For over a decade, DailyForex has been the trusted forex broker authority, establishing an unrivaled reputation for rigorous research and journalistic integrity. With a methodology refined through years of industry experience, we empower traders to make informed decisions, which is particularly important when trading high-risk investments such as penny stocks. Discover more about our comprehensive review process and how we maintain transparency and impartiality here.
Penny stocks refer to all stocks that trade below $5. While the OTC is the primary exchange for penny stocks, traders can find thousands of penny stocks listed on other exchanges, including the LSE, the NASDAQ, the NYSE, and dozens of leading international stock markets. Before traders consider penny stocks, they must weigh the added risks versus the rewards, as there is a reason why the price is that low. The best brokers for penny stocks offer the necessary tools to make informed decisions, and my review below will help you get started.
- IG, No withdrawal fee.
- Robinhood, Mobile-focused equity and crypto broker.
- Interactive Brokers, The biggest online trading platform in the USA.
- TradeStation, A professional trading platform with a competitive cost structure.
IG
In Summary No withdrawal feeIG Markets offers traders an excellent asset selection with hundreds of penny stocks and the L2 Dealer platform for direct market access (DMA) trading. L2 Dealer provides improved liquidity, lower pricing, and direct trading with primary exchanges, market makers, brokers, and MTF dark pools. It also offers market depth, from numerous providers, including full market depth from the LSE, and smart order routing to source the best price from several trading venues. Therefore, I rank IG Markets among the best penny-stock brokers.
Penny stock traders also benefit from no requotes or dealer-referred tickets. OTC trading, links to market news, and one-click trading.
70% of retail investor accounts lose money when trading spread bets and CFDs with this provider
Pros & Cons
- Broad asset selection for Forex traders
- Quality choice of trading platforms, including MT4
- Autochartist signals integrated with the proprietary web-based platform
- No minimum deposit + free deposits and withdrawals
- Limited deposit and withdrawal methods
Robinhood
In Summary Mobile-focused equity and crypto brokerPenny stock traders at Robinhood should consider the subscription-based Robinhood Gold account. It is free for the first 30 days before a monthly fee of $5 applies. Robinhood also supports fractional share dealing from $1.
The Gold account benefits include 4% APY on uninvested cash (FDIC-insured up to $2.5 million at partner banks), up to $50,000 in instant deposits, the first $1,000 of margin interest-free before margin rates between 4.70% and 5.75% apply, advanced market data via NASDAQ Level II data, and professional research provided by Morningstar. It places Robinhood among the best penny-stock brokers in the US.
Pros & Cons
- Quality education for beginner traders
- Balanced asset selection for equity and cryptocurrency traders
- A dedicated cryptocurrency account
- User-friendly and highly rated mobile app
- History of SEC investigations and fines
Interactive Brokers
In Summary The biggest online trading platform in the USAI rank Interactive Brokers among the best penny-stock brokers due to its ultra-competitive infrastructure. Penny stock traders receive an asset selection that few brokers can match, and the proprietary IBKR Desktop and the Trader Workstation (TWS) trading platforms ensure a competitive edge with a professional approach. The latter also includes the IBKR Impact Dashboard for sustainable investing and the IBKR Fundamentals Explorer.
Interactive Brokers IB SmartRouting for IBKR Pro Clients resulted in a total trading cost of 4.1 basis points, or 0.057% of the trade value, as of December 2024. Interactive Brokers also pays up to 3.351% APY.
Pros & Cons
- Excellent asset selection
- Superb trading infrastructure
- Ultra-low trading fees
- Cutting-edge trading platform
- Limited payment processors
TradeStation
In Summary A professional trading platform with a competitive cost structureTradeStation offers penny-stock traders institutional-grade trading conditions, including an average price improvement per share of $1.29 on 94.44% of all NMS equity market orders with an average order execution speed of 0.044 seconds. In 2023, TradeStation delivered an overall price improvement exceeding $32.6M for its traders. Therefore, I rank TradeStation among the best penny-stock brokers.
