Do you want to know more about the best brokers for Penny stocks? Insider Monkey recently published an article about this topic giving us some very useful tips. These are mainly offered by small companies with less than $300 million in market capitalization, also called micro-cap stock. If a company has a market capitalization of less than $50 million than it is called a nano-cap stock. In general, both of these fall under the category of penny stocks. Penny stocks are traded infrequently and selling them may prove to be a hustle, because of highly irregular demand, unlike their big brothers traded on Wall Street. This also leads to another penny stock characteristics, their value is hard to determine due to infrequent trades, plus they are traded over the counter. All these had led to penny stocks being labeled a highly speculative trade. That is why Congress has issued strict restrictions on their trade, mandating that brokers who deal with penny stocks must fulfill several requirements before engaging in trade, like informing them of inherent risks of penny stocks trading, getting a written permission from a client on every trade, and full disclosure on company’s and broker’s fees. They also must send monthly account statements listing all penny stocks client owns and their market value.
Now without a further ado let’s see what Insider Monkey has investigated for us. We have picked two items from their list.
The first one is Interactive Brokers. One thing we really don’t like about Interactive Brokers is their per share commission policy. Those half cents don’t seem much, but considering that penny stock in if fact a volume trading, they quickly add up and will seriously eat into your profit margin. TD Ameritrade doesn’t require a minimal account, which makes it great for beginners. They also offer a cash bonus for signing, ranging from $100 to $600, depending on the account value.
For any further interesting information read Insider Monkey’s article about 5 best brokers for Penny stocks.