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Penny Stock Basics

TD Ameritrade & Penny Stocks: Is It the Top Broker?

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Written by Timothy Sykes
Updated 5/9/2023 14 min read

TD Ameritrade is one of the most well-known online brokers. I’ve used it a lot in my trading career. So let’s discuss why it can be great for trading penny stocks.

Picking a broker is a crucial step in any trader’s journey. I’ll share my thoughts, but it’s up to you to do the research. You should choose the right broker for your trading style.

Trading is like a battlefield, and you need to have the proper weapons. That takes time and dedication. And finding which broker is best for you is a key step in building your arsenal.

TD Ameritrade can be a great broker for trading penny stocks. Read on to find out if it could be a good broker for your needs.

Should You Trade Penny Stocks on TD Ameritrade?

Some of you may wonder if you can buy penny stocks on TD Ameritrade. The answer is yes.

I think TD Ameritrade has pretty solid execution on buy orders. When you buy a stock penny stock on TD Ameritrade, your order usually executes quickly. That’s what you want right? I know I do.

I don’t use TD Ameritrade to find penny stocks to buy … That’s because I use StocksToTrade to find penny stocks to buy. I think you should use it too…

StocksToTrade is designed to help you find penny stocks to trade. No matter your strategy, you can use StocksToTrade. I helped develop it, so its built-in scans are designed for the volatile stocks I like to trade.

But StocksToTrade isn’t a broker. You still need to use a broker to actually buy and sell stocks.

Does TD Ameritrade Charge for Penny Stock Trading?

Tim Sykes studying and trading
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TD Ameritrade’s fees vary depending on the stocks you trade…

Ever since Robinhood introduced commission-free trading, other brokers followed suit. I actually don’t mind paying fees for good executions. I consider it a cost of doing business in the market.

And free trading can be devastating to newbies who don’t have a trading education or weigh their risk/reward.

TD Ameritrade, E-Trade, Charles Schwab, and Fidelity have all been around for some time now. Once Robinhood introduced no fees on trades, it affected all of those other brokers.

TD Ameritrade recently changed its flat-rate fees to no cost, too. The only exception is for trading OTC stocks. OTC stocks on TD Ameritrade still hold a flat rate of $6.95 per trade.

What Are the Benefits of Trading Penny Stocks on TD Ameritrade?

Like I said, I think TD Ameritrade’s recent change to flat-rate fee is a huge benefit. I trade OTC stocks often, and $6.95 per trade is low compared to what I paid 20 years ago…

Another benefit is one I mentioned earlier — execution of buy orders.

Think about it. If you’re meticulous like I am, you may have to time your entries and exits accurately. Since TD Ameritrade is known to have better execution than other brokers, you can potentially better time your entries. Same thing goes for exiting trades and cutting losses quickly, which is my #1 rule.

New to penny stocks? Get my free online penny stock guide here and the rules I trade by here.

Now let’s talk about TD Ameritrade’s platform…

Platforms and Tools

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In 2009, TD Ameritrade acquired thinkorswim. So that’s another platform you can use if you have a TD Ameritrade account. It can be a great resource. Some of my students and I have used it.

What I like about thinkorswim is that it’s built for day traders. It includes access to press releases, 52-week highs and lows, and other technical indicators. Newbies like that it’s free.

I’m not saying free is always good. I believe in paying for quality. When you pay for something, you tend to value it more. I see students who pay for their education take it more seriously.

There’s a time and place for free. I want you to accomplish your goals. That means building your knowledge account and using the best resources you can find. It’s crucial in your growth as a trader.

It’s smart to be skeptical of free resources. And based on my experience, thinkorswim can be a good resource if you’re new to the markets. You can always invest in more powerful tools down the line.


TD Ameritrade offers a wide variety of investment opportunities. It’s great for swing traders, scalpers, and day traders like me.

I’ve found my niche in penny stocks. You need to work to find yours.

If you’re ready to commit to your journey, apply to join my Trading Challenge. This is where all of my top students started their journeys. But only if you’re serious. No lazy losers.

Fees and Commission

When I started trading penny stocks over 20 years ago, the fees were much higher. It blows my mind that there are hardly any commissions anymore!

I honestly don’t know if it’s a good thing for newbies though. Like the pattern day trader rule, having fees for every trade can help prevent newbies from overtrading and blowing up their accounts.

Promoters these days lure so many newbies into stocks. New traders don’t think twice — all they have to do is press a few buttons … They don’t even get charged.

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It can be dangerous. Most traders fail. That’s because they fail to prepare. You have to build your knowledge account first. The crazy market we’ve seen in 2020 is a great time to learn how to day trade penny stocks. It’s a frenzy for traders who prepare.

Start your market education today. My student Matthew Monaco helped me put together my 30-Day Bootcamp. It covers everything you need to start building your trading foundation. And you can work at your own pace. Do it in 30 days or less, or take as long as you need. Get this low-cost resource today. See what Matt has to say about it here.

