Understanding the penny stock broker and their main features is what allows you to choose the best broker to suit your needs. As important as it is to choose the right stocks, it is equally as important to choose the right penny stock broker to carry out your investing activity.
What Is a Penny Stock Broker?
A penny stock broker is an individual or on online platform used by a trader to engage in the buying and selling of penny stocks. There are as many stock brokers out there as there are penny stocks. Well, maybe not exactly, but it sure does feel like it. Their main purpose is to provide a means to facilitate the process of trading stocks.
Your broker can also act as an advisor in certain situations and therefore can have an impact on your trading decisions. Ultimately, each penny stock broker is unique with its own advantages and offerings. What is important is to do your research to select the best broker to fit your needs.
What To Look For In a Penny Stock Broker?
A penny stock can offer two ways of making trades. They can either have traders call in to place their buy and sell orders with a live broker or they can use the broker’s online trading platform. Almost all brokers today offer an online trading platform of which most traders have become accustomed to using. Having a fast, easy and secure means to placing trades is a significant asset when looking for a broker. While the call and trade approach does offer the convenience of speaking to another person to place a trade, lengthy waiting times can affect trading prices and significantly impact returns. Additionally, brokers sometimes charge for the ability to speak to a person, the fee commonly built into the transaction cost. For the most part, using do-it-yourself options online are a preferential choice for conducting trades.
The fee structure is another important concern when choosing a broker. Fee structures can vary from broker to broker. Choosing the right fee structure is dependent on the nature of your trading activity. A flat commission charged off of each buy and sell transaction or a charge on each individual share purchased are two common fee structures. If you commonly purchase penny stocks at very cheap prices per share, you may want to avoid the per-share fee structure as it can render it difficult to make a profit. Buying a penny stock at $0.20 per share with a $0.05 per share transaction fee can eat away at your profit margin. When choosing a broker, it is also important to consider minimum opening balances, withdrawal, inactivity, maintenance and potential hidden fees.
Finding A Penny Stock Broker
Before you can begin to trade penny stocks, you must find the right broker and fits your strategy. There is no one size fits all when it comes to choosing your stock broker and the process often requires lots of tedious research. Websites such a stockbrokers.com are often a good place to start as they offer tools to evaluate and compare among the many available brokers.
Some of the more popular stock brokers include:
To see more options for brokers, check out our article on the Best Stock Brokers for Beginners!
Like any other part of investing, the more preparation the better. Be prepared and learn more about the choosing the right stock broker with Wall Street Survivor’s course Basics Of The Stock Market.
THE 3 BEST TOOLS FOR BEGINNER INVESTORS
Updated November 6, 2021: At WallStreetSurvivor, our passion is helping you learn to invest in the stock market the RIGHT WAY! As part of our commitment to you, we are constantly evaluating all types of financial tools from stock picking newsletters to brokerage apps to stock screeners and more. Here are our favorites:
1. BEST SOURCE OF STOCK PICKS FOR THE LAST 5 YEARS
We have been tracking ALL of the Motley Fool stock picks since January 2016. That's over 5 years and 120 stock picks. Take a look at their stock picks' performance for the last 5 years:
- Average return of their 120 picks from 2016 to 2020 is 233%
- That beats the SP500's 88%
- 84% of their picks are up
- 57 of those 120 stocks have doubled
Now, no one can guarantee that their next picks will be as strong, but our 5 years of experience has been super profitable as you can see. They do pick some losers, but the key for investors is to invest equal dollar amounts in all of their picks. So if you have $1,000 to invest in the market each month, buy $500 of each of their 2 monthly stock picks.
Normally the Motley Fool service is $199 per year but they are currently offering it at their lowest price ever: Just $79 for 12 months..
2. BEST STOCK BROKERAGE ACCOUNT
Robinhood was the first brokerage site to NOT charge commissions when they opened in 2013. They just past 10,000,000 accounts and to celebrate they are offering one free share of stock (value up to $250) when you open a new account. In addition, they will give you another free share of stock (up to $250) for each friend that you refer, max 3 friends a year.
Here's the details: You must click on a special promo link to open your new Robinhood account. Then when you fund your account with at least $10, you will receive one stock valued between $5 and $250. Then, you will get a link to share with your friends. Every time one of your friends opens an account, you will receive another free stock valued between $5 and $250.
3. FIVE STOCKS LIKELY TO DOUBLE
ZACKS Investment Research just released their list of 5 Stocks Likely to Double. ZACKS has been around since 1978 and their top rated stocks have an average gain of 25.35% per year over the last 30+ years. Best of all, you can get this list of 5 stocks for FREE by CLICKING HERE.