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5 Best Brokers for Penny Stock Trading

Donny Gamble
January 15, 2022
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The information provided on this page does not offer any personal financial advice or advocate the purchase or sale of any security or investment for any specific individual.

Penny stocks give you a bite of the action without enormous financial commitment, and it has its own entire trading method to it that differs from everything else you know about stocks.

Trading penny stocks can be done on two markets: the New York Stock Exchange, and various OTC marketplaces. The right broker can set you up with the right market (or both, if you’re lucky).

These penny stock trading platforms are perfect for beginners and seasoned traders alike who want some high risk and high reward from penny stocks.

Best Overall Broker
Robinhood
5.0
Robinhood logo

Robinhood is commission-free investing trading app that has tools to help shape your financial future. They are my #1 recommended choice after researching over a dozen penny stock trading brokers.

Best Brokers for Penny Stocks

Summary of Best Brokers for Penny Stock Trading of Sep 2022

Best Overall

Trading Fees
$0
fee per trading
Minimum Deposit
$0
Promotion
1 share of free stock (when linking bank account)

Best for Beginners

Trading Fees
0
fee per trade
Minimum Deposit
$0
Promotion
Receive a free stock (with a qualifying deposit)

Best for Day Traders

Trading Fees
$0
per trade
Minimum Deposit
$0
Promotion
Earn up to $5,000 when you transfer funds into your account.

Best for Ease of Use

Trading Fees
$0
fee per trade
Minimum Deposit
$0
Promotion
Get 2 free stocks for new accounts & $100 deposit

Best for Professional Traders

Trading Fees
$4.50
per trade
Minimum Deposit
$10,000
Promotion
50% rebate on first 3 months of commissions, up to $10,000 (for new Lightspeed Trader customers only

1. Robinhood - Best Overall

Robinhood is a great all-in-one solution beyond penny stock trading alone. They’ve been on the hot seat since their inception, and have actually caused other institutions to lower their commissions or reduce them to zero.

While there have been some controversies and issues with Robinhood in the past, they’re not something that most of us are going to run into while penny stock trading.

Speaking of which, they’re known for constantly adding new OTC stocks to their app, so you’re not just limited to NYSE.

Pros
  • Full access to research, information, and helpful graphs to show you true historically-driven volatility per stock.
  • No commissions on penny stock trading.
  • Access to OTC stocks that a lot of penny stock apps don’t have access to.
  • IPO access (some end up being penny stocks at first launch).
Cons
  • Most likely to label you a pattern day trader (easily avoidable though).
  • Historical criticism for certain limitations (GME, AMC, etc.), although not a common issue you’ll run into with penny stocks.

2. Webull - Best for Beginners

Webull is one of the top apps for stock trading, but does free really mean better? While you’re going to avoid fees, Webull tends to run into the same customer service issue that Robinhood does, and we’d be willing to bet that it’s due to the lack of funds they have to spare because of free trading. 

Everything is going to have its pros and cons.  While customer service can be difficult to get ahold of, the app and platform is excellent, offers great insight tools and charts, and overall has an excellent feel for beginners as well as more seasoned traders.

You can customize your dashboard and experience depending on what you want to trade, and where you are in your trading journey. However, there are no OTC stocks to choose from, which can be a deal-breaker for many new penny stock traders.

Pros
  • No commissions for penny stock trading, ETFs, or options.
  • Opening your account is easy, funding it is rather fast as well.
  • Intuitive UI and responsive platform, whether you’re on the app or their site.
  • Insightful information for traders to make informative decisions.
Cons
  • Customer service issues similar to other no-commission platforms.
  • As with many no-commission platforms, there are limited products available.

3. TradeStation - Best for Day Traders

It’s been nearly 40 years since TradeStation opened their doors, and now they’re so accessible digitally, you would swear it was founded by a tech firm. 

With such an innovative and easy-to-use app and website UI, other platforms should seriously be trying to copy them and make theirs as intuitive.

