While penny stocks are risky to trade for beginners, they are a great way to capture massive returns with a small investment. Penny shares are cheap to buy and volatile, meaning fortunes can be made or lost overnight. For every trader who became a multi-millionaire, there are horror stories of people blowing up accounts and end up owing money! With that in mind, before you open an account with a brokerage, make sure you’re 100% ready.
Although there are dozens of stock brokers with no account minimums, not many of them are suitable for penny stocks. Luckily for you, I have compiled a list of the best penny stock brokers with no minimum deposits and charge cheap commissions.
TD Ameritrade
- TD Ameritrade is one of the most reputable online brokers with no account minimums for clients!
- Ideal for penny stocks as they charge a $6.95 fee per trade with no surcharges on stocks under $1, making it more affordable to trade OTCBB and Pink Sheet stocks.
- Two great trading platforms available to all customers – Thinkorswim and Trade Architect.
- Robust charting tools that can be customized to meet your requirements.
- Don’t have annoying inactivity or maintenance fees.
- Free access to real-time quotes and level 2, perfect for active day traders
- Customer service is average, to lower costs they outsourced it to cheaper countries such as India.
E-Trade
- E-Trade is my number one pick as the best broker for trading penny stocks.
- Is a highly recommended broker for short selling shares under $5.
- Flat fee commission structure with no extra fees on penny stocks!
- Discounts given to active traders, $6.95 commission for less than 30 trades every quarter, make more than 30 trades and the fee drops to $4.95.
- Don’t accept customers from certain countries which sucks for people in the UK.
Ally Invest
- Formerly known as TradeKing, Ally Invest is another penny stock broker with no minimum deposit required.
- $2,000 account minimum for margin accounts, giving people the chance to profit from short selling companies.
- Suitable for beginners traders new to stock trading and don’t have much money to invest.
- Commissions are low, $4.95 per trade is very competitive within the brokerage industry.
- User interface is appealing to users, making it faster and easier to execute trades.
- Charge a one-cent surcharge per share on stocks below $2.
- Regularly run promotions for new customers. Currently, they offer $500 worth of commission-free trades for clients who deposit $10,000.
- Trading platform and tools aren’t as advanced as the top online brokers but are improving slowly.
Robinhood
- Robinhood has quickly become the most popular broker among millennials.
- The start-up broker offers commission-free trades to millions of people around the world.
- While getting free trades may seem like a great deal, there is a catch. Executions will be slower than the industry standard, penny stocks are volatile and speed is crucial to make consistently profitable trades. More suited towards long-term investors.
- Despite the downsides Robinhood are great for first-time investors looking to gain experience and have fun.
- UI design is beautiful and easy to navigate.
TradeMonster
- TradeMonster is a subsidiary of OptionMonster, owned by well-known financial commentators, Pete Najarian and Jon Najarian.
- Their parent company specializes in Options trading and set up TradeMonster to offer more diverse financial products to the market.
- In 2015, they merged with OptionsHouse and were later taken over by E-Trade.
- $0 account minimum required to open a cash account.
- $0.005 surcharge per share on stocks below $2.
- Not a good option for beginners.
Degiro
- Degiro is a low-cost Dutch broker, only available to European investors.
- Low account minimum, €0.01 has to be deposited during the verification process.
- Limited selection of penny shares on their platform but they have ridiculously cheap fees.
- Good choice for traders in Europe as they find it challenging to find penny share friendly brokers. The majority of US brokers won’t accept customers from Europe or require a deposit of $10,000.
- Compensation scheme protects deposits up to €20,000.
Even though these companies have low minimum requirements, I advise picking the broker that suits your trading style.
James Kelly is my name and penny stocks are my game! Former day trader turned long-term investor with a decade of experience in the market. Over the years, I’ve joined dozens of trading services and I aim to provide honest reviews to help traders make better decisions!
Bill Taylor says
Robinhood does not support Penny Stocks until they start trading on an exchange. Anything ending in “F” or “warrant” is not supported there. I would enjoy finding a company that uses their fee schedule though, because I subscribe to a service that gives me an abundance of information on penny stocks that have been showing growth. If you have any ideas, I am open to suggestions.