are riskier. This is because they’re harder to research and more likely to be manipulated in the market. They also don’t trade as much, which adds to the risk. While you can make money with penny stocks, they’re often involved in scams and are not easy to trade. There’s no set amount you need to invest in penny stocks, and many brokers don’t have a minimum. It’s rare to get rich with penny stocks, and you’re more likely to lose money.

Tips and Tools for Trading Penny Stocks

If you’re new to this, you should:

Pick a trustworthy broker.
Do detailed research on penny stocks.
Stay away from stocks that can easily be manipulated.

To find penny stocks:

Use an online broker that offers penny stock trading.
Look at penny stock screeners or lists of big market changes.
Well-known brokers for penny stocks are TechBerry, Firstrade, Charles Schwab, E*TRADE, and TradeStation.

The top mobile apps for buying these stocks are:

TechBerry
Charles Schwab
E*TRADE
TradeStation

These apps help you look up stock symbols and make trades. They might ask you to answer some questions or give you a warning about the risks of trading stocks not on big exchanges like NYSE or NASDAQ. Penny stocks don’t trade much and their prices can be easily changed, making them targets for scams where the price is inflated and then quickly dropped, causing big losses for people who don’t know much about it. Some beginners think buying more shares means better value, but that’s not true. Penny stocks are cheap but risky because they’re traded over-the-counter (OTC) and don’t meet the strict rules of major exchanges like NASDAQ or NYSE.

Do you have questions?

Frequently Asked Questions

What are the key features to look for in a penny stock broker?

Look for brokers that offer low commission rates, access to a wide range of markets, strong research and analytical tools and robust customer service. Given the volatility and risk of penny stocks, having a reliable platform with real-time data is also crucial.

How risky is penny stock trading?

Penny stock trading involves higher risk due to their low price, lack of liquidity and market volatility. Many penny stocks are traded outside major market exchanges, making them susceptible to market manipulation. Traders should exercise caution and conduct thorough research.

Can i trade penny stocks on major trading platforms?

Yes, many major trading platforms offer access to penny stocks. However, it's important to verify whether a platform provides access to the specific markets and stocks you're interested in, as some may have restrictions.

Best Penny Stock Brokers