In Quest of the Best Penny Stock Broker

When entering the penny stock exchange, a dilettante penny stock trader will certainly start searching for the best online brokers for penny stocks. At this stage things become complicated because there are numerous penny stock brokers to choose from, most of which have specific requirements for penny stock trading online.

These specific requirements are usually written in small font at the bottom of the stock broker’s website and are often neglected by newbie penny stock traders. The specific rules, which stock brokers adopt towards online penny stock trading, may include:

• Special commission for trading penny stocks online, which is higher than the general brokerage commission.
• Fixed commission + additional fee which varies according to the ordered amount of stock.
• Certain limit to the ordered amount above which the penny stock broker charges additional commission.

So whenever a dilettante penny stock trader starts searching for a suitable penny stock broker, he must always pay special attention to any fine print connected with the broker’s commission and fees.

Another point that would concern penny stock traders is the minimum funding required to open a penny stock trading account. This requirement may vary between $0 and $2000 depending on the policy of the penny stock brokers.

In order to alleviate the process of online trading penny stocks, we have compiled a list of stock brokers who have favorable policy towards penny stock trading online. If you are wondering where to buy penny stocks online, check the following list:

Best Online Penny Stock Brokers

1. Choice Trade is an excellent choice for trading penny stocks online due to its low commission and no minimum funding requirement:

• Commission: $5 per trade on Nasdaq and Exchange-listed stocks
• Minimum funding: None
• Account Service Fee: None
• Penny Stock Policy: $7 per trade for OTC BB and Pink Sheets Stocks up to 500,000 shares. For penny stock orders over 500,000 shares add 1% of the total dollar value of the order to the normal commission of $7 per trade.

The penny stock policy of Choice Trade mostly affect penny stock traders who trade with stocks at .0001 and the lower sub penny border. For example, if you want to invest $5000 in penny stocks, you will exceed the surcharge limit if you buy penny stocks cheaper than $0.01 per share.

However, the commission fee of Choice Trade includes only order processing, so if you want additional perks such as streaming data packages, you will have to make additional payment.

2. SHAREBUILDER is another broker which provides relatively good terms for trading with penny stocks which are above the sub penny border, i.e. above $0.001:

• Commission: $6.95
• Minimum Funding: None
• Account Service Fee: None
• Penny Stock Policy: For stocks below $1.00 Sharebuilder adds a surcharge of $0.007 per share. The total commission (base commission + surcharge) cannot exceed 15% of the principal amount of the trade, and cannot be less that the base commission.

ShareBuilder was awarded a five-star rating in the Commissions and Fees category of the June 2012 SmartMoney Magazine Online Broker Survey, along with one other firm.

3. SCOTTRADE is a good choice for trading penny stocks online so long as you don’t invest large sums of money in these stocks. Scottrade offers a competitive commission rate and its penny stock policy does not directly impact trading with sub penny stocks:

• Commission: $7.00
• Minimum Funding: None
• Account Service Fee: No fees for account maintenance or inactivity
• Penny Stock Policy: For stocks priced under $1, add 0.5% of the principal value to the base commission ($7.00). Some foreign and pink sheet stocks must be traded with broker assistance.

4. E*TRADE is another excellent choice for the penny stocks trader. Its services are more expensive than Choice Trade but the commission includes streaming data and OTCBB level 2 quotes. In addition ETrade doesn’t have a restrictive policy towards penny stock trading:

• Comission: $9.99 if you makes less than 150 trades per quarter and $7.99 if you make more than 150 trades per quarter
• Minimum Funding: $500
• Account Service Fee: None
• Penny Stock Policy: None

5. FIDELITY offers a good opportunity for trading penny stocks online. The broker has a reasonable commission which applies to all types of stock.

• Commission: $7.95
• Minimum Funding: $2,500
• Account Service Fee: None
• Penny Stock Policy: None except that “additional fees may be charged on orders that require special handling”

In addition, based on the household activity in the last 12 months, Fidelity offers additional useful services.