Finding the Best Online Broker for Penny Stocks

Penny stocks are certainly good investment options. Since the main goal of any investment is to be able to make profits from the investments, it is important to find the best online broker for penny stocks. The most common trading place for penny stocks is the internet and as such, it is important to find the best penny stock brokers. The advantage of resorting to the well-established penny stock brokers is that they charge low fees and also charge lower commissions for the transactions. While trying to find the best online brokers, it is possible that you may run into brokers that may not be upright and honest. For instance, they may charge you hidden fees or surcharges.

Risk in Penny Stocks?

There is an inherent risk that accompanies every investment in the stock market. This risk is certain even for people who buy penny stocks (although their face-value may be low). Savings in a bank account are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 till the year 2014. In other words, the insurance offered by the FDIC minimises the impact of risk on the regular bank accounts. Similarly, in the case of stocks, the Securities Investor Protection Corporation (SIPC) insures investments to an extent.

The level of insurance is certainly not the same as with the FDIC, however, the SPIC will be able to replace missing stocks when possible. This means that in the event that your stocks are missing, the SPIC will, if possible, replace these stocks. However, if you purchase stocks that are worthless (if you have ben mis-sold) then you will not be covered by the SIPC. In order to be protected by the SIPC insurance, the broker must be a member of the SIPC. It is quite possible that brokers who have previously been members of the SIPC can have their membership revoked or can cease to be members. Hence, it is important that you confirm this by looking at an online brokers list of members of the SIPC.

Features of a Good Online Penny Stock Broker

The best online penny stock broker should be able to provide you with an account that does NOT have a maintenance fee for inactivity. Many online penny brokers have limits on the number of shares that can be traded, beyond which a fee may apply for the transaction. It is recommended that you choose brokers that allow you to trade unlimited shares.

Some of the Best Online Brokers for Penny Stocks

TradeKing is one of the best online brokers for penny stocks and is a very good company that provides excellent customer service as well as has reasonable charges for commission at just $4.95. We have a detailed TradeKing review that tells you why TradeKing stands above the rest. If good customer service and fair charges are what appeal to you, then TradeKing is certainly to be considered, as they are one of the cheapest online broker available.

{*UPDATE: Zecco has now become acquired by TradeKing*}

Another company that makes it to the list is Zecco. The commission that is charged by Zecco is even lesser at only $4.50. Zecco offers ten free trades a month if you have $25,000 assets or if you are a frequent trader. Zecco has FOREX and virtual trading as well. A Zecco review reveals that a minor drawback for the company is that its customer service may not be exceptional. Yet, with the services it offers, it makes a very good choice for an online penny stock broker.

Getting Started Trading Penny Stocks

You may feel apprehensive to start trading penny stocks right away, but you shouldn’t. Get your online broker account opening today and just begin with very small trades. Put in a few hundred dollars and see how well you do.

The information contained on this site does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific situation. In accordance with FTC guidelines, we state that we have may a financial relationship with some of the companies mentioned in this website. Please do the appropriate research before participating in any third party offers.