Lessons From A Penny Pro

Penny Stocks Brokers and Trading Fees

Stocks are showing a nice bounce after Friday’s sell-off. However, as an experienced trader, I know one day doesn’t constitute a trend. That said, while the market is trying to figure things out, I’ve had to remain patient with my trading.

When you’re trading an account that’s under $25K like I am… in the $2K challenge … I know I’ve got to limit my mistakes if I ever want to get out of Pattern Day Trader Hell.

That means every nickel and dime matter… including what you pay in commissions.

Last year I showed traders how to grow a small account… not once…twice…but three times.

(If you’d like to learn more about how I turned three separate small accounts significantly larger, then watch this.)

I’ve already proven my penny stock system works. But today, I’m going to show you how to save money and cut unnecessary expenses…

You see, when you’re trading stocks that are sometimes sub-penny… then you need to pay close attention to your commission costs. It could mean the difference between having a winning or losing on your hands.

Read on to see why I think fees matter, who the best broker is for trading penny stocks, and a whole lot more.

Choosing the Right Penny Stock Broker

Penny stock traders often ask me, “Do fees matter and which broker is the best?”

Of course both matter.

When you’re trading penny stocks, the last thing you want to do is get eaten up by trading fees. That in mind, it matters who you choose as a broker… and you have to know what they’re charging you.

Types of Penny Stock Brokers Fees

For example, there are two types of fee structures when it comes to brokers:

  1. Fixed fees
  2. Volume-tiered fees

Now, fixed fees, in my opinion are the best. For example, I use E*Trade to trade penny stocks. It’s $6.95 per trade… but if you have more than 30 trades per quarter… your fees drop down to $4.95. You see, when you’re trading penny stocks… sometimes, you’ll be trading 10K shares… and flat fees (fixed fees) work the best.

There are other flat-fee brokers out there, like TD Ameritrade too. TD Ameritrade charges $6.95 per trade as well. However, it doesn’t offer a tiered fee structure like E*Trade. In other words, even if you trade more than 30 times a quarter, your fees stay at $6.95 per trade.

Moving on, there’s the volume-tiered fee structure. Why is this bad for penny stock traders?

Well, think about it like this… let’s say you go with Interactive Brokers… here’s a look at its fee schedule.

Let’s say you trade 200,000 shares of a penny stock… your fees would be $0.0035 per share.  Well, you would pay a whopping $700 for that trade ($0.0035*200,000). You see how much that could hurt you, especially if you’re trading a small account?

Even with its fixed-fee schedule per share… it would cost $0.005 per share. Think if you trade even 10,000 shares… it would cost you $50 just to buy the stock… then $50 to sell it.

E*Trade for Penny Stock Trading

That’s one of the reasons why I chose E*Trade as my broker.

Not only that E*Trade offers a state-of-the-art platform: E*Trade Pro.

Source: E*Trade

If you’re able to install this platform onto your computer… that’s great. But even if you can’t… that wouldn’t stop you from trading while you’re on the go because E*Trade offers a web platform, as well as mobile platforms.

Source: E*Trade

Before you select a broker, make sure you do your due diligence. That means asking questions, and figuring out which platform best suits your needs. If you want to learn more about E*Trade as a penny stock broker, make sure to check out its Frequently Asked Questions (FAQs) page.

Now, if you don’t want to use E*Trade as a broker, there’s also TD Ameritrade. Since I don’t use TD Ameritrade, I can’t tell you how good or bad it is… but I do know E*Trade is suitable for most penny stock traders.

Keep in mind, it’s not only about having the right broker when you’re trading penny stocks… you also need to have the right strategy. For example, here’s one of the patterns I use to trade penny stocks:

penny stocks

This is known as a bull flag pattern. Basically, we’re looking for a stock to run higher… stall… and then break out.

Now, one of our clients actually traded this off my recent alert at $.01… and let us know about it in The Traders Council chatroom.

Mar 26, 9:35 AM D.Y. : Out of VRUS at .0146 Plus $ 2990.00 ..Looks like I sold too early

It’s really that simple… once you have a good broker with a trading platform, and charting software to spot trades like the one in VRUS.

Lastly, if you’d like to follow some of my trades… you can… just  follow me on Twitter.

Want to Be a Better Trader? Get Powerful Trading Strategies, Tips & Video Lessons… 100% FREE!