The Truth About the Best Penny Stock Broker: Revealed


When talking about investing in the stock market, you may get an image from a blockbuster movie such as The Wolf of Wall Street. Such films are entertaining, but they are not an accurate representation of the stock exchange world.

If you are using these films as your primary source of information on the market, then you might think this world is beyond your reach. You are right to an extent. Trading stocks is a complicated business. You need education, instincts, and nerves of steel to be successful. These requirements are especially true if you are looking to make millions in a day. However, if you want to make a little extra cash on the side or contribute to your retirement fund, then it might be a little easier.   

Trading penny stocks can be a very lucrative business for many people. Your financial adviser might warn you that there are a lot of shams on the market, and they’re not wrong. Usually, when you are promised huge returns with very little investment, you should immediately question whether it’s a scam. However, with a legitimate penny stockbroker by your side, you should be able to earn a nice profit with smart, long-term investment in the stock market. To do it, you need to be informed, so let’s start with the big question:

What are penny stocks?

In the world of trading, penny stocks are those that belong to small companies and have low prices per share. These companies can be new to listing their stocks on the market, and thus, they may not be as well established. The term relates to stocks that are cheap at first and have the opportunity to become highly lucrative once the company takes off. Other names for penny stocks include micro-cap stocks, nano-cap stocks, or OTC stocks. The U.S. Securities and Exchange Commission considers all companies offering a price per share lower than $5 to be penny stock companies.  

Why do people invest in penny stocks?

Penny stocks can yield far higher returns than stocks that cost $100 or more, but there is no guarantee. Experienced traders will tell you that you should dig hard to find those gems in the already flooded market. Once found, they can be a real opportunity for investment.

Another plus to penny stocks comes in the amount of money you need to get started. These stocks are a significant first step for new investors. You can begin investing with much less capital than what you would need to buy shares in Microsoft or Apple, for example. 

More Benefits of Penny Stocks

Trading in penny stocks allows investors who don’t have a lot of capital to invest to be active on the market. You won’t need to mortgage your house or wonder how to refinance their auto loan to afford it. 

A Prime Example: ACADIA Pharmaceuticals

The last and most important reason for investing in penny stocks is the reward. Real opportunities to win big do exist. Let’s look at the historical data for ACADIA Pharmaceuticals – one of the big players in the pharmaceutical market today. It started as one of many penny stock companies. At the time, shares sold for as little as $1.05! You would have been lucky to buy penny stocks from ACADIA at that price. When news about their new miracle drug for Parkinson’s emerged, you would have enjoyed nearly a 50-fold return on your investment. ACADIA Pharmaceuticals’ stock price hit an all-time high of $54 at one point! 

If you wonder whether buying penny stocks is worth it, the answer is simple. Yes, it can be. This can be very true compared to buying traditional exchange-traded funds. However, it is risky, so it is better to do so with an experienced brokerage firm! 

The Negatives of Penny Stocks

If there were no pitfalls, the whole ordeal would have sounded too good to be true. Like any investment that promises high gains, there are inherent risks also. The same is true for penny stocks. You need to be very cautious when you are choosing where to invest your money. Finding the best penny stock broker for you is step one toward your path of successful investment. 

There are two main problems with penny stocks.

An investment in penny stocks may sound attractive to day traders and those like you who are merely looking for a safe way to invest their savings. Promises of good returns are the main reason for this type of investment. Penny stocks can be quite volatile and subject to various pump-and-dump and market manipulation schemes by unethical stock traders. 

There is another problem. Penny stocks are notable for their inferior liquidity. You and anyone else who has invested in penny stocks may find it challenging to sell them and make a profit. These are all things you should keep in mind before you buy penny stocks. 

As we are talking about the best penny stock broker, we mean the professional you need to choose depending on your personal preferences. Other factors to consider are the location and amount of money you wish to put into the investment. It takes time to do your due diligence, but in many cases, that’s the difference between winning big on the over-the-counter market and losing your money. Thus, you’d better do it!

Penny stock scams? Sounds scary.

They most definitely do. Early seasons of the hit HBO show The Sopranos illustrated very well the mechanism through which such schemes work. In the show, the Mafioso crime family created a team of penny stock traders. They had one goal: to cold-call unsuspecting citizens and convince them to buy penny stocks in a travel agency. The pump-and-dump penny stock scam works by convincing inexperienced traders to invest in an unknown asset.

This action then inflates the price. When the scammers decide that the price has increased enough, they dump the stock and make a huge profit for themselves. Other investors end up with nothing. This scenario is real, and it’s one that has been seen too often in the real world of penny stock trading. 

Guru scams are another danger to be on the lookout for.

