Best Penny Stocks Brokers 2015

Best brokerage firms for trading stocks under $1 (penny stocks) at no extra charge

Conventional wisdom says that buying stocks under $1 dollar is extremely risky and it’s a bad investment. In most cases we agree. But in every rule there are exceptions. CitiBank was basically a penny stock in March of 2009. Now its price fluctuates between $4-$6 per share (taking into consideration 10:1 reverse stock split) and some analysts believe it will triple within next 2 years. It would have been silly not to buy, or, even worse, sell Citibank in March of 2009 ONLY because of "I won’t allow penny stocks in my portfolio" rule.

So, in rare occasions, we want to be able to trade stocks under $1. There is one problem with this though: many stock brokerage firms are trying to overcharge investors for penny stocks. The most common way brokerage companies do this is by putting a $0.01 or $0.05 surcharge on each share of stock priced below $1. So if you buy 5,000 shares of penny stock and regular stock commission is $5, this trade will cost you $5 + 5000*$0.01=$55! It’s a bit high, to say the least. Other brokerage houses came up with less strict rule: surcharge (usually $0.01) on all shares above certain limit (2,000 or 5,000 shares are common numbers). This is not as predatory, but it still makes trading penny stocks very expensive.

Fortunately, some of the best rated brokerage houses don’t overcharge their customers for trading stocks under a dollar or for large-size orders.

TDAmeritrade Review

TD Ameritrade

  • Stocks/ETFs: $9.99 per trade
  • Options: $9.99 + $0.75 per contract
  • No-load mutual funds: $49.99
  • Treasuries at auction: $25
  • All other bonds and CMOs, CDs: on a net yield basis
  • Futures: $2.25 per contract (plus exchange & regulatory fees)
  • Forex: Non-commission currency pairs trade in increments of 10,000 units (and do not contain a "#" symbol suffix). There are no additional fees or charges.

TD Ameritrade Advantages

  • No account fees or trade surcharges
  • Access to an online trader community
  • Free streaming quotes
  • Local branches
  • Free automatic reinvestment of dividends
  • Fee-free retirement accounts
  • Flat-rate commissions, no hidden fees
  • Virtual trading
  • Award winning trading tools

TD Ameritrade Disadvantages

  • Expensive commissions on all asset classes

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Etrade Review


  • $9.99 per stock/etf trade ($7.99 if making 150+ trades per quarter)
  • Options: $9.99 plus $0.75/contract ($7.99 + $0.75 if making 150+ trades per quarter)
  • Mutual Funds: $19.99
  • Futures contracts: $2.99 per contract, per side + fees
  • Forex: markup or markdown will be included in the prices quoted
  • Bonds: $1 per bond (minimum $10, maximum $250)

Etrade Advantages

  • Great trading platform
  • Good research tools
  • Suggestions for stock picks matching your investing strategy
  • Access to foreign stock exchanges
  • Low investment to open an account - $500 to begin investing, $2,000 allows you to open a margin account

Etrade Disadvantages

  • Expensive commissions on stocks and ETFs
  • Advanced trading platform, Power Etrade Pro, is only available to those executing 30 stock or options trades during a calendar quarter
  • Etrade's trading desk might trade against you
  • Customer service responsiveness depends on the size of account and frequency of trades
  • First transfer holds your funds for nearly two weeks

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This article was updated on 2/16/2015.

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