The Best
Penny Stock Brokers
for Online Trading

Taking a look at the 3 best penny stock brokers for online trading.  Let's also look at how to place your buy and sell order, along with a tip that can save you from going broke in literally seconds!!!

The best penny stock brokers are going to get you fast executions, won't charge you an arm and a leg and maybe throw in some extra "goodies," like charting tools and the ability to interface with other platforms.

When choosing one of the online brokers your top concerns should be opening account minimums, commissions and overall functionality. 

There are many brokers that want large initial deposits (like $25,000), or will charge a small fortune in commissions to trade penny stocks.  Obviously, we want to avoid those! 

That said, if the difference between two online penny stock brokers is only a couple of dollars per trade, but the slightly higher priced one has better tools (namely charting/analysis tools), then that may be the better way to go.

Who Are the 3
Best Penny Stock Brokers?

I've chosen only three brokers to review, although initially I planned on covering five, because these three are very well established, have fair opening initial deposits and their commissions are very good for active penny stock traders. 

There are more penny stock brokers that may be a better option for you down the road, but I'm assuming most readers don't have $25,000 to open an account...yet anyway:)

So let's go ahead and take a look at, in my opinion, the three best penny stock brokers:

1) Ameritrade

Ameritrade has, in my opinion, the most sophisticated setup with their Think or Swim (TOS) and Trade Architect platforms.  I am currently in the process of switching from my current broker (Scottrade) over to Ameritrade. 

I currently have an unfunded account with them and have been able to use many of their tools, but just need to get some money transferred into it to start trading with them. 

The more research I did for putting this write up together the more it seemed like Ameritrade was the favorite among many OTC traders.  With their platform, to include mobile, it's easy to see why so many consider them one of the best penny stock brokers. 

That said, they are a bit more expensive per trade and if you are planning to trade frequently, then this may be an issue.  Most commonly though, new penny stock traders aren't going to be trading everyday due to pattern day trader rules and having less than $25,000 in your account.  It also takes a little while to get your feet wet!

What's great though is that you can open an account for free and begin using their Think or Swim platform to place paper trades with no risk of loss. 

Another great benefit is that Level II for OTC securities and big board stocks are included with their service at no extra charge to you.  Overall excellent service from beginner to advance.

Quickly open an account here.

2) Etrade

Everything I know of Etrade points to an excellent trading platform with great tools, charts and excellent resources for research.  As with Ameitrade, they've received much recognition and won awards for their overall platform.

The most common complaint seems to be poor customer service and that level II will need to be paid for (a platform fee) unless you meet specific conditions, like placing 30+ stock or option trades per quarter.

If you're going to be an active trader, then no problem, but for most people this might not work.  It's also important to note that to receive $7.99 trades you'll have to place 150+ trades per quarter and for anything less, then the commission is $9.99.

For most people this means paying a separate fee for Level II quotes and paying the higher commission per trade.  I'd say Ameritrade gives more bang for your buck.

However, if you plan to be a VERY active trader, then Etrade may be best for you, but we're talking about a lot of trades.  Take a look for yourself and you can decide if Etrade is the best of the penny stock brokers.

3) Scottrade

I have personally used Scottrade for over 15 years, with no problems and their customer service has always been exceptional. 

That said, I feel that their tools, charts, research, overall platform leaves something to be desired!  Not too mention their commissions begin to get a bit out of line when buying large quantities of stocks trading under a dollar. 

In other words, 100,000 shares of a .02 stock = $2,000 x 5% = $10!  That's $10 + $7 (their base fee) = $17 to buy your stock and another $17 to sell it!  Ouch!!!

For the style of trading that I used to do (swing trading) that had been sufficient, but I've had to rely on outside sources (sometimes paying subscriptions) to make up for what they do not offer, or what they don't offer well.

As I have now incorporated more day trading into the mix, I am now looking to open an additional account with Ameritrade.  Needless to say, once I began doing more research on other penny stock brokers, I wish I would have made the change many years ago!

Lastly, Scottrade does not offer Level II for OTC securities, so you'll have to budget at least an extra $30 a month with a third party vendor if Level II is going to be important to you (we'll cover the importance of Level II in a later lesson).

All in all, I will still keep my Scottrade account open, for certain trades other than OTC stocks, but for this review would consider them to be the worst of these three penny stock brokers.

*All data derived from each individual penny stock brokers websites 5/12/2015.  Please visit each companies individual websites for most current details.

How Long Does It Take to Open an Account?

From start to finish the whole process of opening an account online should only take you a matter of minutes.  To fund your account may take a bit longer...money needs to transfer and clear. 

For most people, if you open an account now and begin the funding process today, by the time you have read through this guide (assuming it takes you a few days to do so), then you'll be ready to trade about the same time you finish up here...perfect timing!

If you have the ability and choose a broker that has physical locations, then you can be up and running the same day as you can just walk your money in to the local branch in person.

In addition, be prepared with your social security number and possibly to prove your residence with a utility bill.  They want to make sure you are who you say you are.

Conclusion

Feel free to open an account now with whichever you feel is the best of these penny stock brokers (or any other you find), but I highly recommend you not start trading until you've finished this guide.  So, let's move on to Penny Stock Risks.