| Online penny stock brokers vary from ultra cheap | | | | E*Trade, Zedo, LowTrade and ChoiceTrade. Don't |
| and straight forward services to expensive brokers | | | | expect a lot of help from these services. Some of |
| who offer comprehensive support and guidance. I will | | | | them provide great tools and resources (like |
| summarize the different categories of brokers and | | | | E*Trade), but you have to utilize them yourself. |
| when you should go with a specific category. I will | | | | Despite the allure of low fees, I urge you to only |
| also help you identify the specific fees which apply to | | | | move to a discount broker once you've gained |
| penny stock trading. | | | | significant skill and experience in this industry. |
| Identifying Penny Stock Trading Fees | | | | Online Penny Stock Brokers Who Offer Both |
| Keep in mind that trading penny stock often involves | | | | Discount and Full Service |
| an extra charge or at least a different fee structure. | | | | Some full-service brokers kind of ride the line |
| So don't just look at a broker's basic structure and | | | | between being full-service brokerages and discount |
| fees; specifically look for how the broker handles | | | | brokers. What this means is that they offer |
| penny stock trades. In some cases, you won't see | | | | inexpensive trades (though maybe not quite as |
| penny stocks identified. You might also see them | | | | cheap as some true discount brokers) but also more |
| referred to as micro cap stocks or nano stocks. | | | | expensive service for investors who desire greater |
| However, you can still identify how a broker handles | | | | assistance and service. Brokers like this include ING's |
| penny stock trades by spotting trades with the Pink | | | | ShareBuilder and TDAmeritrade. |
| Sheets and the OTCBB (Over-the-Counter Bulletin | | | | Full-Service Penny Stock Brokers |
| Board). You may also see different charges for | | | | Then you have true full-service brokers. If you're |
| stocks under a $5 per share, which usually indicates a | | | | new to investing, I encourage you to stomach the |
| penny stock fee. | | | | extra expense of working with a full-service broker |
| Will you be day trading? If so, to trade on margin be | | | | as you learn the ropes. Vanguard, Fidelity and Charles |
| prepared to pony up a $25,000 starting balance. This | | | | Schwab are quality examples in this category of |
| is enforced by the SEC (Securities and Exchange | | | | brokers. These brokerage firms will offer you |
| Commission), so if you find a broker willing to skirt | | | | guidance and hands-on assistance in determining your |
| this rule, run fast the other way. | | | | investment strategy. If you dream of working |
| Discount Stock Brokers | | | | entirely on your own and you desperately want to |
| Discount brokers will offer lower fees and less of a | | | | avoid high fees, I still encourage you to start with a |
| discrepancy between standard trades and penny | | | | full service broker to build a solid foundation of |
| trades. Quality discount brokers include services like | | | | experience and knowledge. |