Stock Ameritrade

Ameritrade for Penny Stocks

Finding a good penny stock broker can be difficult, but some of the most popular companies are Ameritrade, Etrade, Zecco and Scottrade. Service and commission definitely vary from broker to broker and you certainly get what you pay for. I personally have accounts set up with four different penny stock brokers because they are all good at different things. For example, Ameritrade integrates with the EquityFeed Trading Platform I use and executes trades quickly.

I use Etrade as my back up to Ameritrade in case Ameritrade is experiencing server issues which is a rare event, but has happened. I have been locked out of my account at the opening of a trading session and would have missed out on thousands of dollars of profit, but I was able to log into my Etrade account and make the purchase. Ameritrade and Etrade provide pretty much the same service, but Etrade has slightly better tools. Etrade’s Level 2 quotes are much better than Ameritrade’s and Zecco’s Level 2 quotes. I do not use Etrade’s tools because I use other applications which are significantly better.

Zecco and Scottrade are other popular brokers. Scottrade is very popular because they have low commissions and are easy to work with. Zecco is my favorite for cheap trades as they often give you free trades every month. I try to use these up before paying commissions at Ameritrade.

Unfortunately, Zecco does not always show accurate level 2 quotes and can be slower than Ameritrade and Etrade at executing orders. All of these brokers will allow you to also buy big board stocks. Many premium brokers will not let you buy penny stocks because they usually end up losing money on the trade. This is because it’s easy to stick your clearinghouse or broker with shares that you sold to them to close your trade. Many of these brokers are also shorting penny stocks and this creates a conflict of interest between company and client.

Support is obviously important and you should be able to call in and speak with a real person without being put on hold for more than two minutes during trading hours. Most of the phone support is trained to handle big board clients, so they are clueless about how to trade penny stocks. Be prepared to hold their hand as you become more experienced and always be sure to place a limit order.

I only call support to place a trade for a restricted stock or to have them fix a glitch in my account. Once you have more than $25,000 in your account and are flagged as a pattern day trader, you should consider upgrading to a direct access software account.

DAS is only for experienced traders as it allows you to route orders through different market makers, and gives you the ability to stack the bid or ask in your favor. Most of the DAS providers use the same platform, but just put their name on it. Go with the company that gives you the best service and the best commissions during your initial account set up.

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