Where to Buy Penny Stocks

You'll have to learn where to buy Penny Stocks specifically, if you're going to venture into the stock market niche of trading low priced stocks.

Many traders will automatically begin trading Penny Stocks in their existing brokerage account, not realizing that there is a different commission schedule for low priced stocks at many online brokers. This different commission schedule is usually in the small print or noted by an asterisk or something else that can be easily overlooked.

I've written a previous article on Where NOT to Buy Penny Stocks which goes into more detail about the effects of various commission structuring you may come across.

Besides considering commissions, you'll also want to review each online broker's customer service track record, speed of trade execution, availability of low priced stocks to buy and availability AND ability to short low priced stocks. Be sure to check each of these and any other important features or capabilities you may want with each broker as they specifically relate to low priced stocks.

Here are a couple of reasons to check each of the items mentioned above:

  • Commissions: As noted in my previous article Where NOT to Buy Penny Stocks, commissions can mean saving or wasting several thousands of dollars each year as compared between one broker and another.
  • Customer Service: Just because you may have experience trading stocks, you may find yourself in unfamiliar territory when trading Penny Stocks and in need of assistance now and then in regards to your trading account. Be sure to check things like 1) the number of ways to contact customer service, 2) the time it takes for a reply and 3) the knowledge of the customer support staff, among other things.
  • Speed of Trade Execution: When trading Penny Stocks, the order routing is typically not the same as higher priced stocks. Some brokers are Direct Access brokers allowing for faster trade execution than others. Speed of trade execution is especially important when trading low priced stocks, which often are also low relative volume stocks.
  • Availability of Low Priced Stocks: Different brokers may provide access to different low priced stocks, and at different times.
  • Availability and Ability to Short Low Priced Stocks: Some online brokers have a minimum price requirement to be able to short low priced stocks, while others do not. Also, the number of shares available to short can vary widely from broker to broker.

The best thing to do when learning where to buy Penny Stocks is to do some research on your own about various online brokers because all of the things mentioned above can change over time. As of the time of this writing, here is a partial list of brokers that have had good reviews across the web for Penny Stock trading to help get you started: ThinkorSwim, Lightspeed Trading, Speed Trader, Infinity Brokerage, Genesis Securities, Sogotrade and Interactive Brokers.

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