Things to consider while choosing a Penny Stock Broker

[comparebroker]

Hi,

I have $500 and one of my friends advised me to invest that in penny stocks. I researched it on Internet and found that the stocks whose value is under $5 are called "Penny Stocks". I then searched if all brokers facilitate this service. Unfortunately, the answer is no.

My question is " What are the things to consider while choosing a penny stock broker?"

 

[Trader333]

What are the things to consider while choosing a penny stock broker?

You should consider not trading penny stocks at all in my view as they are well known for price manipulation. I am sure many people get the spam emails that are all about the latest penny stock that is about to explode in value when in reality they aren't.

 

[neil]

Hi,

I have $500 and one of my friends advised me to invest that in penny stocks. I researched it on Internet and found that the stocks whose value is under $5 are called "Penny Stocks". I then searched if all brokers facilitate this service. Unfortunately, the answer is no.

My question is " What are the things to consider while choosing a penny stock broker?"

And get a new friend :whistling

 

[comparebroker]

@Neil Why get a friend? I don't understand.
@Trader333, Yes, I do understand your concern. But if still I have to invest, can you help?
I want the broker to be cheap and at the same time has an efficient trading platform.
I mean from what I know about penny stocks, their prices change rapidly and if the platform sucks then profits can change to losses.

You know any websites, which give the listings

 

[Trader333]

It's not the platform you need to really worry about in my view it is the liquidity of the stock being traded. If liquidity is poor then you will get hammered and many penny stocks have very poor liquidity.

 

[ryandj2222]

$500 isn't enough really. For penny stocks you need to buy a fair few to hedge your bets against the inevitable big losers (although of course you'd use a stop loss). If you bought even just one or two stocks with your money your commission would be a huge % of the cost and you'd need to make a fairly big profit to beat the commission and spread.

 

[neil]

It's not the platform you need to really worry about in my view it is the liquidity of the stock being traded. If liquidity is poor then you will get hammered and many penny stocks have very poor liquidity.

Heed the above advice.

Your friend may mean well but is clearly lacking knowledge of penny shares.
Google "penny shares" and you will learn that dealing in them is dangerous. You need to read a lot more about the subject and remember that pro's do not play with Penny shares - they are cheap for a reason but liquidity is all important.

 

[comparebroker]

Wel, I ll study more about penny stocks. Thanks for the advice though.

 

[tar]

Check Choicetrade $7/side for penny stocks up to 500K shares , for orders over 500K shares you will pay an extra 1% of the total order per side .

 

[comparebroker]

Are there like hidden charges for Penny stocks too? I thought that this is the case just with normal shares. Also, does choosing a brokerage matters. I mean I know choice trade but haven't used them a lot. What's their Pro?