Guru scams are quite common in the world of trading penny stocks. Self-proclaimed “investment gurus” are out there. They will promise to reveal the big secrets of winning in the market. In exchange, they will ask for a one-time payment to join their “inner circle.” These scam artists are experienced and have existed for as long as the stock market. Avoid them like the plague! One thing you need to remember is that there are no shortcuts to success, especially in penny stock trades!

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How to Avoid Scammers

Since scammers are lurking around every corner, one must know how to not fall prey to them. The best way to do that is to be alert. If an offer sounds too good to be true, then it probably is. Even if you are not trading regularly, educate yourself about the market, and be aware of the recent trends. The best way to develop the essential skill of distinguishing between a blatant promotion and a genuine investment opportunity is through experience.

Before you buy penny stocks, do your best to research the company. Look specifically into its management. If the managers are shady individuals, there may be information about them on the internet. Scammers have a much tougher job in our day and age as far as penny stock trades are concerned. You need to stay vigilant. You should trust reports that appear in legitimate journals only. Make sure that the publication was not a paid-for promotion. We cannot stress this enough. Last but not least, trust the brokerage of only highly-rated, trustworthy stock traders! 

Best Penny Stock Broker

Can I buy penny stocks now?

We know that you are eager to jump head-first into investing in penny stocks. However, consider that there is a reason some active traders avoid them. Those stocks are considered to be high-risk. Usually, this means that the reward, if you are successful in your investment, could be great, but the chance to fail is even higher. 

Maybe it would better suit your portfolio to invest in mutual funds or government-issued securities? They yield smaller profits but are significantly safer. If you are looking for a way to make a healthy passive income without the bother of dealing with the volatile stock market, then this might be the right option for you. If you are sure that being a part-time trader and investing in penny stocks is your calling, go ahead. 

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Finding a Broker

Your first step on the road to riches should be finding a broker. When looking for an online broker to help you start trading on the stock market, you might feel overwhelmed by the sheer number of such companies. To help you avoid scams, we will discuss the pros and cons of using the services and trading apps of some of the best penny stock traders out there. They have the know-how to help you get your hands on hot penny stocks and make money. We will discuss the following companies:

  • Interactive Brokers
  • TradeStation
  • eOption
  • Fidelity Investment
  • Charles Schwab 
  • TD AmeriTrade
  • TC2000 Brokerage
  • Ally Invest
  • Firstrade
  • Lightspeed

All of these firms have a longstanding reputation in trading exchange-traded funds and penny stocks. They are full-service brokers with an affinity to penny stock investing and a base of loyal clients who are ready to defend them. Let’s take a closer look at the pros and cons of their services individually.

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Interactive Brokers

Interactive Brokers is an online broker that holds a ton of recognition. Their awards include Best Overall Online Brokers, Best for International Trading, Best for Low Costs, Best for Options Trading, and Best for Day Trading. Day traders and penny stock traders love them because they offer real-time price calculations that make them perfect for penny stocks. They have meager commissions too. You will not have to pay more than 1% of the overall investment and typically just $0.005 per transaction. 

Their AI-powered online assistant will give you all the support you need while setting up your account.

The Drawbacks

There are two drawbacks to using Interactive Brokers. Their platform, “Traders Workstation,” supports only one device at a time. Some traders find that tedious. Another disadvantage is that Traders Workstation is not the most straightforward trading app to learn. If a potentially steep learning curve is a problem for you, then you might want to look elsewhere. 


TradeStation is one of the best known and most highly rated online stockbrokers out there. The Best Overall Online Broker and Best for Day Trading awards the company holds are a great manifestation of that fact. The possibility of a low commission per transaction is attractive to casual traders. The amount they pay while trading through TradeStation becomes lower and lower with every transaction they make within one month. 

The offered discount is an excellent incentive to be more involved in the dynamic world of penny stock trading. Real-time calculations and the opportunity to customize the app’s market scanner are additional benefits. Experienced day traders and market makers are particularly impressed by the platform’s capabilities for charting and technical analysis. Of course, you will need to devote some time to learning the ins and outs of the application. However, once you do, you will be in a position to quickly place, modify, and cancel transactions directly from the charts or using an easy shortcut on your keyboard. 

The Drawbacks

Be advised that TradeStation offers a multitude of payment plans. Make sure to read the terms of each carefully to ensure you can pick the plan that is best suited to your needs.


If you are looking to invest in penny stocks, eOption is an online broker that offers all the brokerage services you might need to be successful. You will need to set up a brokerage account with a minimum amount of $500, which is reasonable. A flat transaction fee of $3 also applies. The low fee offers another chance to keep your costs down and not reach for a credit card or other, more radical method to finance your investment dream. 

