Best penny stock brokers

Best Penny Stocks Brokers


Review best penny stocks brokerage firms in 2014. Top-rated online trading accounts with flat fees for Pink Sheets/OTCBB/stocks priced under $1 trades.


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 March of 2009. Now its price fluctuates between $4-$5 per share (considering reverse stock split) and some analysts believe it will triple within next 2 years. It would have been silly not to buy, or, even worse, to sell Citibank shares in March of 2009 ONLY because of "I won’t allow penny stocks in my portfolio" rule.

So, in rare occasions, we want to be able to trade stocks under $1. There is one problem with this though: many online brokerage firms are trying to overcharge investors for penny stocks trades. The most common way brokerage companies do this is by putting 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 $5, this trade will cost you $5 + 5,000 * $0.01 = $55! 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 (2,000 or 5,000 shares are the most common numbers). This is not as predatory as previous case, but it still makes trading penny stocks very expensive.

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


4.5-star brokerage firm rating

OptionsXpress review

Best Penny Stocks Broker Pricing


InvestmentsCommissions
Stocks and ETFs$8.95
Options$14.95 for up to 10 contracts, $1.50 per contract for over 10 contracts
Options Active Traders$12.95 for up to 10 contracts, $1.25 per contract for over 10 contracts
Mutual funds $9.95
Bonds$5 per bond, $9.95 minimum
Futures$3.50 per contract
Forex No commissions. optionsXpress receives compensation through the bid/ask spread.
Options on Futures $3.50 per contract
Spreads, Straddles & Combos2-10 contracts - $12.95 flat (active traders) $14.95 flat (non-active traders); 10 + contracts - $1.25 per contract (active traders); $1.50 per contract (non-active traders)

Investments stocks, options, mutual funds, bonds, futures, options on futures, covered calls, forex, ETFs
OptionXpress minimum deposit to open account $0 for cash account, $2,000 for margin account
FeesOptionsXpress fees


Optionsxpress Advantages

  • Very cheap mutual fund commissions at $9.95 per transaction
  • Best customer service
  • Many well-designed trading tools and cutting-edge trading technology
  • Free streaming quotes
  • $100 bonus for opening new account
  • No fee IRA accounts
  • Great research
  • Free virtual trading
  • Helpful investor community
  • No money down to open new account
  • Free account transfers
  • Free instructor-led online classes
  • Free broker-assisted trading
  • Free DRIP: dividend reinvestment plan (contact customer service to set up)


Optionsxpress Disadvantages

  • Higher than average commissions on stocks and ETFs


Best Penny Stocks Broker Review


Optionsxpress offers flat-rate, $8.95 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 (unless its large block transactions requiring special handling) and fees. Continue Optionsxpress Review.

Link To OptionsXpress Promotion - $100 bonus:


Open Optionsxpress account

4-star brokerage firm rating

Etrade Review

Best Penny Stocks Broker Pricing


ProductPrice
Stocks and ETFs $9.99 ($7.99 if making 150+ trades per quarter)
Stocks and ETFs broker assisted $34.99
Options $9.99 + $0.75 per contract ($7.99 + $0.75 if making 150+ trades per quarter)
Mutual funds $19.99
Futures contracts $2.99 per contract, per side + fees
Fixed Incomemarkup or markdown and any transaction fee will be included in the price quoted
Forex No commissions. Etrade receives compensation through the bid/ask spread.
Bonds$1 per bond (minimum $10, maximum $250) for online secondary market trades. Includes Agency bonds, Corporate bonds, Municipal bonds, Brokered CDs, Pass-thrus, CMOs, Asset Backed Securities.

Investments stocks, bonds, mutual funds, futures, forex, fixed income, options, ETFs
Etrade minimum deposit to open account $500 for non-retirement cash account, $0 for retirement cash account, $2,000 for margin account
FeesEtrade fees


Etrade Advantages

  • No account maintenance or inactivity fees
  • Large and well established company
  • Powerful trading tools
  • No IRA account fees, and no minimums with electronic statements and confirmations
  • Low minimums to open accounts: $500 for cash account, $0 for retirement cash account, $2,000 for margin account
  • Banking products available: checking, savings, money market accounts, CDs, and credit cards
  • No surcharges on large orders or penny stocks
  • Great research amenities from S&P, MorningStar, Thompson Reuters, Credit Suisse, and Smart Consensus
  • Access to trading on 40 foreign exchanges
  • Free streaming quotes
  • Very broad selection of products: 8,000 mutual funds, every ETF sold, over 30,000 bonds, securities from 77 international markets, 1,300 no-load, no-transaction fee mutual funds, and 90+ commission-free ETFs


Etrade Disadvantages

  • High commissions on stocks and ETFs
  • High margin rates
  • $0.005 per share surcharge on extended hours trades (ECN fee) and on trades executed through E*TRADE Pro at an ECN during both regular market and extended hours sessions
  • E*TRADE Pro platform is available at no charge only to customers who execute at least 30 stock or options trades during a calendar quarter


Best Penny Stocks Broker Review


Etrade, charges $9.99 per trade on all trades (except ECN trades) including Pink Sheets, OTCBB, and on stocks priced less than $1. There are no penny stock and large order surcharges and fees. If you trade a lot, you could get lower commissions. Continue Etrade Review.

Link To Etrade Promotion - 60 days free trading + up to $600:


Open Etrade account

This article was updated on 9/24/2014.



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