Can I Trade OTC Stocks on Robinhood?
If you want to trade OTC stocks at Robinhood, we have the details you need. We’ll also give you an alternative that may be a better option.
Robinhood for OTC Stocks
Robinhood is not well known for its OTC stocks. It does offer
limited access to the over-the-counter
marketplace, though.
A good place to go on the Robinhood website to find OTC securities is on the Trending Lists
(the broker-dealer does not have a stock screener). These are groups of stocks and ETFs. Most of the securities in the Trending Lists trade on the major exchanges, but a few do trade over the counter.
Typically, the OTC stocks are in the foreign groups. Usually, these will be either Europe or China.
In the China list, we found Weichai Power, a diesel engine manufacturer. Trading over the counter in the United States, it has a ticker symbol WEICY (the Y indicates the issue is an OTC American Depository Receipt).
Robinhood’s profile for Weichai Power indicates that it pays a dividend (annual yield currently over 2%), but remember there must be a currency conversion for this to take place, so there is currency risk involved.
Average daily volume for WEICY is over 23,000 shares, according to Robinhood’s site, so it’s pretty actively traded. This level of volume will help to keep the bid-ask spread as low as possible.
Robinhood only accepts whole-share orders on the entry side for WEICY, but otherwise OTC orders are entered in the same way as regular stocks.
Robinhood charges no commissions for stock trades on the over-the-counter marketplace and regular exchanges.
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Penny Stocks at Robinhood
Stocks below $5 in market value that trade on the major national exchanges like the Nasdaq are available at Robinhood. Unfortunately, it’s not possible to search entire exchanges for low-priced stocks due to the lack of a screener, but the securities in the Trending Lists mentioned above can be sorted by price.
One penny stock on the Nasdaq we found at Robinhood is Exela Technologies (ticker symbol XELA). This is a business process automation company. Its stock price at the time of publication is around 75¢, so this is a very cheap stock. Robinhood only accepts whole-share orders on the buy side (as with Weichai Power).
According to Robinhood’s profile for XELA, the company does not pay a dividend. All of its recent quarterly earnings reports at Robinhood are negative. It has an average daily volume of over 71 million shares, which means a lot of traders are interested in this stock.
Firstrade as an OTC Alternative
Because Robinhood has just a handful of OTC stocks, you may want to look elsewhere for over-the-counter trading, especially if you have your eyes set on trading large numbers of stocks.
Firstrade has 15,000+ of stocks that trade over the counter, and unlike Robinhood, it does have a screener for these investments. Like Robinhood, Firstrade charges zero commissions for stock trades and has zero surcharges for OTC trades.
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Get up to $4,000 cash bonus + $200 in ACAT rebate!
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Searching for OTC Securities at Firstrade
Firstrade’s website is the place to look for
over-the-counter securities. Hover over Research & Tools in the top menu and then click on Screeners. On the next page, there will be three screeners. Make sure you’re on the Stocks Screener tab.
On Firstrade’s equity screener, there are many search variables. One of them is exchange, and here you will find the over-the-counter marketplace. There are two choices: OTC BB and OTC PINK. The Bulletin Board was terminated in November of 2021, so the first option is obsolete. We did find 11 securities by doing a search for OTC BB, but none of the assets in the results are tradable. Under OTC PINK, we found more than 15,000 stocks. These do have profiles and are tradable.
After performing a search, it’s possible to narrow down results by selecting other search criteria besides exchange. These include market cap, 52-week low, current price, and PEG ratio. There are many others.
In the filtered results, there will be many sortable criteria. These don’t have to be specified in the original search. A scan can be saved for later use, a helpful feature.
Clicking on a ticker symbol in the list of search results generates a profile page for that security.
Example of an OTC Stock
Using the OTC PINK exchange on Firstrade’s search engine, we found 1st Colonial Bancorp, Inc. Trading with ticker symbol FCOB, this is an American company with a market cap of around $55 million. That’s very small, but Firstrade’s profile, which is taken from Morningstar, shows a dividend yield of over 50%, which is tremendous.
1st Colonial operates in New Jersey. Founded in 2000, the stock has a long history. Most recently, the company has reported a string of positive earnings, quarter by quarter. Its most recent annual revenue was just north of $20 million, another very small number.
Placing a trade for an OTC stock at Firstrade is very straightforward and follows the same procedures that a regular stock requires. On the website, simply click on a buy or sell button and enter the necessary details. On the mobile app, tap on the Trade Stock button. Because the mobile app doesn’t have a stock screener, you’ll have to enter a ticker symbol and land on the stock’s profile by tapping on the company name in the drop-down list of choices.
Firstrade’s Rules on OTC Stocks
Firstrade has a minimum share price of 10¢ on the buy side. Also, the broker-dealer requires the use of limit orders for OTC securities and does not permit extended-hours trading of these securities.
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Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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