Unlike TradeStation and Interactive Brokers, eOption has a pretty straightforward online platform. It can even automatically send stock alerts to you when you want them. If you are not too tech-savvy, this may be the best way for you to trade penny stocks.

The Drawbacks

Automation has its drawbacks, though. Due to its nature, you will have a limited opportunity to learn about the market. The research, analysis, and news stream offered are quite limited, which is why a live broker is sometimes needed to place a purchase. 

There is an option to receive better analysis and charts by employing the technical capabilities of trading tools such as Sterling Trader Pro and DAS Trader. Those are paid though and can cost up to $230 a month. Choose eOption only if you are ready to sacrifice learning opportunities and in-depth analysis for comfort. 

Fidelity Investment

Fidelity is a well-known name in the business. They offer one of the best overall analysis online brokers are capable of, for free. There is no minimum amount you need to put into your account when you set it up. Fees are lower than $5 per transaction, which is also a plus. Their trading app is called Active Trader Pro. It can be used by all stock traders, no matter how frequently they make a transaction or what the balance of their account is.

Reaping the Awards

We are talking about the best options for you for trading penny stocks, and it comes as no surprise that Fidelity Investment has tons of awards: 

  • Best Overall Online Brokers
  • Best for Beginners
  • Best Stock Trading Apps
  • Best for ETFs
  • Best for Roth IRAs
  • Best for IRAs
  • Best for International Trading
  • Best Web Trading Platforms

That’s pretty impressive. Thanks to the stock screeners offered by Active Trader Pro, you can scan for penny stocks by market niche and find the right investment.

The Drawbacks

One of the few drawbacks to using Fidelity is that if you are not a U.S. citizen or resident, you will not be able to open an account. However, in any other case, we strongly recommend trying them out. If you find the company’s platform too complex to operate, you’re not losing anything due to the lack of an account minimum. 

Charles Schwab

Charles Schwab is another well-known name in the trading world. The firm offers commission-free ETFs for their own Schwab Stocks and a $4.95 fee per transaction when trading in penny stocks. One of the best things about using Charles Schwab’s platform is that it gives you access to the exchange on which the stock you are considering trades. Access to this database can keep you informed about any inherent risks in advance.  

Overall, this online broker offers one of the best research pages out there. It is perfect for people who are sticking their toes into the treacherous waters of investing in the stock market and are eager to learn a lot about it. It is worth giving it a shot if higher-than-average margin rates do not scare you. 

The Highlights

There are a few pleasant pluses that come with this account:

  • There are no hidden taxes after the flat fees declared by the company. The Schwab Satisfaction Guarantee promises to earn you a refund on trading fees.
  • The mobile trading app synchronizes in real-time with the desktop platform
  • Charles Schwab is a holder of quite a few essential industry awards that are a guarantee for quality. These awards include Best Overall Online Brokers, Best Web Trading Platforms, Best for International Trading, Best for Options, Best for Beginners, Best for Roth IRA, Best for IRA, Best for ETFs, and Best Stock Trading Apps. 

TD AmeriTrade

TD AmeriTrade has flat fees that are a little higher than the average, at $6.95 per transaction. You will be getting a good quality of service for the money you are paying though. TD AmeriTrade has been voted number one on a survey of the best penny stock broker for the casual trader. 

The company has been around since 1975. A long history and excellent track record are just as crucial in stock traders as they are in the penny stock companies in which you are planning to invest. This brokerage has a fantastic array of platforms, research, a mobile trading app, education, and customer service. These factors make the slightly higher fees worth it. 

TD AmeriTrade has its own media division for market research and news. This extra effort means you can count on their analysis. You can access the database as their client and learn about the business in real-time. 

The Drawbacks

The only drawback is that due to the fixed fee, your initial investment for trading penny stocks becomes slightly higher. It is still not high enough to max out your savings account. TD AmeriTrade is the right choice for you if you are looking for a quality service from a company with an established name in the business.

TC2000 Brokerage

This brokerage comes highly recommended for people who are looking to buy penny stocks and options directly from charts. The TC2000 platform has won numerous awards and is perfect for beginners. The commissions are low: $4.95 per stock transaction and $2.95 + 65 cents per contract for trading options. Even if your checking account is on the low side, you can start investing right away. The low margin rates and high levels of customer satisfaction make TC2000 Brokerage an excellent option for you. 

The Drawbacks

One of the drawbacks of this particular platform is that it does not offer news and analysis. You will have to get your information elsewhere. However, the intuitive trading tools it uses will free up enough time for you to do that. The opportunity to trade directly from the charts on the TC2000 platform is unique. There is hardly any other company that offers it. 

