Best Penny Stock Brokers


Best penny stock brokerage firms in 2017. Low cost online trading accounts with flat fees on Pink Sheets/OTCBB/stocks priced under $1.


Conventional wisdom says that buying stocks priced $1 or less per share is extremely risky and it’s a bad investment. In most cases - we agree. But in every rule there are exceptions. For example, Citibank stock was basically a penny stock in February of 2009. Now its price fluctuates between $4-$6 per share (considering reverse stock split) and some analysts believe it will triple within the next 2 years. It would have been silly not to buy, or, even worse, to sell Citibank shares in February of 2009 ONLY because of "I won’t allow penny stocks in my portfolio" rule.

Example above shows that there are occasions when we want to be able to trade stocks under $1. There is one problem with this: many online brokerage firms are trying to overcharge investors for penny stocks trades. The most common way brokerage companies do this is by imposing a $0.01 or similar surcharge on each share of stock priced below $1. In this case if you buy 5,000 shares of penny stock and regular stock commission is $10, this trade will cost you $10 + 5,000 * $0.01 = $60! It’s a bit high, to say the least. Other brokerage houses came up with less strict rule: surcharge (usually $0.01) on all shares above certain limit (1,000 and 5,000 shares are the most common numbers). This is not as predatory as the previous case but it still makes trading penny stocks very expensive.

Fortunately, there are very highly rated brokerage houses that don’t surcharge customers for trading stocks priced under a dollar and for placing large-size orders. Let's take a closer look at the best stock brokers for penny stock trading:



TD Ameritrade: Best Penny Stock Broker Pricing


InvestmentsCommissions
Stocks and ETFs $9.99
Stocks and ETFs broker assisted $49.99
Options $9.99 + $0.75 per contract
No-load mutual funds $49.99
Treasuries at auction $25
All other bonds and CMOs, CDs on a net yield basis
Futures $2.25 per contract plus exchange & regulatory fees
Forex Non-commission currency pairs trade in increments of 10,000 units (and do not contain a "#" symbol suffix). There are no additional fees or charges.

Investments stocks, mutual funds, options, ETFs, bonds, CDs, UITs, futures, and forex
TD Ameritrade minimum deposit to open account $0 for cash account, $2,000 for margin account
FeesTD Ameritrade fees
Promotion and login linksTD Ameritrade login, TD Ameritrade promotions and TD Ameritrade referral


TD Ameritrade Advantages

  • Very few fees and no surcharges on penny stocks, large orders, or after-hours trading
  • Large and well-known company with 126 local branches
  • Two excellent trading platforms available to all clients: Thinkorswim and Trade Architect
  • Users can practice trading without risking real money using PaperMoney virtual trading
  • Easy access to myTRADE online trader community
  • No account maintenance or inactivity fees
  • Free streaming quotes, including Level II
  • Best selection of independent, third-party research from 13 firms (Standard & Poor's, Morningstar, Jaywalk, TheStreet, etc.)
  • 100+ ETFs with no commissions
  • Large number of mutual funds - around 12,000 available; 4,051 NTF (no-transaction fee) funds
  • Free DRIP (dividend reinvestment plan)
  • No-fee IRA accounts


TD Ameritrade: Best Penny Stock Broker Review


TD Ameritrade offers flat-rate, $9.95 per trade commission on any trades including Pink Sheets, OTCBB, and stocks priced under $1. The firm does not have penny stock and large order surcharges and fees. Unadvertised secret is that TD Ameritrade's commissions are negotiable for active traders.

TD Ameritrade offers very powerful and comprehensive trading tools, including two great trading platforms - Thinkorswim and Trade Architect (Trade Architect review). The company bought the most innovative online brokerage firm - Thinkorswim (Thinkorswim review) - and now offers to its clients Thinkorswim's best-in-class trading software, customizable charts, integrated one-click trading, and technical tools.

The Thinkorswim is a completely free desktop application that needs to be downloaded from the TD Ameritrade website. To be eligible one only needs to be a client of TD Ameritrade. Within the Thinkorswim platform users can trade almost every type of investment that they can think of: stocks, options, FOREX, futures and others. In addition, this advanced trading software offers fantastic technical analysis tools for chart readers, which is critical to many traders.

The charting and trading screens are very customizable to user's preferences. Users can move windows around, change colors and add or subtract hundreds of preset technical studies, including some that can only be found in Thinkorswim such as "market forecast", "trade the market" and others. Of course, there are other advanced features such as Fibonacci analysis tools and drawing tools to draw support and resistance lines.

Very advanced mobile smartphone and tablet applications are available for iPhone, iPad, Windows, Android, and Blackberry users as well.

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TradeStation: Best Online Penny Stock Broker Pricing


InvestmentsCommissions
Stocks and ETFs flat-rate plan $9.99 (1 to 9 trades/month); $7.99 (10 to 29 trades/month); $6.99 (30 to 99 trades/month); $5.99 (100 to 199 trades/month); $4.99 (200 or more)
Stocks and ETFs per-share plan $0.01 per share first 500 shares, $0.006 per share after that; $1.00 minimum per trade
Options per contract plan $1.00, no base or ticket charge, market or limit orders
Options per trade plan $9.99 + $0.70 per contract (1 to 9 trades/month); $7.99 + $0.50 per contract (10 to 29 trades/month); $6.99 + $0.40 per contract (30 to 99 trades/month); $5.99 + $0.30 per contract (100 to 199 trades/month); $4.99 + $0.20 per contract (200 or more)
Futures $0.25 - $1.20 per side, per contract + exchange, regulatory & overnight fees
Mutual funds $14.95
Bonds $14.95 + $5 per bond
Forexcommission-free with tight spreads and fractional pips
OTCBB $9.99 (100,000 share position maximum)
Pink Sheet Stocks $9.99 (100,000 share position maximum)

Investments stocks, options, mutual funds, bonds, futures, ETFs
Tradestation minimum deposit to open account $5,000 for non-daytraders, futures and forex accounts, $5,500 for futures and forex IRA accounts, and $30,000 for daytraders
FeesTradestation fees
Promotion linkTradestation promotions


TradeStation Advantages

  • Very low commissions for active traders
  • Great direct-access platform
  • Best charting package
  • Trading modeling functionality
  • Rich selection of investment products
  • Active online trader community
  • Good mutual funds pricing at $15 per transaction


TradeStation: Best Online Penny Stock Broker Review


TradeStation Securities offers three commission plans for stocks and ETFs: pay-per-share, flat-rate, and unbundled. Flat-rate commissions are higher than the average in the industry - $9.99 per stock and ETF trade if making less than 10 trades per month, but it gets much cheaper for active traders with rates dropping to as low as $4.95. Pay-per-share commission plan, on the other hand, is very cheap: first 500 shares are $0.01 per share, $0.006 per share thereafter, with $1 minimum per trade. Unbundled plan should only be used by professional traders.

There is potentially a huge additional cost for account holders: customers have to trade at least 5,000 shares or 50 options contracts a month to avoid very steep $99.95 monthly fee (excluded from the fee are also accounts with $100,000 balance and clients making 10 round-turn futures or futures option contracts or 50 round-turn single stock futures).

TradeStation is known for offering one of the best trading platforms among online brokers with powerful strategy creation, useful testing tools, and custom-built analytics. The firm is targeting very active investors (daytraders), and it is most popular among futures traders because of great software and low futures commissions.

TradeStation has no surcharges no penny stock trades. When per-trade commission plan is selected large size trades are also well-priced, especially for active traders.

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Updated on 1/12/2017.


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