Top rated online brokerage firm for penny stock traders. Best broker for trading penny stocks (OTC BB, pink sheets, stocks under $1).

Rating:  4.5-star brokerage firm rating

Overview of Top Rated Penny Stocks Broker

TD Ameritrade has a very good platform called thinkorswim. It offers many advanced features, which option traders, stock and ETF traders, and penny stocks (OTC BB, pink sheets) traders can all take advantage of. Beginners may find the software a little intimidating, however. Let’s take a look at the program and see what its advantages and disadvantages are.

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TD Ameritrade has no surcharges on penny stocks, large size orders, OTC BB and pink sheets stock trades. The same flat $6.95 commission applies to all of these trades.

Is Thinkorswim Good for Penny Stocks Traders?

TD Ameritrade’s flagship trading software has some really nice tools for penny stocks traders. ETF’s and stocks can be bought and sold on thinkorswim. There are some useful tools that stock traders will benefit from. These include a scanner that searches for stocks. Called Stock Hacker, the screener looks at various characteristics, such as P/E ratio, % change in price, current ratio, inventory, book value per share, quick ratio, and return on assets. Up to 2,000 stocks can be displayed in the results, which can easily be narrowed by specifying ranges for the inputs.

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There is also a tool called Company Profile. It looks at the variables that impact the revenue of a company and makes predictions on its analysis. It provides a valuation for a stock, and explains the upsides and downsides of its investigation.

The ‘Analyze’ tab in thinkorswim examines ratings, probability analysis, risk profiles, and fundamentals of stocks and ETF’s. For example, the SPDR S&P 500 exchange-traded fund SPY displays a probability graph, which estimates the likelihood of the ETF being above or below a certain price in the future.

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The same tab shows analyst ratings for stocks. IBM, for example, has 3 stars out of 5 from S&P Capital IQ, a hold rating from Ford Equity Research, and an underperform from Credit Suisse. All of the ratings have been updated in the last month, and the reports are available for download in pdf format.

Is Thinkorswim Good for Penny Stocks Day Trading?

Day traders will find some beneficial tools in thinkorswim, not least of which is the software’s powerful charting. There are several hundred technical studies available, which can quickly be added to an equity’s price history. Some of the available tools include Aroon Indicator, Ease of Movement, and Projection Oscillator.

There are also some very good drawing tools on TD Ameritrade’s platform. For example, there are trend lines, arrows, regression lines, Fibonacci time extensions, and text boxes.

Thinkorswim’s order entry system is fairly quick, although it’s more complex than other platforms. An order can be started by right-clicking on a chart and selecting buy or sell from the drop-down menu. Buy custom and sell custom are also available. These are for more advanced order types, such as order cancels other.

Keep in mind that TD Ameritrade, unlike Merrill Edge and E*Trade, does not give any discounts on commissions for active traders or large accounts. All stock trades at TDA are $6.95.


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Is Thinkorswim Good for Option Traders?

TD Ameritrade customers who want to buy and sell derivative contracts will find good resources on the broker’s most advanced platform. Similar to Stock Hacker, there is also Option Hacker. It looks for derivatives based on inputs that can be selected from a drop-down list. These include delta, implied volume, days to expiration, and % in or out of the money. Fundamental data of the underlying stock can be selected as well—for example, the company’s cash flow or debt-to-capital ratio.

In order to narrow down the search engine’s results, ranges can be set for all input variables. Results of call and put options can be sorted by stock or option characteristics, either ascending or descending. Complex orders such as verticals and diagonals can also be investigated. It’s fairly simple to submit an order for any option play in thinkorswim by right-clicking on the menu icon on the far right side of the screen. The opposite side of the trade can also be selected.

A handy spread book shows many different derivative contracts that are available for an underlying equity, be it a stock or ETF. The fund SPY has iron condors, strangles, butterflies, straddles, and double diagonals.

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The option tools in thinkorswim are much more advanced than what is available at many other brokerage houses. Vanguard, for example, offers trading in derivatives. But the firm doesn’t have the advanced trading tools that TD Ameritrade offers.

Is Thinkorswim Good for Beginners?

Because of thinkorswim’s complexity, it is not recommended for new traders. In fact, TD Ameritrade offers a second program, Trade Architect, that is designed to be more user friendly. It can place trades for stocks, options, and ETF’s; but the interface is easier to navigate, and the tools on the platform are simpler. The platform uses Adobe Flash Player.

There is less information on Trade Architect, so the software is less likely to confuse beginning investors. Despite the program’s simplicity, it still offers all the basics, such as an order ticket, transaction history, a watchlist, heat maps, and a stock screener.

Charting is also integrated into Trade Architect. A graph can be detached from the platform and shown the width of the screen. Technical indicators and drawing tools are incorporated into the software, and there are multiple options for graph style.

Limited stock research can be performed on Trade Architect. A stock’s profile page shows recent news, option chains, and quarterly earnings. Analyst recommendations are also displayed from multiple sources.

Other platforms from TD Ameritrade’s rivals are also easier to learn and use. Schwab’s StreetSmart Edge, for example, is simpler than thinkorswim; so it would be easier for a novice to learn.

Best Broker for Penny Stock Trading Summary

TD Ameritrade offers the best trading tools to many different types of investors. Thinkorswim is a great choice for stock, ETF, options, and penny stocks day traders.

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Best Broker For Penny Stocks reviewed by Rating: 5