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How to trade penny stocks on Robinhood?

How to trade penny stocks on Robinhood

Low-priced stocks or "penny stocks" are stocks that have a price of less than $5 and are usually issued by small companies. Penny stocks are high-risk investments known for their extreme volatility and huge price swings.

Most investors tend to avoid these stocks as they have a track record of fraud and manipulation. But for others, investing in penny stocks means the lure of big returns in a short time. As they are not traded on the big stock exchanges, it is difficult to find reliable informaiton on them, so do your research before you start investing in penny stocks. 

 

Can you buy penny stocks on Robinhood?

 

Robinhood, which offers commission-free trading, does allow you to buy penny stocks on its platform. Robinhood aims to bring in new investors so it makes sense that they would allow oennsy stocks to be traded. New traders looking for penny stocks contributed to Robinhood's growth. 

 

How to find the best moving penny stocks on Robinhood

 

  1. Open up the Robinhood app or web platform
  2. Navigate on Popular collections, which cuts down the number of stock you are looking at
  3. Choose an industry, or screen for different aspects of (for instance analyst ratings, upcoming earning results)
  4. Adjust price you want to buy for to narrow down your options
  5. Check for trends
  6. Choose a stock
  7. Review your order
  8. Submit your order

 

How to buy penny stocks on Robinhood

 

Once you have researched penny stocks, and decided which one to buy and for how much, here is what you need to do: 

  1. Open the Robinhood app
  2. Choose the penny stock you want to buy
  3. Tap on the Trade button
  4. Enter the amount you want to purchase penny stocks for
  5. Review your order
  6. Submit your order

Robinhood penny stocks: things to consider & risks

 

Penny stocks are risky and speculative investments. Before you start pouring your money into them, test your risk tolerance, educate yourself, and try trading using a demo account to get the feel of these stocks.

  • The best approach is to buy the shares of small-cap companies that are listed on a regular stock exchange
  • Invest in a sector you know and trust, where you have insights
  • Watch out for scams: Learn about the latest and most common fraud schemes, and check out the company you want to invest in
  • Keep in mind that they are usually easy to buy and hard to sell
  • Never put all your money in just one or a couple of penny stocks

 

Robinhood further reading

 

Author of this article

Eszter Zalan

Author of this article

Eszter is a Brussels-based content editor and writer with over fifteen years of experience in journalism. She thrives in researching complicated issues and explain their essence in a plain and clear language to guide you through the world of finance.

Eszter Zalan

Content Editor

Eszter is a Brussels-based content editor and writer with over fifteen years of experience in journalism. She thrives in researching complicated issues and explain their essence in a plain and clear language to guide you through the world of finance.

Everything you find on BrokerChooser is based on reliable data and unbiased information. We combine our 10+ years finance experience with readers feedback. Read more about our methodology

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