The TradeStation Desktop trading platform features one-click and drag-and-drop trading. The ability to scan up to 1,000 stocks in real-time, and RadarScreen, allow penny stock traders to use 180+ technical and fundamental indicators. The TradeStation EasyLanguage option supports algorithmic penny stock trading.
Pros & Cons
- Commission-free futures trading
- Fast and reliable order execution with average speeds of 0.056 seconds
- Cutting-edge trading platform with 180+ indicators
- Unfair treatment of non-US traders due to stock commissions
- Only bank-related payment processors
Top Brokers for Penny Stocks Comparison
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Regulators | ASIC, BaFin, CySEC, DFSA, FCA, FINMA, FMA, FSCA, JFSA, MAS | N/A | ASIC, Central Bank of Ireland, CFTC, FCA, MAS, SEBI, SEC | N/A |
Year Established | 1974 | 2013 | 1978 | 1982 |
Execution Type(s) | Market Maker | Market Maker | Market Maker | ECN/STP, Market Maker |
Minimum Deposit | ||||
Average Trading Cost EUR/USD | 0.9 pips | N/A | Account and account-tier dependent | N/A |
Average Trading Cost GBP/USD | 1.4 pip | N/A | Account and account-tier dependent | N/A |
Average Trading Cost Gold | $0.30 | N/A | Account and account-tier dependent | N/A |
Trading Platform(s) | Other, MetaTrader 4, Proprietary platform, Trading View+ | Proprietary platform | Proprietary platform | Proprietary platform |
Islamic Account | ||||
Negative Balance Protection | N/A | N/A | ||
Get Started Visit Website71% of retail spread bet and CFD accounts lose money | Visit Website | Visit Website | Visit Website |
What to Look for When Selecting a Broker for Penny Stocks
I focused on the criteria below, which are necessary to all penny stock trading, and irrelevant to the strategy and preferences.
The best brokers for penny stocks will offer the following:
- Regulation: I recommend a broker with a clean regulatory record of 10+ years, ideally with a trader-friendly regulator.
- Fees: Low trading fees define a competitive trading environment, and volume-based rebates will lower final trading fees for high-volume traders.
- Asset selection: A balanced choice of penny stocks is necessary to ensure trading opportunities and diversification.
- Liquidity: Many penny stocks are less liquid, making broker liquidity a primary requirement for trading effectively with fast order processing.
- Trading Platforms: Algorithmic trading is ideal for committed penny stock traders. Otherwise, in-depth charting software, research tools, multi-screen support, and one-click trading are essential.
Trading and Non-Trading Fees with Penny Stockbrokers
The pricing environment at all brokers consists of frequent trading fees and less frequent non-trading fees.
Trading Fees at Brokers for Penny Stocks
- Spreads (the difference between the bid and the ask price)
- Commissions (some penny stocks are commission-free)
- Swap rates (charged on leveraged overnight positions)
- Currency conversion fees (if the trade currency differs from the account currency)
Non-trading Fees at Brokers for Penny Stocks
- Deposit fees (the best brokers for penny stocks offer fee-free deposits)
- Withdrawal fees (they vary based on the payment processors)
- Inactivity fees (penny stock traders can avoid them by placing one trade every 30 to 90 days)
- Currency conversion fees (if the deposit or withdrawal currency differs from the account currency)
Pros and Cons of Trading Penny Stocks
Before considering penny stock trading, I urge traders to consider the pros and cons.
The Pros of Trading Penny Stocks
- An increased profit potential
- A high-volume strategy exploiting smaller price fluctuations
- Thousands of penny stocks across international exchanges
- Advanced strategies include algorithmic penny stock trading
- Sentiment strategies can offer additional trading opportunities
The Cons of Trading Penny Stocks
- Lack of understanding of penny stock trading
- Less liquidity that results in erratic price action
- Insufficient capital to trade sufficient volumes for small price moves
- Pump-and-dump schemes, especially on social media
- Some penny stocks lack transparency or audited financial statements
- Fraudulent businesses may seek capital via reverse mergers with penny stocks
Bottom Line
Trading penny stocks can yield high returns but also carries higher risks. The best brokers for penny stocks offer the necessary infrastructure to succeed, but it all begins with an in-depth understanding of penny stock trading.