Ally Invest

The mix of high customer satisfaction and low fees make Ally Invest a favorite FINRA member firm. Potential penny stock investors are drawn by the low minimum account balance too. You will have to put just $250 into your brokerage account to start trading. 

Ally Invest is known for its well-reviewed customer service and even banking services! It is not surprising that due to the low initial costs the brokerage is offering, there is a lack of news and research added to the service. 

The Drawbacks

The margin costs can be steep. However, the more transactions you make per month, the lower the fees you pay. Ally Invest stimulates you to be more active on the market. You will have to devote more time to reading financial news, but it will only benefit you. Another reason that Ally Trading is popular among investors is that they offer a full scope of financial services. They offer not only banking but also car insurance and even auto loan refinancing! Ally Invest will be the perfect choice for you if you are serious about penny stock trading.


Firstrade is one of the most highly-recommended brokerage platforms on the market today. It has no commissions and more than 700 commission-free ETFs. The newly developed platform is available to investors free of charge. 

The platform comes with great opportunities for customization. You will benefit from perks such as the powerful Firstrade Navigator, although you must hold a brokerage account with more than $10,000 in balance. 

One of the best features of the platform is the so-called “Profit and Loss simulator.” It allows you to predict your potential profits over a set period with the strategy you are employing.

The Drawbacks

The learning curve of this platform is steep, but the benefits outweigh the negative aspects of it.

Best Penny Stock Broker


Our last offer for the day is for those investors who are looking to trade penny stocks in a fast and efficient manner. If you are one of those, Lightspeed is the best choice for you. Its specially tailored platform offers the opportunity to purchase, modify, and trade penny stocks faster than any other brokerage that exists. 

Lightspeed ranks high on the customer satisfaction scale. The firm has excellent online support that will provide you with all the information you need to set up and run your account. The lack of in-house research can be a considerable drawback, but it is a negative that is common among a few of the other brokerage platforms available. 

The Drawbacks

The real reason to stop and think before signing up for Lightspeed is the minimum account balance required by the company. While other platforms ask for $500, $250 or even $0 to start trading penny stocks, here you will have to set aside at least $10,000. The deposit amount is a considerable sum. You will have to pay $4.50 per trade for fewer than 250 trades a month. If you make more than 250 trades a month, the fee becomes $2.50 per trade. We can recommend that you use Lightspeed only if you are ready to make a serious commitment to trading penny stocks. You must be able to set aside the initial funds and enough time to research the market. 

Can I invest without a penny stock broker?

In theory, you can. Be warned, however, that it can be challenging. The relatively small fees that you pay brokerage firms offer you a lot of insight and assistance and trading tools. An online broker that maintains a reliable trading app can be nearly irreplaceable when you trade penny stocks. You will have to put much more effort if you want to buy penny stocks on your own. However, it is still possible, especially when compared to trading traditional stocks. 

How to Start Trading Without a Broker

To start trading penny stocks without a brokerage firm, you need a specific set of skills. You need to be able to find information about the best penny stocks on the stock market. You can check listings on the Pink Sheets and OTCBB for example. If you can read and comprehend the information there, you will also be able to assess which penny stock companies are the right ones for you.

Do not forget to check the management and the overall respectability of the team. You should be able to assess if the company is doing well. If it is doing well, then maybe it would be a good idea to invest in them. 

Three Key Qualities Needed

All stock traders with experience will tell you the same thing. You can afford to go into the business on your own only if you possess three essential qualities:

  • You can check your emotions and ego at the door when you enter the penny stock market.
  • You can stick to the penny stocks you invest in for the long run.
  • You have the patience needed to make stable investments only.

If you do not possess any of those qualities, we strongly recommend turning to a brokerage firm to put your money to work. 

Summing It Up

Choosing the exact way in which you trade penny stocks depends entirely on you. The final selection of a brokerage firm may lie in the opportunity it offers for learning about the market or how easy the brokerage’s platform is to use. Transaction fees are also an essential factor. 

The low prices of penny stocks mean that you buy more shares. Often the best brokerage is the one that offers flat fees and no or low minimum initial account balances. The best online brokers should offer these two things. You are not limited to one choice and can easily switch between online brokers if you do not like them. A valid reason for swapping may be that you find their platforms confusing or need more services such as research and analysis of the market. 

Our #1 Recommendation

The best recommendation we can give to you is to find the best penny stock broker for you. You should find one that makes you comfortable while you navigate the sea of penny stocks and helps you optimize your profits. However, if you put in enough effort, you can yield excellent results from the penny stock market. 

Have you already dabbled in the world of trading penny stocks? Do you think you can get rich from penny stock trading? Please do not hesitate to share your opinions with us in the comments section below! 


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