Penny Stock Brokers
Scottrade
Majority of traders use Scottrade for penny stocks, there is a flat $7 rate for market and limit orders. There is a $500 minimum to open an account, but we strongly suggest that new investors go for the margin account which requires a $2000 deposit. Stocks under $1 are just $7 + 1/2% of principal.
The reason you should always go for a margin account is that there is a T+3 rule for a normal account. That is the trade plus three days settlement rule. This means that if you sold a stock today, you need to wait three days for that trade to ’settle’ before you can access that money to either buy another stock, or withdraw it.
If you have a margin account, you can buy another stock immediately after selling a stock. You don’t have to borrow money from margin, it’s there for you if you want it, but few penny stock traders will ever use margin to buy a stock.
So if you wanted to buy 50000 shares of a stock trading at 1c, you would pay 50,000 (shares) X .01 (stock price) X .005 (1/2%) + $7 (trade charge) = $9.25
Be careful trading stocks below 0.01, call them first to confirm orders with sub-penny stocks, margin accounts can get margin calls due to some systme problems they have.
Ameritrade
The next most popular broker is Ameritrade with the following commission schedule:
Internet trades $10.99
Interactive Voice Response (IVR) Telephone System $14.99
Broker-assisted $24.99 + $0.75 per contract (Market orders) and $29.99 + $0.75 per contract (Limit orders)
There is a quarterly inactivity fee of $15.00 if you are not using the account, but taking into consideration the tools and features that Ameritrade offers, this price is worth it. There are <a href=”http://www.ameritrade.com/streamer.html#”>streamers</a> which you get with your account and plenty of upgrades if you are a more active trader and have a larger portfolio.
Both these brokers get the job done, if you are comfortable with trading and do not need any hand holding, Scottrade would be good. If you think you may need to call a broker and get some help, Ameritrade might be better for you, but you will pay a lot more.
