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Best online brokers for trading penny stocks 2021

Hey, I’m going to be talking about the best brokerages to use for trading stocks. If you’re particularly interested in OTC stocks like I am and for those of you who do not know the difference between OTC stocks and listed stocks, essentially OTC stocks are the stocks that aren’t listed on the major exchanges. And because of that, it can be a little more difficult to find great brokerages to trade them on. So because of that, I want to talk about what brokerages I use and have used and would say you guys should look into if you want to be trading these types of stocks and I’ve used pretty much every single one of these brokerages that I’m talking about. So it probably is a little confusing if you’re trying to choose who you should go with but I would say it’s probably best to choose between one of these four brokerages because all the other brokerages have significantly more fees. And again, there’s a ton of other brokerages out there. You know that there are interactive brokers, there’s Cobra, there’s Centerpoint, there’s lightspeed, there’s sure trader, those are just to name a few of the other brokerages. But for me, I would say it’s probably best to choose between one of these for TD Ameritrade, Charles Schwab, fidelity, and E-trade. And let me just kind of go in order and explain some of the pros and some of the cons of each of these, I guess, each of these platforms. So let me start with TD Ameritrade. So this is one that I have an account at. And the main reason that I have an account at TD Ameritrade is not to trade OTC stocks, because I am not a huge fan of their inability or their refusal to negotiate on their commissions on OTC. So depending on how you trade, your Commission can add up a lot, especially if you have a small account, it can make a big difference. Because again, if you’re taking small positions when you’re starting, which I recommend, if you’re taking a small position, say $100 position, they have a 6.95 cent commission for every time you buy an OTC stock and every time you sell an OTC stock. So let’s say you buy $100 worth of a penny stock. And maybe it’s 10,000 shares of a what is that a one-cent stock? Let’s call it that. I think math is right on that. If not, forgive me mental math is not my strong suit. But say you put $100 in right 695 for the Commission on both sides. So that’s pretty much $14. So you pretty much lost 14% of your money as soon as you buy it. So for that reason, I’m not a huge fan of trading on TD Ameritrade, especially if you are a beginner. Now if you have a much larger account, you know, you got a $50,000 account $100,000 account and you’re making $10,000 trades, well, 14, you know a dollars out of a $10,000 it doesn’t make as much of a difference. If you’re going over and over and over as I do, it still does add up. So definitely don’t discount this. But it’s less of a factor if you have a bigger account. But if you have a small account, you want to avoid paying a ton of commissions because it’s going to destroy your profits.

TD Ameritrade trading platfrom: 

Td ameritrade

Now the one thing that I do like TD Ameritrade for is the fact that in their platform, which is called Thinkorswim This is what you download. That’s what this is lady beautiful. She’s looking real cute. That’s where she’s on Thinkorswim and this has free level two so sometimes you may have to deposit $500 but they have level two for OTC which is something that a lot of these other platforms do not have. So keep that in mind guys.

So that is the main thing that I would use from TD Ameritrade, it’s still helpful to have an account and account because I liked the Thinkorswim platform. I just I’m not a fan of the Commission. So for that reason, I do not trade on TD Ameritrade.

Fidelity trading platform:

fidelity

 Now, the next thing that I like to use is fidelity. And fidelity is great because they have no commission whatsoever on OTC stocks, which means if you buy and sell, you know 100 times in a day, let’s say total. That’s what 100 100 times 695 that’s almost 700 bucks you save by being on fidelity and you might think, man 100 times a day, that’s a lot. I trade multiple hundreds of times per day. And it adds up. So me paying 695 per trade will cost me 1000s of dollars a day. That is not an exaggeration. So obviously, you won’t make as many trades as me. But this is still something to keep in mind. So I’m a big fan of fidelity for going long. And something else that I like about them is that they let you use margin on your OTC. Now, this might not make sense to you if you are new to this world. But essentially what this means is, if you are over the $25,000 limit for the PDT rule, if you’re over that limit, you can have a margin account and make as many day trades as you want. And having the ability to use margin means that you can use that money over and over and over. So in a $25,000 account in one day, I can trade a million dollars worth of OTC stock, no issue. And you can imagine if I can make just point 1% on a million dollars, that adds up versus if I only have $25,000 worth of buying power. If I buy that $25,000 and sell and then I can’t buy more for the rest of the day. You know, it’s a little bit harder to make big gains on an account, which is why I’m a fan of using margin. Now, I’m not a fan of using leverage. I’m not saying if you have a $25,000 account, you should go in with a $50,000 position at once. That’s not what I’m saying. But it’s the ability to use your money over and over again, that’s very, very helpful. So I’m a big fan of fidelity for that reason. Now the one thing I guess the two things that fidelity is missing is the fact that fidelity does not let you trade. Any OTC that has a stop sign on OTC markets.com, which is frustrating because this means if it’s not pink current financials are not updated for the company, then you’re not able to trade it. And there are so so many companies that are running queues where there’s a ton of opportunity that I make 1000s of dollars on that a lot of people who are just on fidelity, they’re not allowed to trade. So it’s a little bit frustrating, and you win some you lose some so you go pay commissions. But at the same time, you’re not allowed to trade those stops on companies and a lot of those are the ones that are running a ton. So you got to keep that in mind and weigh these things. And also, fidelity has pretty terrible locates, if you want to short OTC so there’s a lot of OTC stocks that I like shorting because you know, I like going long when there’s not too long side and I like shorting when there’s an opportunity on the downside and fidelity doesn’t have that great locates. So you got to keep that in mind. So I use fidelity for a long time, but I’m not currently using them because they banned me for life. But I would still use them for I would say going long on stocks that do not stop sign stocks, that is what they’re great for. 

