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Vanguard Penny and OTC Stocks Trading


2020 Vanguard penny stock commission and fees charged for buying pink sheets/OTCBB/stocks priced under $1. Is Vanguard good for (offers) penny stocks trading?



Does Vanguard Offer Penny Stocks?


Yes, Vanguard customers can trade penny stocks. Traders can search for over-the-counter equities using the broker’s handy stock screener. It has the ability to look specifically for securities that trade in the OTC marketplace. Strangely, it only returns 39 choices. The screener cannot search for any stock that is priced under one penny. The handful of results that are displayed can be sorted by some important criteria, including market cap, shares outstanding, and number of employees. Curiously, some OTC stocks have zero employees.


Vanguard Penny Stock Fees


Vanguard as well as companies in the Best Penny Stock Firms list do not have penny stock/pink sheets/OTCBB fees and surcharges.


Comparison


While Vanguard’s screener can search by exchange, it doesn’t generate a lot of results. Fidelity’s screener displays 940 over-the-counter stocks, while TD Ameritrade shows 4,622. E*Trade’s screener cannot search for securities on specific exchanges.

Vanguard’s policy not to charge anything extra for penny stocks is much better than WellsTrade, who charges a minimum of $34.95 for OTC trades, with a maximum of 3.5% of trade value. It is, however, worse than Firstrade's $0 commission rate on all OTC stocks.

Firstrade provides access to OTC and penny stocks with $0 commission, and it's the best option for OTC traders on the market.


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OTC Equities Available at Vanguard


After running a screen, just click on a ticker symbol to read more about the stock on its profile page. Because these are over-the-counter securities, the information on them may be incomplete or even alarming compared to regular equities.

One stock that appears in Vanguard’s search results is Acusphere, Inc. The ticker symbol is ACUS, and its last trade price was just 2¢. The day before it was trading at 1¢, so it experienced a 100% gain in one day. There is no news available for the stock, and no earnings have been reported.

A second example is BNNP, the Bank of Napa. This stock has a much higher share price—$13. But like the previous stock, BNNP has no reported earnings. There are no analyst reports available, and the bank’s financial statements are patchy and incomplete.


How To Buy Penny Stocks on Vanguard


If you’ve decided that you are able to take on the extra risk that is inherent in the OTC marketplace, you can submit an order just as you would for a major stock. Clicking on ‘I want to trade this stock’ on the profile page will produce an order form. Vanguard only accepts limit orders for penny stocks. Some OTC equities may not be available for on-line trading at Vanguard.


Vanguard OTC Stocks


The broker’s regular commission schedule applies to OTC securities. The trading fee is $0 to $20, depending on account size and trading frequency. Most traders will pay $7.


Common Risks in the OTC Marketplace


Obviously, the over-the-counter environment is very different than the New York Stock Exchange. America’s major exchanges have strict listing requirements and stringent government regulation. The OTC markets, however, don’t provide this level of protection. Volatility tends to be high among OTC stocks, and bid-ask spreads are frequently very large. Liquidity can also be a problem.


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Vanguard Overview

In addition to the Vanguard mutual funds, the broker also offers over 16,000 non-Vanguard funds. This is one of the largest mutual fund offerings in the industry. Many of these carry no loads and no transaction fees. Vanguard also manages 127 of its own mutual funds. The Vanguard funds have low expense ratios and come with no load and no transaction fee.

Vanguard changed the way many investors and institutions looked at investing by championing the idea of low cost investing. Their stance on lowering expense ratios, and their impact on accounts over a long time period, has permanently changed the investing landscape. Vanguard’s services offer a huge amount of flexibility and numerous options for very low cost investing in Vanguard products, especially for long term investors.

Vanguard Brokerage Services customers have access to all Vanguard funds as well as many investment options outside the Vanguard family. With that said, keep in mind that despite a heavily promoted “commitment” to minimizing fees, the fee structures are extremely variable and can be quite complicated depending upon the type of investments you are making. With that said, it remains clear that Vanguard is a good choice for IRA investing, and that with a little due diligence you will be able to take full advantage of Vanguard’s many low-cost investment options.

Vanguard, despite being a fantastic company overall, does not offer the best online investment platform on the market… unless an investor wants to buy Vanguard funds.

Vanguard Brokerage trading tools are not keeping up with the industry. Users can't modify their orders: they have to cancel and then resubmit them (!). The charts are poor with no possibility of saving user indicators.

Vanguard provides research tools that can help users find stocks, ETFs, CDs, or bonds that meet their criteria. For example, the Stock Screener tool enables users to sort through over 8,700 securities to identify investment options according to performance goals, risk tolerance, and sector or industry of interest. Lists of stocks or other instruments can be saved for future investing, or can moved directly to the online trading interface. But, comparing to competition, the research tools are weak and Stock Screener is really disappointing.

The tools for entering orders will be familiar to any investor with online trading experience. Advanced investment tools allow users to perform options trading, trade on margin, or set up CD or bond ladders. There are educational materials on their website that cover these instruments.

Vanguard’s user account home page looks outdated, but it contains a lot of information. It allows users to easily view account balances, allocation ratios, and performance. Users can expect the road to get a little bumpier once they try to venture away from the main page. The menus on top don’t offer the best descriptions of their intended function and once a link is clicked, the page it brings the user to is still somewhat confusing. This is mainly because the majority of pages on Vanguard’s site are excessively wordy.

Fortunately, once a user finds their way around the Vanguard website they are able to discover lots of helpful tips. Foremost among these is their “Insights” section that acts as a blog for some of the top minds over at Vanguard. Investors can find information explaining fund fees, Vanguard’s investment outlook, global market news, domestic market news, and more.