What is a Penny Stock Broker?
You can see my favorite penny stock brokers HERE and all I can do is warn you about these bad brokers, but below is also a cool infographic that explains what a penny stock broker actually does:
If you want to buy stocks, you can’t simply call a company and buy its shares. You must deal with a broker. A broker is a middleman who specializes in selling these shares. A broker can be an individual, a brokerage company, or an online platform. So what is a penny stockbroker?
A penny stock broker runs the account that you’ll use to log in and trade and is responsible for making sure that your shares are bought or sold after you place your orders.
Who can be a stockbroker?
Not just anyone can be a stockbroker. To become a stockbroker, one must pass two exams which are administered by the Financial Industry Regulatory Authority, Inc (FINRA): the Series 7 and the Series 63 exams.
Types of brokers
There are two key types of brokers: full-service brokers, who provide services such as investment advice and retirement planning, and discount brokers, who offer more limited services but charge much less.
How do you choose a penny stockbroker?
Some stock brokers will try to charge you with hidden fees, including:
- Mandatory Frequency of Trading
- Annual Maintenance Fee
- Charges Toward Withdrawal
- Inactivity Fee
- Minimum Brokerage Per Share Charges
- Large Order Surcharges
- Minimum Account Balance
- Minimum Brokerage Per Order Charges
- Surcharges For Low-Priced Stocks
Either be sure to read the fine print, or be sure to ask about these fees before you commit to a broker. It’s best to ask right away, rather than being unpleasantly surprised later on.
Other considerations when choosing a penny stock broker
In addition to price, consider these things before signing on with a broker:
- Volume Restrictions
- Research and Analysis Tools
- Short Selling Restriction
- Customer Service Phone support
Finally, don’t forget to ask around for reviews of particular brokers!
Do you have a penny stock broker?
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