Penny stocks trade under $5 (OTC) over the counter or on major exchanges like NYSE and Nasdaq. Penny stocks are high-risk investments due to a lack of liquidity and high volatility. They are difficult to convert into cash and have limited filing as well as regulatory standards, making them vulnerable to scams and market manipulation. Still, some investors are tempted by their low prices and like to trade these stocks because they can go in with little money and make high returns.

These stocks can be highly rewarding, but only if you can expertly navigate the sea of risk and find the best broker to trade your penny stock. Due to the risk and greater complexity of investing in OTC stocks, it is critical to do proper research, thoroughly understand how trading works, understand the financials and business strategies of companies that are being considered for investment, and use the right tools. And your broker matters.

Finding the best online broker that supports penny stocks trading with the lowest commissions and offers helpful features will simplify investing. Finding a suitable brokerage can be challenging. Therefore, we have researched various trading platforms and weighed myriad factors to compile the list of the best brokers for penny stocks.

The factors we use to determine the best brokers include access to over-the-counter markets, $0 or flat rate commissions, low account minimums, and no additional fees for low-cost stocks. In addition, we search for real-time margin calculations so an investor is aware of their buying power. Where many brokers provide penny stocks trading, some charge extra for stocks that trade below a specific dollar level or impose volume restrictions that raise prices for large orders. Despite cutting commissions to $0 on ETFs and exchange-traded stocks, many brokers still charge commissions for trading penny stocks.

Here is the list of best brokers for penny stocks based on fees, research tools, and penny-trading features.

• Fidelity Investments
• Interactive Brokers
• TD Ameritrade
• TradeStation

Fidelity Investments

Account Minimum: $0

Fees: $0 for stock & ETF trades

Fidelity is the best stockbroker overall because it offers everything a typical investor could need while being reasonably priced and simple to use. This broker doesn’t charge anything for penny stocks in contrast to other brokers that either charge extra or won’t trade them at all. Fidelity’s excellent analysis can help you search for penny stocks by market sector. Customers can now use their Active Trader Pro platform, regardless of their trading volume or account balance.

Pros:

• All customers can use Active Trader Pro
• Stock screeners help in finding potential trades
• High-quality executions on stocks
• $0 commission on over-the-counter stock trades
• It doesn’t charge closure, transfer, inactivity, or wire fees

Cons:

• Non-US residents can’t open an account
• Using tools requires signing in to multiple platforms
• No customer support is available via email

Interactive Brokers (IBKR)

Account Minimum: $0

OTC Stock Fee: 0.50%

Interactive Broker is a well-liked option for both penny stock and regular investing. The broker offers benefits to IBKR lite users, such as zero commission stock trading except for little OTC Link ECN cost. High-volume traders can choose an IBKR Pro account and save money with the platform’s attractive tiered commission structure.

Moreover, IBKR’s access to numerous stock exchanges, including over-the-counter markets, enables investors to locate and trade a wide variety of penny stocks. Also, IBKR’s advanced trading platforms, such as a web-based customer portal and an Investment Broker Trader Workstation, provide technical analysis tools, extensive charting, and real-time data to help investors make well-informed decisions. IBKR’s extremely low $0.005 per-share trading commission and margin calculations that are updated every second are perfect for penny stock traders.

Pros:

• Low commissions, $0 for IBKR Lite, and a maximum 1% trade value for Pro
• Real-time data streaming with account information
• The AI-powered online assistant, IBot from IB, can assist in finding features.
• Tiered commission structure that offers large reductions for adequate monthly trading volume.
• Extensive collection of educational materials, particularly in terms of online courses.

Cons:

• It does not provide 24/7 customer support
• It does not provide in-house research
• IBKR Pro users must pay trading fees, though they are a little
• Data streaming only on one device at a time

3. TD Ameritrade

Account Minimum: $0

OTC Stock Fee: $6.95

TD Ameritrade is a great trading platform that allows the trading of penny stocks. The company has no commissions, platform fees, data costs, or trade minimums. However, there is a $6.95 per trade fee for equities listed on the OTC Bulletin Board (OTCBB). So, TD Ameritrade isn’t for you if you would like to trade penny stocks without paying any commissions at all.

Still, TD Ameritrade has the most extensive research tools, analytical software, and real-time streaming data if you’re looking to find the best penny stocks to trade. By employing their company profile and social sentiment analytics, you may use their platform to set up the most profitable penny stock transactions and reduce the majority of the risk. Also, the company has a user-friendly web platform and mobile app.

Pros:

• Access to the tools available on the Thinkorswim trading platform
• Excellent research tools for examining penny stocks
• Better real-time data and analysis quality
• 24/7 phone, email, and live chat customer assistance
• No inactivity costs or account closing costs.

Cons:

• Although TD Ameritrade claims to have no commission fees, they charge $6.95 for OTC trades
• It does not provide international stocks
• There’s a $75 account transfer fee and $25 international and domestic wire transfer fees

4. TradeStation

Account Minimum: $0

Fees: $0 for stocks/ETFs, Futures cost $1.50 per contract, and options are $0.60 per contract.

TradeStation is a super fast and pro-level trading exchange with various customizable tools for seasoned traders. This broker doesn’t charge fees for penny stock trading, but this perk is only available on the first 10,000 shares per trade.

Users of TradeStation’s web platform or mobile apps can trade penny stocks (and all other securities) commission-free via a feature called TS Select. Real-time data streams for all. You can place, change, and cancel transactions using the keyboard shortcuts or through charts. The best thing about TradeStation is its easy-to-use risk-mitigation tools for market screening. Using their research tools, you can create your own automated trading strategy.

Pros:

• Versatile real-time market scanners
• Robust charting as well as technical analysis abilities
• The per-share fees decrease as you trade shares
• TS offers commission-free stock trading

Cons:

• Setting up a trading strategy has a steep learning curve
• Too many pricing options available could be confusing

The Bottom Line

We have reviewed and discussed some of the biggest online brokerages in the United States. Investing in penny stocks can be risky. However, with high risk comes the chance for a high reward due to the large number of shares you can buy at a low price. Just be aware that their extreme volatility and lack of liquidity enhance the likelihood of failure. As a result, if you invest in penny stocks, you should ensure that your broker is reliable.