While there are manageable fees, some could easily confuse new investors, so it’s a good idea to read the fine print and go over everything in full detail before you sign on for the long-haul.

Other than your deposits taking a while to clear to actually fund the account, it’s great for penny stock traders.

Pros
  • Seriously easy-to-use platform with an excellent UI.
  • Very easy to open an account, the process is simple and fast.
  • Trustworthy business with nearly 40 years in operation with no issue.
  • Fees are manageable
Cons
  • Intentionally confusing fee scale to confound new traders.
  • Customer services is touch-and-go, not always available.

4. Firstrade - Best for Ease of Use

Firstrade makes it easy as can be to utilize multiple areas of your stock trading experience. As one of the most intuitive and clean UI’s out of this entire list, you’re comfortably led through your investment process from start to finish regardless of your expertise or knowledge.

Some of the drawbacks of using Firstrade specifically come down to penny stock trading, which is a bit of a shame, but despite the few stipulations they still emerge as one of the best apps and broker services available for NYSE penny stock trading.

While you don’t have to pay for options trading commissions, there is a commission on order flows, but these services have to make money from something.

You can enjoy a lack of penalties for inactivity, and that’s not something that’s commonly offered through services like these.

Pros
  • Absolutely no commission or cost for per-contract options trading.
  • Superior support for Mandarin-speaking and Cantonese-speaking members.
  • Unique advanced trading options not commonly offered by other free-commission apps and services.
  • Zero account minimum and no fees for spans of inactivity.
Cons
  • No international trading options; you are confined to US NYSE stocks.
  • There is no access to the OTC marketplace, which can stifle your penny stock trading.

5. Lightspeed - Best for Professional Traders

Lightspeed is best for professional traders because of its volume and, as the name implies, fast time to sell stocks. In penny stocks, you have such little time to move on the market, which is why Lightspeed’s service is something that pro day traders are going to love.

Apart from being able to sell stocks extremely fast, their fees are scaling—that means that the more you buy or sell in bulk, the less percentages you pay in fees.

Overall, the service is beyond worth the fees since many individuals will be moving a lot of volume per transaction.

Pros
  • Ability to move volume extremely fast.
  • Hyper-advanced platform with the most recent up-to-date information, perfect for penny stock traders.
  • Options trading is arguably cheaper than many other platforms.
  • Excellent top-tier customer service you simply don’t get anywhere else.
Cons
  • Per-trade fees are $4.50 each.
  • The minimum investment is rather high at $10,000 (varies depending on starting offer).

How Do You Start Trading Penny Stocks?

Sign up with your broker of choice, verify and fund your account, and begin buying. Any stock under $5.00 in value is a penny stock, according to the SEC. Start here and purchase an abundance of inexpensive stocks.

Penny stock trading is all about high volume and small price changes. With the right volume, you can pocket a low four-figure payday off of a stock moving from $0.05 to $0.06. It all depends on how you play it.

Once your account is funded, put in purchase orders for the stocks you want, and start trading. Be careful, though: the market moves fast, and opportunities move even faster.

How to Choose the Right Penny Stock Broker

Which one aligns with your biggest financial goal? Are you a beginner and want to learn the ropes without getting discouraged? Robinhood might be the best pick.

Do you have experience but it’s been a while since you’ve traded? Firstrade makes it easy to get back into trading.

We’ve organized these top penny stock trading companies by their strongest attributes to help you make a decision, now you just have to ask yourself what your biggest roadblock is with trading, and make your selection based on that.

Methodology in Selecting These Top Picks

Utilizing public information, the individual brokers and app pages, their commission pages (or lack thereof), and cross-referencing them with anecdotal information online pertaining to individual reviews and professional reviews, we were able to determine the validity and customer service rating of these services.

Instead of an arbitrary number, we labeled each of these five best brokers and stock services based on their most prominent strengths to help you narrow down what matters most to you, and prioritize that while looking at top-tier options.