Customer Service

Customer service exists to help the client. When you sign up with a broker, you become that broker’s client…

So don’t ever be afraid to contact your broker with any questions or problems. Use customer service. That’s what it’s for.

TD Ameritrade has pretty solid customer service available 24/7 via phone and other methods of communication. When vetting a broker, be sure to check how and when you can get a hold of a live person. When you trade volatile stocks like penny stocks, you just might need to get in touch sometimes.

Why You Should Research Your Broker

After reading this, you may have realized that I’m very meticulous. I like to trade like a sniper.

You need to be the same in the markets. That means that you’re patient and prepared. You need to be self-sufficient and learn to think for yourself. Penny stocks move fast. The market changes fast. You have to stay alert and know how to adapt.

You need to be meticulous in everything you do. That includes doing your research before you pick a broker. Don’t just use one that everyone else is using. Find and pick the one that’s best for you and your trading style.

Trading Challenge

Being a part of my Trading Challenge can potentially shorten your learning curve. All of my top students come from my Trading Challenge. And now they pay it forward by helping newer traders in chat and webinars.

I became a teacher and started the Trading Challenge so I could help people. There’s a lack of transparency in the market, and I want to change that. I want you to become a self-sufficient trader.

The Trading Challenge is where you can work to do that with webinars, lessons, DVDs, and the best chat room. Apply to join us today. Unless you’re not prepared to work. I prefer quality over quantity.

Now let’s switch gears…

How Do I Find Penny Stocks on TD Ameritrade?

You need to use a good stock screener to find stocks that fit your strategy. You put in your criteria to scan every stock in the market. Once you have a smaller list, you can focus your attention on the best contenders.

I use StocksToTrade to find penny stocks to trade every day. It has 40+ built-in scans that fit my needs.

If you use TD Ameritrade, thinkorswim is a stock screener you can use to find penny stocks.

Trading would be so much more difficult if stock screeners didn’t exist. There are thousands of stocks … How else would you find the ones that have the potential for big gains?

How Do You Buy Penny Stocks on TD Ameritrade?

Once you find penny stocks that fit your criteria, put them on your watchlist.

Once they’re on your watchlist, pay attention to price action, patterns, and technical indicators and wait for the right entry point.

Once you’re ready, entering a position on TD Ameritrade is easy. All you have to do is click a few buttons to get into a trade. It’s that simple.

Frequently Asked Questions About TD Ameritrade Penny Stocks

Can You Short Penny Stocks on TD Ameritrade?

You can short penny stocks on TD Ameritrade, but it isn’t the best broker for shorting. Its short list is almost nonexistent. Short-biased traders will likely find a better broker for shorting somewhere else.

Is Ameritrade Good for Day Trading Penny Stocks?

If you’re a long-biased trader, TD Ameritrade can be a good broker for penny stocks. Short-biased traders should probably find another option. Find your niche, do your broker research, and then weigh your options.

Do You Have to Pay Taxes on Penny Stocks?

Any realized gains that you make become capital gains. As a day trader, those capital gains will be considered short-term capital gains. You have to pay taxes on any realized gains, so make sure to do your research and always consult a local tax professional for help with financial decisions.

Can You Get Rich Trading Penny Stocks?

I’ve made over $5.9 million trading penny stocks. I have several millionaire and six-figure students.* So yes it is possible with preparation, dedication, and discipline. Our results aren’t typical. Most traders lose. But remember that small gains add up.

Conclusion: TD Ameritrade & Penny Stocks

There are lots of brokers to choose from. TD Ameritrade, E-Trade, Fidelity, Charles Schwabb, and Robinhood are just a few options.

TD Ameritrade has platforms and tools that can help you learn the basics and start your journey toward becoming a self-sufficient trader.

I want all of my students to find the best broker for them. Don’t blindly copy me or follow my alerts. That won’t help you learn how to trade.

Should you use TD Ameritrade? Only you can answer that. I’ve had decent experiences with them.

If you’re a short-biased trader, you might want to look elsewhere. TD Ameritrade isn’t great for shorting. Always weigh the risk/reward.

Take advantage of learning in this incredible market. It’s how you can prepare for the next hot market. There are so many plays. If you’re not trading now, take this time to learn. If you are trading, be sure to prepare to adapt. Hot markets don’t last forever…

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Apply for my Trading Challenge if you’re ready to prepare to trade through any kind of market.

Do you use TD Ameritrade to trade penny stocks? What’s your top broker? Let me know. I love to hear from you!

(*Please note: My results, along with the results of my top students, are far from typical. Individual results will vary. Most traders lose money. My top students and I have the benefit of many years of hard work and dedication. Trading is inherently risky. Do your due diligence and never risk more than you can afford to lose.)

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”