Penny Stock Brokers 4u

Even if you have invested in stocks for many years and have even actively managed your portfolio rather than have a professional stock broker make the majority of investment decisions for you, chances are that you will not be fully prepared to leap into the world of penny stocks.  Luckily there are many resources available on the Internet to help you get a better understanding of this unique but highly volatile investment vehicle.

Once you have done your homework and are ready to enter into your first penny stock trade, you will need to decide which penny stock broker will best serve your needs. There are a number of penny stock brokers to be found including both full-service brokerages and discount brokerages.

A full service penny stock broker does exactly what the name indicates, they fully service your account through advice and professional guidance by discussing your investment objectives with you and then suggesting those penny stocks that they feel will meet your investment goals and yet stay within your risk comfort zone.  You are gaining their insight into the market and those conditions that may affect the various penny stocks you are considering. That does not mean that using a full service broker will protect you against a stock plummeting to worthlessness. They are only human after all and do not have a crystal ball anymore than you do. Since using a full service broker will entail higher commissions, you should choose one carefully. Look at the fees they charge not just per transaction but any additional fees they may have set up specifically for penny stock transactions. Generally speaking, a full service broker’s fees make the most sense when you are not trading regularly, which is not usually the case with penny stock investors.

Discount brokerages do not give you the services that a full service brokerage does. Often you are handling everything yourself with online access and/or telephone access to your account. This type of brokerage is much less expensive and is often used by penny stock investors for this reason. The commissions, fees and account requirements can vary quite a bit between the various penny stock brokers.

• Commissions – Range from free with limited number of trades to over $20 per transaction; some with a sliding rate based on number of shares or amount of investment
• Inactivity Fees – Many do not charge a fee for this but some are $100 a year or more
• Penny Stock Fees – Many do not charge a fee specific to penny stock transactions; others charge a fee for large orders (more than a set number of shares, sometimes as few as 1,000 or as many as 100,000 shares) or for any stock less than a minimum price (usually $1)
• Minimums – While some brokerages do not require a minimum amount to start an account, most require some sort of minimum ranging from $500 to $2,000. Some have higher amounts in lieu of commissions; for example, a minimum account of $25,000 allows you 10 free trades per month.
• Quarterly or Annual Fees – Many do not charge a regular fee, but you should check to be sure. Also check for any miscellaneous fees such as withdrawal fees, statement fees and so forth.

There are other considerations besides commissions, fees and minimums when choosing a penny stock broker. When investing in penny stocks timing of order executions can be even more critical than with any other type of investment.  While a penny stock can sit at one price for quite awhile, it is not unheard of for a $1 stock to trade at $3 for a 2-3 hour window and then drop down to $2 and then remain at the lower price for days, weeks or even longer.  The worst thing that can happen is for your online brokerage website to be down or take too long to execute your order.  It is therefore imperative that you research the brokerages you are considering to be sure they are highly reliable and efficient.

A word about online brokerages – even if all of them were to be miraculously equal on all other fronts (commissions, fees, minimums and reliability), the ability to use their website with ease and the variety of useful tools they make available may very well be a deciding factor for an investor. While one site may post only low/high quotes, another may give real time quotes. While one site may provide articles to assist you in choosing penny stocks, another may have a “hot list” that is frequently updated. Some will show top performers to consider and the bottom performers to avoid. Perhaps a site that gives a history of all stocks would be useful. Once you determine what tools will best assist you with your portfolio management, you will be better able to choose an appropriate online penny stock broker.  Although too involved for some investors, you may want to consider using more than one online brokerage to begin with so that you can compare them over a period of time and then settle on one. There are also a number of newsletters that you can sign up for that will shoot an email to you on a regular basis of the top penny stocks chosen by that particular company.

Below is a listing of some brokerages to research. This is by no means a complete list and they are not in any particular order indicating a preference of one over another, since in the end it is the investor that must be happy with all the aspects of the brokerage they ultimately use.

• TDAmeritrade – they offer Internet trading, Interactive Voice Response (IVR) Telephone System trading and Broker-assisted trading.
• E*Trade – they offer a reduction in their already low transaction fee for accounts with 150 or more trades per quarter.
• Choicetrade – they have a flat commission per trade with no surcharge for penny stocks nor a minimum per trade.
• Scottrade – they do not charge inactivity fees or account maintenance fees, and require just $500 to open an account ($2,000 for a margin account).
• Trading Direct – two of their nice features are Free E-Documents which enables printing a variety of statements and Express Trading which lets you place 3 stock orders at one time from one screen.
• LowTrades – they offer a “no-nonsense free trial” so you can test-drive their company
• Zecco – offers a 10 free stock trades a month with a $25,000 minimum balance option in addition to a low price stock trade fee for smaller accounts

Many brokerages also have sign-on bonuses that you should be sure to take advantage of if offered. Some give you a cash bonus; others give a number of free transactions.