Penny Stock FAQ's

What are penny stocks?

Classified by the SEC, penny stocks are any stock beneath $5.00 in individual value. This used to be any stock below $1.00, hence the name. A penny stock is traded for a low value because the company is new, their market value is yet to be determined, or they are in an upcoming industry that hasn’t taken off yet, but for many it’s an opportunity to get in on the ground floor of a company’s hopeful success.

More commonly, penny stocks are bought in vast quantities, and then sold after marginal price increases, sometimes in $0.01 increases, to turn quick profits.

These profits come from volume over price increases, because if you can move 100,000+ stocks at the increased price of a nickel, you can net thousands of dollars in a single transaction during your lunch break. That’s not a reality for many, of course, but it’s been known to happen.

How much money do you need to trade penny stocks?

You can start with a marginal amount of money. You could buy 100 stocks at a penny a piece, and then sell when it hits two cents, and reinvest over and over again.

The odds of going double-or-nothing and getting lucky each time are slim to none, but as you diversify, you can take different risk factors and reinvest small pockets of money in different stocks.

You should start with around $100 and play with multiple stocks, and get a feel for how it works before you upgrade to dropping $1,000, but you truly can start with a single dollar.

That’s why penny stock trading is so attractive to many low-budget investors, just be sure you play it right and remember: a gain is a gain.

Is it a good idea to buy penny stocks?

Technically, penny stocks are one of the riskiest investments that one can make, which is why you won’t find a single investment-based website or investment advisor that doesn’t first warn you about the volatility of penny stocks.

You should never put in any amount of money that you are not 100% okay losing, because the reality is that some of these stocks could just close out and leave you with nothing.

Penny stocks are like daytime stock market foreplay, where you buy and sell at moderate increases, which is not akin to long-term investments through index funds or too-big-too-fail stocks (they can all fail, but you know what we mean).

Can you become a millionaire trading penny stocks?

Penny stocks define the current price of a single stock. At one point in time, Pier 1 hit a ridiculously low stock price of $0.11, only to rise again after a financial crisis.

It’s not a penny stock, and it didn’t start out as a penny stock, but for a short amount of time it technically was.  Yes, you can become a millionaire trading penny stocks, but it’s highly unlikely.

While it’s not the same level of uncertainty as playing the lottery for a million-dollar power ball, because there are investment strategies at play, there’s also no guarantee or proven model.

Where do you find penny stocks to buy?

Some penny stocks can be purchased on the NYSE through apps on this list, but there is also an OTC market where you can buy companies that want to have stock options, but don’t want to go completely public. This is where the majority of penny stock trading takes place.

You can access OTC markets which have extended trading hours. You can get in earlier, stay later, and spend more time trading penny stocks. Just be wary of the time, because you can absolutely get lost in yourself while doing something like this.

Is options trading better than buying penny stocks?

Options trading and penny stocks are two different worlds. While they are both t technically stocks, options have contracts, time frames, and rules to them that differ from just buying and selling stocks (especially penny stocks).

They’re often roped together in terms of risk, but options are far less risky (if you know what you’re doing) than penny stocks. If you’re looking for a lower risk investment, options are a little more expensive to get into, but definitely not as volatile as penny stocks.

Final Thoughts

Penny stock trading has its ups and downs, but the right platform can make all the difference in how you trade. Many of these platforms are free, with alternative fee-based trading platforms you can advance to later on down the line.

Pick what’s right for your current budget and investment commitment. There’s nothing wrong with low-budget no-fee trades, as long as you’re investing and doing your best to keep an eye on the market, and turn a profit.

Robinhood

Robinhood has commission-free investing, and tools to help shape your financial future. Sign up and get your first stock free.

Best Brokers for Penny Stock Trading Recap

About the author 

Donny Gamble

I’m Donny. I’m a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.

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