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, 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 trades:


4-star brokerage firm rating

TDAmeritrade review

Best Penny Stocks Broker Pricing


InvestmentsCommissions
Stocks and ETFs $9.99
Stocks and ETFs broker assisted $49.99
Stocks and ETFs interactive voice response (IVR) telephone system $34.99
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\TDA minimum deposit to open account $0 for cash account, $2,000 for margin account
FeesTD Ameritrade fees


TD Ameritrade Advantages

  • No surcharges on penny stocks, large orders, or after-hours trading
  • Large and well known company with 126 local branches
  • Two excellent trading platforms: ThinkOrSwim and Trade Architect
  • Practice trading without risking your own money using paperMoney
  • No-fee IRA accounts
  • No account maintenance or inactivity fees
  • Rich selection of independent, third-party research from 12 firms (Standard & Poor's, Morningstar, Jaywalk, TheStreet, etc.)
  • Large number of mutual funds - over 13,000 available; 2,500 NTF (no-transaction fee) funds
  • Free DRIP: dividend reinvestment plan


TD Ameritrade Disadvantages

  • At $9.99 for stocks and ETFs and $49 for mutual funds, commission rates are very high
  • Extremely high margin rates


Best Penny Stocks 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. Continue TD Ameritrade Review.


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, 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, 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 7/25/2014.



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