6 Best Brokers for Penny Stock Trading of November 2024
Penny stocks are low-priced securities that trade for less than $5 a share. Not all brokers offer them, and those that do may charge higher fees.
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Penny stocks are risky, low-cost investments, though they don’t actually cost a penny. They are shares of small companies that trade outside of major stock exchanges.
Some brokers add a surcharge to stocks that are valued at less than a certain dollar amount, like penny stocks. Many won't extend their free commission offers to unlisted stocks. The definition of penny stocks will also vary by broker. Some consider anything trading under $5 to be a penny stock, while others put the cutoff at $2 or $1. (For more on penny stock trading, see our article on investing in penny stocks.)
Penny stocks may seem like a steal when stacked against companies that trade for $500 or more. This is where the backstory is important: These stocks are cheap for a reason. Because they are issued by small, yet-to-be-established companies, penny stock values can be turbulent. They are often hard to research and accurately value, and they trade infrequently, which means they can be tough to sell. (Here are other ways to find cheap stocks beyond penny stocks.)
Because of less stringent financial disclosure requirements, penny stocks are more susceptible to “pump and dump” schemes, where traders talk up the value of a stock only to “dump” it at artificially inflated prices. (In an effort to discourage this practice, the U.S. Securities and Exchange Commission issued new rules in September 2020 to prevent brokers from quoting OTC stocks unless companies issuing shares release up-to-date financial information.)
Choosing a penny stock broker
In case the above didn’t make this clear: There are significant risks that come with trading penny stocks, unless you are a sophisticated investor and you understand this market. You'll also want to be aware of the following when selecting an online broker to trade penny stocks:
Volume restrictions: Besides trade surcharges, there may be volume restrictions. Some, such as Fidelity or Firstrade, offer unlimited shares without additional fees, but a few charge more for large orders. Some brokers also limit the number of penny stock shares you can trade in one order or in one day, slowing your ability to trade and forcing you to pay another commission for a second order.
Trading restrictions: Watch out for firms that require you to trade penny stocks by placing a phone order or that impose limits on the types of trades you can execute. Ideally, your penny stock broker will allow you to trade penny stocks with the same online platform used for other stock trades.
Below are NerdWallet’s picks for the top brokerages for penny stock traders. You'll notice that many of these brokers also appear on our list of the top online brokers for stock trading; they're all well-rounded brokers that also offer a uniquely strong suite of features for penny stock trading.
Why trust NerdWallet
Penny stocks are risky, low-cost investments, though they don’t actually cost a penny. They are shares of small companies that trade outside of major stock exchanges.
Some brokers add a surcharge to stocks that are valued at less than a certain dollar amount, like penny stocks. Many won't extend their free commission offers to unlisted stocks. The definition of penny stocks will also vary by broker. Some consider anything trading under $5 to be a penny stock, while others put the cutoff at $2 or $1. (For more on penny stock trading, see our article on investing in penny stocks.)
Penny stocks may seem like a steal when stacked against companies that trade for $500 or more. This is where the backstory is important: These stocks are cheap for a reason. Because they are issued by small, yet-to-be-established companies, penny stock values can be turbulent. They are often hard to research and accurately value, and they trade infrequently, which means they can be tough to sell. (Here are other ways to find cheap stocks beyond penny stocks.)
Because of less stringent financial disclosure requirements, penny stocks are more susceptible to “pump and dump” schemes, where traders talk up the value of a stock only to “dump” it at artificially inflated prices. (In an effort to discourage this practice, the U.S. Securities and Exchange Commission issued new rules in September 2020 to prevent brokers from quoting OTC stocks unless companies issuing shares release up-to-date financial information.)
Choosing a penny stock broker
In case the above didn’t make this clear: There are significant risks that come with trading penny stocks, unless you are a sophisticated investor and you understand this market. You'll also want to be aware of the following when selecting an online broker to trade penny stocks:
Volume restrictions: Besides trade surcharges, there may be volume restrictions. Some, such as Fidelity or Firstrade, offer unlimited shares without additional fees, but a few charge more for large orders. Some brokers also limit the number of penny stock shares you can trade in one order or in one day, slowing your ability to trade and forcing you to pay another commission for a second order.
Trading restrictions: Watch out for firms that require you to trade penny stocks by placing a phone order or that impose limits on the types of trades you can execute. Ideally, your penny stock broker will allow you to trade penny stocks with the same online platform used for other stock trades.
