TradeZero penny stocks trading conditions explained

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Can you trade penny stocks at TradeZero as of October 2024?

Penny stocks are high-risk investments that offer a chance to reap great rewards if you pick the right stock, but also lose big if you bet on the wrong horse. So definitely make sure you know what you're getting into. Are you clear and open to the risk? Then let's take a look at whether you can place your bets at TradeZero.

Yes, you can trade penny stocks on the over-the-counter (OTC) market at TradeZero. Read on for exact fee details and what to keep a close eye on.

Penny stocks are pretty risky business (AI-generated image)

All you need to know about trading penny stocks at TradeZero

Krisztián Gátonyi

Forex • Market Analysis • Stock Market

I've tested dozens of brokers over the years, and explored their product offering in-depth, including whether penny stocks are available. Here is what you should know before trading penny stocks at TradeZero:

You can trade penny stocks, but check fee details closely to avoid surprises.
If you're on a budget, consider fractional share trading as a less risky alternative. However, for that you will have to go to another broker.
To see your best bets, check our list of the best brokers for penny stocks.

Before we begin, let's see if TradeZero is available in your country:

Yes, you can open an account at TradeZero if you live in United States!

United States

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TradeZero

4.2/5

Minimum deposit

$250

Stock fee

Low

Options fee

Low

Inactivity fee

Account opening

1 day

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Watch those per-share fees!

Penny stocks are shares of small public companies that trade for less than $5 per share: sometimes just a buck or two, or even just a few cents (hence the name). You can buy some penny stocks on formal exchanges, like the NASDAQ, but the majority are traded over the counter (OTC) through a broker-dealer network.

These stocks can be tempting due to their low prices, but they're also super risky. Imagine buying a ton of shares because they cost just pennies or a few dollars, only to see the company tank and lose it all. It's like betting on a dark horse in a race - thrilling but dangerous.

Here's where fees come into play. With stocks, brokers usually calculate fees in one of several ways:

per share (usually with a minimum and/or maximum)
as a percentage of trade value
a flat fee per trade
no commission

So if you're buying thousands of penny stock shares, and your broker charges a fee per share, those costs can pile up quickly.

Let's say you buy 10,000 shares at $0.50 each (total trade value $5,000). If your broker charges $0.01 per share, with no maximum, that's $100 in fees right off the bat. Now compare that to a flat fee or a percentage fee of the trade value: for example, with a 1% fee on a $5,000 trade, you’d pay $50, regardless of the number of shares. If there's no commission or just a $10 flat fee, even better – much easier on your wallet, right?

Alright, with that in mind, let’s see exactly what fees you will face when trading penny stocks at TradeZero:

Penny stock (OTC) trading fees at TradeZero: $0.005 per share with a minimum of $0.99 and a maximum of $7.95 up to 250k shares

A safer alternative: fractional shares

OK, have we mentioned yet that trading penny stocks is risky business? Seriously, know what you're getting into before you put your hard-earned money into what you imagine, or hope, will be the next big thing.

You can find a detailed rundown of all the risks you face in our article on how to trade penny stocks, from low liquidity to scams. These stocks are highly volatile, with massive price swings that can make your head spin. So they're definitely not for beginners; only experienced traders should venture here. If you do invest, keep your investment small — only what you can afford to lose.

As an alternative, especially if you are looking for penny stocks only because you have a small budget, consider buying fractional shares. This is a much safer option, as you can invest in some proven, high-quality stocks, even if they have high share prices, by being able to purchase just a partial share, typically for as little as $1. Less risk, less volatitily, more trustworthy companies, fewer sleepless nights!

Unfortunately, you can't trade fractional shares at TradeZero. You can find some great brokers that offer fractional share trading in our lists of the best micro-investing apps or the best brokers for beginners.

See the top brokers for trading penny stocks

Is TradeZero not available in your country? Not satisfied with what it offers? Wondering if there is another broker where you can buy penny stocks, but at better conditions?

Head over to our toplist of the best brokers for penny stocks to explore TradeZero’s top competitors for diversifying your portfolio with penny stocks. Browse through our curated selection of top-notch brokerages to see if you can go one better than TradeZero!

FAQ

Is it worth investing in penny stocks?

Penny stocks are highly volatile assets that require caution. Some penny stocks may lose all their value over a relatively short period, while others may produce above-average returns. So definitely be aware of the risks before investing in penny stocks. I would recommend that you put just a fraction of your total portfolio in penny stocks - money that you are OK with losing.

Why are penny stocks so risky?

Penny stocks are considered risky assets because of their high price volatility and lack of liquidity. Penny stocks are shares of small companies, only a few of which have the potential to perform well in the future. Because of poor liquidity, it is hard or sometimes outright impossible to sell the stocks you own.

Check out this short video for a behind-the-scenes peek into how our experts personally test and evaluate brokers.

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Penny stocks trading at TradeZero