 Charles Schwab platform:

Schwab

Alright, so moving on. Charles Schwab, this is a this is great brokerage and they would be pretty much perfect except for one thing. So what Schwab is great for is, again, just like fidelity, they have zero commissions on OTC zero commissions, which is incredible, which means that if you have a small account, I think Schwab is a great option, especially if you’re under $25,000 Schwab is probably the brokerage for you because not only again do they allow you to trade any of those stop sign stocks, but they’re also zero commission and they also have good locates on shorts. Now if you’re under 25,000, you should probably be in a cash account so you don’t fall subject to the PDT rule, which means you’re not going to lose short but if you’re over 25,000 you’re going to be able to short and Schwab has the best short locate of all these four OTC So between these four brokerages, Schwab has by far the best location for shorting OTC and I mean a lot of money shorting OTC within my Schwab account, so the fact that the swap does that is great. So I would say the pros of Schwab are they have a great location, they allow you to trade stops on tickers, and they have zero commissions on OTC. So they would be the perfect brokerage except for this one thing, they do not let you use margin on OTC stocks. So that’s kind of what I just talked about for fidelity but Schwab if you have $25,000, and you’re over the PDT limit, and you have a margin account, it does not matter if you buy an OTC stock, they will only let you use your settled cash. So if you buy $25,000 worth of an OTC stock and sell it, you will not be able to buy again and sell again, buy against elegant, you’ll have to wait for that money to settle, which means your buying power is extremely limited. It’s extremely limited. So again, you can go from trading a million dollars worth of stock on a $25,000 account to now trading,

Okay! $25,000 on a $25,000 account, which limits you from the long side. And what’s stupid is that you can short unlimited so I could short a million dollars with OTC stocks in Schwab per day on a $25,000 account as long as it’s not all at once, but I would not be able to go long more than 25,000. So that’s the one thing about Schwab that frustrates me but it is what it is. And again guys, there’s there are pros and cons to each of these brokerages. 

E-trade trading platform:

E trade

Now the last one, and this is where I currently have my account for going long is the fact that I guess e-trade does allow you to use margin and they do negotiate on commissions, and they do allow you to trade stocks on stocks. So just to review, TD Ameritrade does not negotiate at all on commissions, but they do let you use margin and they do let you trade stop sign stocks. So each raid, it’s pretty much the same thing, except they do negotiate on the rates and I was able to get my rate down a lot on OTC stocks. So automatically it starts at 695 which is the same as TD Ameritrade but if you make more than 30 trades per quarter, they will automatically lower it down from 695 down to 495 which is great. So it automatically already lowers but then if you have a large account and you make a lot of trades you can get that significantly lower than even 495 so I’m not gonna say on here what I got from E-trade. But it’s pretty cool that they’re willing to negotiate and I appreciate this about each raid so for that reason, they are honestly one of my favorite brokerages now because of that, and again, they allow you to go long on all these stops on tickers. They allow you to use margin on ongoing long again I don’t think their short locates are super great but for me, this would be my number one option for going long on OTC stocks if I am over the $25,000 PDT rule. So that’s pretty much it. I think also think that they have I think they have level two for OTC I believe e-trade does have that and Schwab kind of have it but they don’t have it and fidelity does not have it at all. So TD Ameritrade has the best level two I would say I haven’t again, I haven’t dipped my toes in level two for E-trade because I use an outside service for level two for OTC. Or sometimes again I use TD Ameritrade so I haven’t checked if e-trade has that but that’s just the summary guys. So again, just to give you a quick highlight. TD Ameritrade does not negotiate on commissions but you can trade OTC stops on tickers and you can trade with margin fidelity they have zero commissions on OTC but you cannot straight stops on tickers and you can use margin so can use margin no stops on tickers and zero commissions not super great short locates Schwab the perfect brokerage except for the fact that you cannot use margin on your OTC and also their level two is not super great. And then each raid is great because they negotiate on commissions and everything you can use margin you can trade stops on tickers, but you know they don’t have super great short locates. So that’s the summary of these four ones’ guys. Again, if you’re under 25k I would say Schwab is the move if you’re over I would probably consider choosing between these you know if you’re over by a lot you can have multiple $25,000 accounts you know maybe try to put some in each of these and maybe have some money in here for trading and getting that level too. 

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