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Fidelity Penny Stocks and OTC Fees in 2024
Fidelity OTC fees: commission charged for buying pink sheets/OTCBB bulletin board/gray market/stocks
priced under $1. Fidelity penny stock policy. Can I trade OTC stocks on Fidelity?
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Fidelity OTC Stocks
If you are looking for a good broker to trade penny stocks, Fidelity could be a great choice. The broker offers listed penny stocks and Pink Sheets trading on the OTC marketplace.
Is Fidelity the best choice, though? Let’s find out.
Key Takeaways
• Fidelity offers over 2,600 stocks priced between $0.10 and $5, and there are no commissions for listed or OTC penny stocks.
• Fidelity provides many useful tools for penny stock traders, including a stock screener, a professional trading platform, advanced charting, and a mobile app for convenient trading.
• Firstrade, a viable alternative,
offers a much larger list of OTC Pink sheets than what is available at Fidelity. The broker also offers commission-free trading.
What is a Penny Stock?
Before we delve into Fidelity’s penny stock trading, let's define what a penny stock actually is.
The term 'penny stock' refers to a couple of different classifications of stocks. Penny stocks can be exchange-traded stocks priced under $5 or low-cost stocks trading on the OTCBB and OTC Pink markets. Each type of penny stock has its own pros and cons.
Listed Penny stocks trade on exchanges like the NYSE and NASDAQ. They are stocks of companies with a small market capitalization. These companies adhere to all the requirements of the major exchanges to ensure relative stability and lower risk.
Penny stocks trading on the OTC marketplaces, like Pink Sheets and Grey Market stocks, are companies that do not report earnings or any other data related to their financial health. Most people think of low-cost OTC stocks when they hear the term 'Penny Stock.' They are known for their low liquidity and volatile price action.
Fidelity’s Penny Stocks and OTC Stocks
At Fidelity, you can find many different types of penny stocks. All of the securities trading on major exchanges for less than $5 are available. A good selection of Pink Sheets is also available.
An example from a recent stock scan shows that for companies valued at less than $8.3 billion (micro and small caps), there are 2,600 listed stocks traded between $0.10 and $5.
Using the same search criteria along with a filter for stocks trading on the OTC marketplace, the list is narrowed down to 820 stocks.
Fidelity’s Fees
One attractive aspect of Fidelity's penny stock trading is that there are no transaction fees. The zero-commission policy extends to OTC stocks, giving penny stock traders a significant advantage. Many other brokers charge traders around $5 to $7 per OTC trade.
Firstrade as an Alternative
If you want to trade with a broker that offers a much more extensive list of penny stocks, Firstrade is a good alternative.
Like Fidelity, Firstrade has been serving investors for many years. The broker is well-established and safe to use. It also caters to penny stock traders and provides a much more extensive list of OTC Pink sheets. Another similarity to Fidelity is that Firstrade offers commission-free trading in both listed and OTC market stocks.
Firstrade’s Penny Stocks
As with Fidelity, Firstrade’s stock screener allows you to find a large number of penny stocks easily.
Using Firstrade’s screener, you will see as many as 3,900 OTC Pink and OTCBB penny stocks priced between $0.10 and $5. All of the screener’s results can be traded except for foreign stocks (with an ‘F’ in the ticker).
To find the screener, navigate to the broker's website's ‘Research & Tools’ section. From there, select ‘Screeners’ and then select the criteria that best suits your needs. Among the filter options are ‘Exchange’ and ‘Share Price,’ which you will need to narrow your penny stock search.
An important note about the share price filter is that Firstrade only allows trading on penny stocks priced at $0.10 or higher. Setting $0.10 as your minimum price will help filter out stocks that are not tradable.
Open Firstrade Account
Get up to $250 in transfer fee rebate.
Visit Firstrade Website
Updated on 7/5/2024.
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.
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