Below are NerdWallet’s picks for the top brokerages for penny stock traders. You'll notice that many of these brokers also appear on our list of the top online brokers for stock trading; they're all well-rounded brokers that also offer a uniquely strong suite of features for penny stock trading.
Best Brokers for Penny Stock Trading
| Broker | NerdWallet rating | Fees | Account minimum | Promotion | Learn more |
|---|---|---|---|---|---|
 Robinhood Learn more on Robinhood's website | $0 per trade | $0 | 1 Free Stock after linking your bank account (stock value range $5.00-$200) | Learn more on Robinhood's website | |
 Interactive Brokers IBKR Pro Learn more on Interactive Brokers' website | $0.005 per share; as low as $0.0005 with volume discounts | $0 | Exclusive! U.S. residents who open a new IBKR Pro account will receive a 0.25% rate reduction on margin loans. Terms apply. | Learn more on Interactive Brokers' website | |
 SoFi Active Investing Learn more on SoFi Invest's website | $0 per trade | $0 | Up to $1,000 in free stock for users who sign up via mobile app | Learn more on SoFi Invest's website | |
 Fidelity | $0 per trade for online U.S. stocks and ETFs | $0 | None no promotion available at this time | Read review | |
 Firstrade | $0 per trade | $0 | Up to $200 in Transfer Fee Rebates | Read review | |
 Merrill Edge® Self-Directed | $0 per trade | $0 | None no promotion available at this time | Read review |
$0
per trade
$0
1 Free Stock
after linking your bank account (stock value range $5.00-$200)
Pros
Commission-free stock, options and ETF trades.
Streamlined interface.
Cryptocurrency trading.
IRA with 1% match (3% for Gold members).
High interest rate on uninvested cash.
Cons
No mutual funds.
Little third-party research.
Why We Like It
Robinhood provides free stock, options, ETF and cryptocurrency trades (but no bonds or mutual funds), and its account minimum is $0, too. Robinhood Gold offers a high interest rate on uninvested cash and low margin rates.
$0.005
per share; as low as $0.0005 with volume discounts
$0
Exclusive!
U.S. residents who open a new IBKR Pro account will receive a 0.25% rate reduction on margin loans. Terms apply.
Pros
Per-share pricing.
Volume discounts.
Large investment selection.
Extensive tools for active traders.
Powerful trading platform.
NerdWallet users who sign up for IBKR Pro get a 0.25% discount on the first $100,000 of a margin loan.
Cons
Complex pricing on some investments.
Why We Like It
IBKR Pro offers advanced traders a variety of features to up their investing game, including some of the lowest margin rates in the business, discounted contract fees on large-volume options trades, and a high cash interest rate for balances above $10,000. In exchange, users pay very low trade commissions.
$0
per trade
$0
Up to $1,000
in free stock for users who sign up via mobile app
Pros
Commission-free stock, options and ETF trades.
Free financial counseling.
IPO access.
IRA match.
Cons
Low interest rate on uninvested cash.
Why We Like It
SoFi Active Investing's $0 trading commission, free access to financial advisors, fractional shares and $1 account minimum are attractive to new investors. More advanced investors will appreciate the company's wide mutual fund selection and IPO access.
Best Broker for Beginning Investors 2024
$0
per trade for online U.S. stocks and ETFs
$0
None
no promotion available at this time
Pros
Commission-free stock, options and ETF trades.
Large selection of research providers.
Strong customer service.
Expense-ratio-free index funds.
Highly rated mobile app.
High interest rate on uninvested cash.
Cons
Relatively high broker-assisted trade fee.
Why We Like It
Fidelity is one of the largest and most well-established brokerages, and it shows. Fidelity charges no trading commissions, offers an extensive set of no-fee, no-minimum index funds. It also stands out for its top-notch research tools, a renowned trading platform and very strong customer service.
Want to compare more options? Here are our other top picks:
If you’re still on the fence about penny stocks, learn more about some of your other investment options:
Last updated on November 1, 2024
Methodology
NerdWallet’s comprehensive review process evaluates and ranks the largest U.S. brokers by assets under management, along with emerging industry players. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs. We adhere to strict guidelines for editorial integrity.
We collect data directly from providers through detailed questionnaires, and conduct first-hand testing and observation through provider demonstrations. The questionnaire answers, combined with demonstrations, interviews of personnel at the providers and our specialists’ hands-on research, fuel our proprietary assessment process that scores each provider’s performance across more than 20 factors. The final output produces star ratings from poor (one star) to excellent (five stars).
For more details about the categories considered when rating brokers and our process, read our full methodology.
To recap our selections...
