Best Penny Stock Brokers for 2023 (Updated)

Every week I get dozens of emails from traders looking to find the top penny stock brokers. Despite it being less expensive, finding a suitable trading platform specifically for penny stocks is still a frustrating task that will leave you pulling your hair out.

There are so many factors involved in selecting a broker and you need to understand how it will impact your trading performance. Below I outline my top picks and reveal the most important factors to consider when selecting a broker.

Best Brokers for Penny Stocks:

1. Charles Schwab

Founded in 1973, Charles Schwab is one of the most iconic and trusted brokers on Wall Street. Schwab offers clients access to a wide selection of stocks including access to penny stocks on over-the-counter markets, pink sheets and on traditional exchanges. The mobile and desktop apps are reliable and can meet the needs of the majority of stock traders.

Their trading platform did lag behind competitors for the past few years. They fixed this issue by acquiring TD Ameritrade, so customers can now use Ameritrade’s robust trading platform as well.

No recurring fees, no account minimum or extra surcharges for shares under $5, making it for the perfect broker for penny stock. In addition, the $0 stock trades are another benefit that enhance the fee-free trading experience at Schwab.

Account Minimum: $0
Fees: $0

2. Fidelity

The runner up, Fidelity hopped on the commission-free bandwagon in October 2019 and haven’t looked back. Fidelity’s research tools can screen through thousands of penny stocks by market sector.

Another bonus, the Active Trader Pro platform is now available for all customers, regardless of their account size and trade frequency. In addition, Fidelity’s trade executions are excellent with a strong selection of stocks to trade.

The main downsides of Fidelity is they only accept US citizens and the data on the site has to be manually refreshed. Not major negatives but worth knowing about.

Account Minimum: $0
Fees: $0

3. Interactive Brokers

Interactive Brokers trading fees range from $0.0035 to $0.005 per share and with IBKR Lite you can buy penny stocks for $0. While it’s expensive compared to other brokers, IB provides the best all-round exposure to penny stocks, providing more access to OTC/pink sheets and has the best borrows.

The Traders Workstation platform has a steep learning curve and is challenging for new traders to learn.

Interactive Brokers make into the third spot because they cater to international traders. Finding a suitable broker for penny stocks in the UK and Europe is a nightmare and IB is a solid option.

Account Minimum: $0
Fees: Max charge of $0.005 per share for Pro platform or 1% of trade value, $0 for IBKR Lite.

4. TD Ameritrade

TD Ameritrade have been in business for over 40 years and is well-known for their “thinkorswim” trading platform. The platform is highly regarded in the industry and possesses excellent charting tools.

They have no account minimums, no recurring charges and zero commissions for non-OTC stocks. Similarly to E*TRADE, TD charges $6.95 for OTC stock trades so it does drive up the cost of trading low-priced stocks.

Despite the extra costs, provide great executions and customer service is brilliant. Also no inactivity fees makes them well-suited for long-term investors.

Account Minimum: $0
Fees: $0 but charge $6.95 for OTC stocks

5. E*TRADE

E*TRADE used to be my favourite broker but unfortunately they’ve slipped in the rankings lately. The broker offers a large selection of penny stocks but charges a fee of $6.95 for OTC trades. The fee drops by $2 to $4.95 when you make 30 trades per calendar quarter. This rewards more active traders.

Their trading platform is top-notch, offering quick executions and strong charting features. Some traders use E*TRADE  purely for their charting tools but don’t trade actively with them. Currently, E*TRADE is one of Tim Sykes’ preferred brokers. Morgan Stanley acquired the brokerage in October 2020 and it’s uncertain how this will impact their operations going forward.

Account Minimum: $0
Fees: $0 but charge $6.95 for OTC stocks

6. TradeStation

Last but not least is TradeStation, this broker was built for active traders. TradeStation charges zero commissions up to 10,000 shares but after the surcharge is $0.005 per share.

Another broker with no minimum deposit required but you need to deposit $2,000 to get access to all three TradeStation platforms. Their trading technology is highly rated and offers a solid trading platform with advanced tools.

Account Minimum: $2,000 for TS Select, $0 for TSgo
Fees: $0 for first 10,000 shares, $0.005 per share in excess of 10,000

Criteria for picking a penny stock broker:

• Surcharges – Depending on the broker, some will add a surcharge to shares under $2. Ally Invest charge a flat fee of $4.95 and a surcharge of $0.01 per share. If you buy 10,000 shares with Ally Invest, it’ll cost you an additional $100! If you’re not careful, these small charges can add up over the long run. Ideally the brokerage should charge a flat commission fee with no sneaky hidden fees.
• Account Size – The biggest obstacle is not having enough capital and people don’t realize there’s a pattern day trader rule that will restrict your activity to 4 trades in 5 business days. I suggest starting off with $2000 to make it worthwhile as commissions will impact your profits. It’s crazy to think every broker we covered have no minimum deposits to entice new customers.
• Trading Restrictions – You should be able to trade shares using an online platform and be cautious of any firms forcing you to place trades over the phone. Some companies will also impose restrictions when it comes to shorting penny stocks.
• Location– People who live outside the United States will have a harder time finding a penny stock friendly broker. Some brokers don’t accept customers from certain countries. Luckily, Interactive Brokers accept customers from countries such as the UK and Australia.
• Trading Tools – For active traders, trading tools play a big part in their success. All the top brokers should provide live streaming quotes, free demo accounts, level 2 quotes, scanners, mobile apps, and stock charting tools to perform technical analysis. Charging extra fees for trading tools is normal practice.
• Customer service – The bigger your account size, the better customer service you will receive. Brokers treat their bigger clients a lot better for obvious reasons and hate dealing with poor people. That’s why they discourage people from penny shares because they have a bad reputation.