Best Pink Sheets Broker
If you are looking for a good broker for OTC trading, Firstrade should be high on your list of considerations. With commission-free trading and one of the industry's most extensive listings of OTC stocks, Firstrade is hard to beat. Is Firstrade the best broker for OTC trading? It depends on what kind of trader you are.
Keep reading to see how Firstrade can benefit your OTC trading.
Firstrade OTC Trading
Several things make Firstrade great for OTC trading. One is that the broker offers a vast selection of OTC stocks, and another is that Firstrade’s zero-commission policy extends to the OTC markets. Firstrade’s order ticket is easy to use, and the broker’s trading interface provides a good amount of information for each OTC stock on offer.
Types of OTC Stocks
Firstrade’s impressive list of OTC securities includes stocks trading on the OTCBB and OTC Pink markets.
Among the securities provided are foreign stocks like Roche Holding (RHHBY), Adidas AG (ADDYY), Danone (DANOY), and Deutsche Telekom AG (DTEGY). Also available are ADRs and Pink Sheets.
Whether you want to gain global exposure for your portfolio, take advantage of market-moving events occurring around the world, or trade penny stocks, Firstrade provides a solid platform for almost any kind of OTC trading you have in mind.
Despite its many qualities, investors should know about a few restrictions Firstrade’s penny stock trading has.
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Limitations for Penny Stock Trading at Firstrade
Following a relatively new ruling by the Securities and Exchange Commission (SEC), some OTC securities are now untradable at Firstrade. Examples include Pink No Information, Expert Market, and Grey Market securities. The regulation affects all U.S.-based brokers.
In addition to the restricted securities list, Firstrade made OTC securities priced below $0.10 untradable. The rule makes highly speculative sub-penny trading strategies impossible. Traders can still trade penny stocks, but the stocks should meet the minimum price-per-share.
Using the built-in screener is the easiest and fastest way to find suitable candidates for trading.
Using the Firstrade Screener for OTC Securities
The stock screener is located within the ‘Research & Tools’ menu. Selecting ‘Screener’ pulls up a large list of criteria that investors can sort to their preferences. For our example, we used the screener to find penny stock candidates that fit within the bounds of Firstrade’s rules.
By toggling ‘Exchange’ and ‘Share Price’ on, the options to set a price range and exchange selection become visible. We chose ‘OTC Pink’ as the exchange and set the share price range to $0.10 to $5.
Next, we sorted the results based on daily volume to see the day’s most active tickers.
Placing a Trade
Once you find a ticker that you want to invest in, you must use the trade ticket to outline the parameters of your order. The trade tickets on the website and mobile application are similar in many ways.
Clicking on the ‘Buy’ button activates the trade ticket, and from there, you can specify the order type, share quantity, limit price, and more.
From there, you can also access MorningStar research data and analysis (when available), detailed charts, and up-to-date price quotes.
Fees and Commissions
As previously mentioned, one of the primary highlights of trading OTC securities at Firstrade is that no commissions go along with them.
Still, there are a few fees to be aware of.
ADR securities come with a small pass-through fee. The fee is not charged for every ADR, but banks that issue them can charge investors if they feel it necessary. Since the fees are unique to each security, viewing the prospectus is the quickest way to see the pass-through fee. ADR pass-through fees often range from $0.01-$0.05 per share.
Another cost that all trades incur is a regulatory fee. There are two primary oversight bodies (FINRA and SEC) for the financial markets, and each one charges a very small amount on each transaction.
Is Firstrade the Best Broker for OTC Trading?
In summary, Firstrade is the best broker for OTC trading for most investors interested in OTC securities. The number of securities available, the commission-free pricing model, and the user-friendly trading interface create a positive trading experience.
However, penny stock traders dealing in shares priced under $0.10 will not find what they are looking for at Firstrade.
Pros of OTC Trading at Firstrade
Here is a short list of pros and cons as we see them.
- Firstrade offers a very long list of OTC securities
- OTC screener is powerful and easy to use
- OTC trades are free ($0 commissions)
- Investors can include a global outlook while diversifying
Cons of OTC Trading at Firstrade
- Trading penny stocks under $0.10 is not allowed
- Charting may be too limited for high-speed traders
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Updated on 3/3/2023.
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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