Can I Buy Penny Stocks on Fidelity?
Fidelity might be a good broker to try if you want to trade penny stocks (Pink Sheets, gray market, and OTCBB). The broker offers professional trading software, commission-free OTC market trades for U.S.-listed stocks, and several account types to choose from.
Is Fidelity as good as it gets for trading penny stocks in 2023? We think not. Keep reading to find out why.
Trading Penny Stocks at Fidelity
Fidelity provides its customers with commission-free penny stock trading on all its trading platforms. Investors can trade pink sheets and other OTC securities at Fidelity just as they would any other security.
Using the trade ticket on the mobile app, the website, or the professional desktop software, simply enter the ticker for your penny stock, decide on a price to buy or sell, set up your trade parameters, and submit your transaction request.
Is Fidelity Good for Trading Penny Stocks?
There are a few things to remember if you want to trade micro-cap stocks at the popular commission-free broker.
Before placing your first OTC penny stock trade at Fidelity, you must first get approval. It’s not hard to do, but it is an extra step.
Another thing to consider is that Fidelity offers fewer pink sheet stocks than some of its competitors – Firstrade comes to mind (continue reading to learn more about why Firstrade is an excellent alternative for penny stock trading).
Here’s what it looks like to trade a penny stock on Fidelity’s website.
Activating Penny Stock Trading on Fidelity
To begin trading penny stocks in your Fidelity account, you must ensure the feature is on.
Start with navigating to your ‘Accounts’ page, then ‘Balances.’ Under ‘Trading Profile,’ select
‘Trade Restrictions & Violations.’
A ‘Trading Profile’ window will pop up with a few tabs. Choose ‘Account Agreements’ and then look to
the bottom of the list for ‘Penny Stock Trading’. You will need to check if you’ve signed up for penny stocks.
When you start the process, you’ll see some important information to read, and then Fidelity walks
you through the rest of the process.
You will verify your identity, select your account, and sign an agreement.
Scanning for Pink Sheets at Fidelity
Fidelity has an excellent screener that can be used to filter vast quantities of data. Fidelity’s screener is also relatively easy to use, thanks to the thematic approach and availability of selectable criteria.
The screener can be used to find penny stocks to trade, but it is limited. As previously mentioned, Fidelity does not provide an extensive listing of OTC Pennies. As a result, the search results you receive may not be as rich as what you are looking for.
Trading Fees for Penny Stocks at Fidelity
Fidelity does not charge commissions for penny stock trades. However, some fees can hit your account if you don’t read the trade ticket thoroughly.
One is a foreign security settlement fee. This is a fee of $50, and it results from transacting in foreign stocks, including OTC Penny stocks.
Another is a fee for Pink Sheets that are not Depository Trust Company (DTCC) eligible. The DTCC provides settlement services that lower costs, among other things. OTCBB stocks not included in the program come with a $50 fee.
Firstrade as a Penny Stock Alternative
With so many limitations and a few surprise fees associated with pink sheet trading at Fidelity, you
will be happy to know that there is another decades-old broker that does penny stocks better.
Unlike Fidelity, Firstrade offers commission-free trading on securities listed on the OTCBB and OTC Pink marketplaces with no hidden fees. In addition, Firstrade gives access to a much longer list of penny stocks: 15,000+ vs 900+.
Firstrade Penny Stock Trading
To trade penny stocks at Firstrade, you can place your order directly on the order ticket or use the screener results as a starting point.
Let’s have a look at how to place penny trades on Firstrade.
Open Firstrade Account
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Firstrade Order Ticket
The Firstrade order ticket is very easy to use. You’ll find the ticker entry field, the order type selections, and options for created bracket orders. The order ticket also features helpful information like a detailed chart, current price, volume, bid-ask spread, company profile, percent change, and more.
Firstrade Penny Stock Screener
If you don’t already know what ticker you want to trade, using Firstrade’s screener can certainly give you plenty to choose from.
To find the screener, navigate to ‘Research & Tools.’ Choose ‘Screeners’ from the dropdown menu and begin selecting criteria for your search. To find good Penny stock candidates, start with the ‘Exchanges’ option and then ‘Price.’
The ‘Exchanges’ option allows you to select ‘OTCBB and OTC Pink,’ while the ‘Price’ option allows you to set a minimum and maximum price for the securities you search for.
This is probably a good time to point out that Firstrade no longer allows Penny stock trading for securities under $0.10, so setting that price as your minimum in the screener ensures you’ll get actionable results.
Open Firstrade Account
Get up to $4,000 cash bonus + $200 in ACAT rebate!
Open Firstrade Account
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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