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

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

Open the Robinhood app
Choose the penny stock you want to buy
Tap on the Trade button
Enter the amount you want to purchase penny stocks for
Review your order
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