4 Best Brokers for Penny Stock Trading
Penny stocks are securities that trade for less than $5 a share. Wondering where to buy them? It's a good question: Not all brokers offer them, and those that do may charge higher fees.The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
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 and are also known as over-the-counter (OTC) stocks.
The precise definition of penny stocks will vary by broker. Some consider anything trading under $5 a penny stock, while others set the cutoff at $2 or $1.
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, their value can be turbulent. They are often hard to research and accurately appraise, and they trade infrequently, making them tough to sell.
Long story short, many brokers are a bit antsy about trading penny stocks. This can make it more challenging to figure out where to buy penny stocks than with other investments.
Below are NerdWallet’s picks for the top brokerages for penny stock traders. These four brokers don't impose any additional fees or investment restrictions on domestic penny stocks.
→ Penny stocks aren't your only option: Other ways to find cheap stocks
Company | NerdWallet rating | Fees | Account minimum | Promotion | Learn more |
|---|---|---|---|---|---|
4.6/5 | $0 per trade | $0 | Get up to $1,000 in stock when you open & fund a new Active Invest account. Limited time offer. Terms & Conditions Apply. | Learn moreon SoFi Invest®'s website | |
Learn moreon SoFi Invest®'s website | |||||
Learn moreon SoFi Invest®'s website | |||||
4.5/5 | $0 on trades of stocks, ETFs and their options. Other fees may apply. | $0 | 1 Free Stock after linking your bank account (stock value range $5.00-$200) | Learn moreon Robinhood's website | |
Learn moreon Robinhood's website | |||||
Learn moreon Robinhood's website | |||||
4.1/5 | $0 | $0 | Earn 8.1% APY on your uninvested cash for 3 months + up to 60 Free Stocks with qualified deposits. Terms & Conditions apply. | Read reviewon NerdWallet | |
Read reviewon NerdWallet | |||||
Read reviewon NerdWallet | |||||
4.1/5 | $0 per trade | $0 | Get up to $600 when you invest in a new Merrill account | Read reviewon NerdWallet | |
Read reviewon NerdWallet | |||||
Read reviewon NerdWallet | |||||
Best penny stock brokers overview
SoFi Active Investing is a great choice for OTC stock traders, as it offers no-commission trades and puts no investment restrictions on penny stocks. However, traders who want access to exotic assets such as forex and crypto — or who want third-party research to inform their trading decisions — may need to look elsewhere.
SoFi Active Investing's $0 trading commission, fractional shares and $0 account minimum are attractive to new investors. More advanced investors will appreciate the company's wide mutual fund selection and IPO access.
Robinhood offers free ETF, options, crypto and stock trades (including all OTC stocks). It's also a leader in mobile-first design for brokerage apps, and provides a streamlined trading interface. However, Robinhood doesn't offer much in the way of third-party research, and its execution quality is slightly below average.
At Robinhood, trades of stocks, ETFs and their options are commission free, as are cryptocurrency trades. (Other fees may apply, including on index options.) Robinhood Gold offers a high interest rate on uninvested cash and low margin rates. The company does not offer mutual funds or individual bonds.
Moomoo users can trade U.S.-listed ETFs, equity options and stocks (including OTC stocks) without any fees, in an easy-to-use app with low margin rates. However, Moomoo's execution quality could be better, and it does charge a commission of a few pennies per share on foreign-listed stock trades.
Moomoo offers free stock and option trades in an easy-to-use trading platform that charges low margin rates. It's not built for passive retirement investors — IRAs aren't supported, nor are mutual funds — but there's a lot to like about Moomoo for more active traders.
Merrill Edge is a great choice for penny stock traders who have a Bank of America account, as it's integrated into Bank of America's app, and offers free trades of all OTC stocks with high order execution quality. However, fractional shares and alternative assets such as crypto and futures, which may also appeal to penny stock traders, are not available.
Merrill Edge's extensive research and educational offerings, its Idea Builder investment-finder tool, and its seamless integration with other Bank of America accounts make it a solid choice for beginner investors.
Choosing a penny stockbroker
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:
Additional fees: Most of the brokers we review have eliminated trading commissions for stocks, provided those stocks are well-established and trade on major U.S. exchanges such as the NYSE and Nasdaq. But many brokers still charge some kind of trading fee for OTC stocks and foreign stocks that aren't officially listed on U.S. exchanges. Only a few brokers are commission-free for penny stock traders, but we've made our list exclusive to brokers that don't charge commissions.
Limited penny stock selection: Some brokers only offer a small selection of relatively-established OTC stocks to investors, and others only offer one-off penny stock trades on request. If you're looking to trade especially obscure penny stocks, you may find that many brokers don't allow access to them.
If you’re still on the fence about penny stocks, learn more about some of your other investment options:
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).
This list is based on our OTC access score, which measures the size of a broker's OTC stock selection, whether OTC stocks are subject to additional fees, and whether OTC trades are available by default or have to be requested. Merrill Edge, Moomoo, SoFi Active Investing and Robinhood are the only brokers we review that earned the highest possible score in this category, meaning that they offer an unlimited selection of domestic OTC stocks to all users without any additional fees.
For more details about the categories considered when rating brokers and our process, read our full methodology.