Etrade penny stocks

E*Trade Penny Stocks (OTC and Pink Sheets) in 2022

E*Trade OTC fees, penny stock commission charged for buying pink sheets/OTCBB bulletin board/gray market/stocks priced under $1. Rules and policy. Can I buy OTC stocks on E*Trade?

Can I Buy Penny Stocks on E*Trade?

If you want to find a good broker for trading penny stocks, E*TRADE might be a good option for you to try. E*TRADE offers an extensive selection of stocks priced under $5, and you can use any of E*TRADE’s trading platforms to take advantage of the potential price swings that penny stocks are known for. Whether you are looking for ‘penny stocks’ listed on U.S. exchanges or securities on the OTC markets, E*TRADE provides some good opportunities.   

Penny Stocks Availability at E*TRADE

For penny stock trading at E*TRADE, there are many options available to you. You can trade penny stocks (securities priced under $5) listed on one of the major U.S. exchanges or go with securities on the OTC markets if high volatility is what you are looking for.

No matter what your trading style happens to be, E*TRADE has something for you.

If you choose to trade exchange-listed penny stocks, you can do so as you would any other listed security on the platform. Select your ticker and place your order. There are no fees associated with trades at E*TRADE as long as those transactions take place on a major U.S. exchange.

Other services offered by E*TRADE, such as short selling, increasing buying power with margin, and using options contracts, are also possible with securities listed on exchanges.

When it comes to trading OTC securities, E*TRADE does charge a fee.  

Scanning for OTC Securities at E*TRADE

Scanning for OTC stocks at E*TRADE is a relatively simple process, but the scanner doesn’t have OTC as a search criterion. That means scanning for pink sheets and other securities on the OTC marketplace is not as straightforward as it could be. Still, it is possible to search for tickers directly or run scans based on price, volume, percent change, etc.

Once you get your scan results, you will still need to filter out stocks based on their exchange type, which could be tedious. Therefore, it is recommended to use a third-party penny stock scanner if you plan on trading pink sheets at E*TRADE.

ETRADE Penny Stocks Trading

E*Trade Penny Stock Fees

E*Trade penny stocks fee $0
E*Trade OTC, OTCBB, and gray market stocks fee $6.95 ($4.95 if 30 equity trades made per quarter)
E*Trade large order surcharge $0
E*Trade ECN surcharge $0

A consideration for many investors trading penny stocks is the commission fee schedule. Depending on how many trades you plan on putting on, the fees for making those trades could significantly impact your bottom line.

At E*TRADE, commissions for OTC trading are pretty steep. The base rate is $6.95 per trade, and the price goes down to $4.95 if you make more than 30 trades in a single quarter.

The commissions are the same whether you are trading OTC Pink Sheets, OTCBB, or OTC ADRs.

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Firstrade is a No-Fee Alternative for OTC Trading

A clear alternative to E*TRADE for penny stock trading is Firstrade, especially if you are concerned with fees and commissions. At Firstrade, you never have to pay commissions on OTC trades, which is quite nice.

Firstrade has a large selection of Pink Sheet and OTCBB securities to choose from, and the onboard screener is not bad – more on that further down.  

One thing to note about scanning for and trading penny stocks at Firstrade is that a new ruling from the Securities and Exchange Commission (SEC) makes the grey market, Expert Market, and Pink No Information stocks untradable.

If you are new to penny stock trading, the new rule may not mean anything. More experienced traders will notice the difference, however. The ruling affects Firstrade and every other broker licensed in the U.S.

Firstrade Penny Stock Fees

There are no commissions for OTC trading at Firstrade.

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Types of Penny Stocks at Firstrade

There are three main types of penny stocks available at Firstrade. You can find exchange-listed stocks priced under $5, and you can find ‘true’ penny stocks trading on the OTC marketplaces.

At Firstrade, there are two primary sources of OTC penny stocks, and you can specify the type you prefer as an option on the screener. There are OTCBB and OTC Pink Sheet securities.

Screening for OTC Securities at Firstrade

The Firstrade stock screener is located under the Research & Tools menu on the main page. A dropdown menu appears, and you can select ‘Screeners’ to get the process started.

With the scanner open, there are a few options that you will need to select to generate a listing of OTC penny stocks. Select ‘Exchange’ and ‘Share price.’

The ‘Exchange’ option allows you to select ‘OTC BB’ and ‘OTC Pink,’ and the ‘Share Price’ option allows you to set a minimum share price of $0.10.

Now would be a good time to mention that Firstrade no longer supports trading sub-penny securities. You can trade securities that are priced at $0.10 and above. Defining that minimum share price in your scan will ensure that your results are tradable.

Once your list of OTC penny stocks populates, it is recommended that you use the ‘Daily Vol’ column to sort the results based on their daily buzz.

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Firstrade Review

Trading Penny Stocks at Firstrade

The order ticket for penny stocks is easy to use and has all the functionality you expect from a modern broker. You can set your limit price, stop order, and execution instructions. There is also a convenient option to view a chart and other company-specific information.  

penny stocks order ticket

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Updated on 5/10/2022.

Ben Wright
About the Author
Ben Wright is an investor, a trader, an educator, and something of an explorer. He spends his days in the markets when he is not teaching or spending time with his family. Ben writes about stockbrokers, markets, investment vehicles, promotional offers, and tools that help investors make the most of their time in the markets.