How to buy penny stocks on Robinhood

Robinhood is one of the few brokers that offers access to penny stocks — stocks that can be purchased for $5 or less. Here’s how to find and purchase penny stocks on Robinhood.

Can I buy penny stocks on Robinhood?

Yes, you can buy penny stocks on Robinhood — but the selection is limited to US exchange-listed penny stocks and specific penny stocks that trade over-the-counter (OTC). As of September 21, 2022, Robinhood supports over 300 American Depository Receipts (ADRs) that trade on the OTC market. Of those, we counted 64 ADRs that qualify as penny stocks.

How to find penny stocks on Robinhood

Robinhood provides curated lists of stocks under the Trending Lists section of the platform. Unfortunately, penny stocks isn’t one of them. To find the best penny stocks on Robinhood, you’ll need to dig around and play with some filters:

1. Log in to your Robinhood account
2. Select the magnifying glass in the upper right corner to pull up the search bar and reveal Trending Lists. If you’re on a web browser, scroll down on the Investing tab to Trending Lists.
3. Select New OTC securities. Then, sort the list in ascending order to show the different penny ADRs available on Robinhood. Alternatively, you can apply a filter to this list.
4. Select the filter button and set a maximum price of $5, which will show all the penny stocks on the New OTC securities list.

Use this same process to find penny stocks on Robinhood’s other curated lists. Select any list and rearrange the stocks in ascending order. You may see repeat stocks across the different lists, but this gives you a way to filter penny stocks on Robinhood.

How to buy penny stocks on Robinhood

If you don’t have an account with Robinhood, you’ll first need to sign up and open an account then follow these steps:

1. Fund your account. Link your bank account or debit card and transfer up to $50,000 per business day into your Robinhood account, and access up to $1,000 instantly for trading. Robinhood Gold subscribers can access up to $50,000 in instant deposits.
2. Pick a stock. Follow our instructions above to find penny stocks on Robinhood. Research potential stocks until you’re comfortable investing your money.
3. Select your order type. Choose between a market, limit, stop loss, stop-limit or trailing stop order.
4. Enter the number of shares to buy. Choose between buying in whole shares or fractional shares. With fractional shares, you can invest specific dollar amounts, as low as $1.
5. Review your order. Select Review Order and look over the details of your order to ensure the information is correct.
6. Submit. Confirm your purchase by swiping up on mobile or selecting Buy on the desktop platform.

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• $0 stock trade fee
• $0 min. deposit to open
• Make unlimited commission-free trades, plus earn 4% interest on uninvested cash in your account with Robinhood Gold.

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Risks to consider before you buy penny stocks

• Limited track record. Low-dollar stocks tend to come from companies with a limited financial history, which may make it difficult for you to vet the stock.
• Lack of transparency. Penny stocks that trade on the OTC Link market are not required to submit audited financials to the Securities and Exchange Commission (SEC).
• Illiquidity. Penny stocks tend to trade at a lower volume than well-known companies or blue-chip stocks, which can make them more difficult to buy and sell.
• Unpredictable. Penny stocks have a reputation for volatility: They’ve been known to experience drastic swings in price — sometimes over the course of a single day — which can lead to substantial losses.

Can I day trade penny stocks on Robinhood?

Yes, it’s possible to day trade penny stocks on Robinhood. But Robinhood margin account holders like Robinhood Instant accounts can only execute up to three day trades in a five trading day period.

A day trade is any security that is bought and sold on the same trading day. But day trading is a highly risky trading method. To execute a profitable day trade, you must be able to competently wield numerous trading strategies alongside a robust understanding of the market you plan to trade in.

The Pattern Day Trading rule

The Pattern Day Trading rule is set by the Financial Industry Regulatory Authority (FINRA) and governed by the SEC, and applies to all US brokers. According to the rule, margin account holders are limited to three day trades within a five trading day period, unless they have at least $25,000 of portfolio value at the end of the previous day.
Robinhood account holders who place more than three day trades within a five-day trading period will be flagged as a pattern day trader (PDT). If this happens, you can’t place any day trades for 90 days unless you bring your account value above $25,000.

Keep track of how many day trades you’ve made by scrolling down to the Day Trades section from within the the Investing page of your Account.

Can I day trade if I downgrade to a Cash account?

Yes, you can day trade by downgrading your margin-enabled account to a cash account. Robinhood cash account holders can trade stocks, exchange-traded products (ETPs) and options without day trade restrictions.
Here’s how to switch to a Robinhood cash account via mobile app:

1. Head to the Account tab (picture of a silhouette) in the bottom-right corner of the screen.
2. Tap the hamburger menu (three horizontal bars) in the top-right corner of the screen, and then select Investing.
3. Scroll down and select Day trade settings.
4. Select Switch to cash account.

Is Robinhood good for day trading?

Even with all the right tools at their disposal, day traders often face sizable losses. And Robinhood isn’t well-equipped to cater to this style of trading. Robinhood has recently improved its advanced charting capabilities, but it still lags behind competitors like TD Ameritrade or even Webull in terms of advanced charting and analysis tools. Without these advanced tools and indicators, day trading penny stocks on Robinhood could lead to uninformed trades that result in crippling losses.

Compare Robinhood to other stock trading platforms

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Name	Product	Available asset types	Stock trade fee	Minimum deposit	Signup bonus
SoFi Invest SoFi Invest Finder Award		Stocks, Options, ETFs, Cryptocurrency	$0	$0	Get up to $1,000 when you fund a new account within 30 days.	Winner of Finder’s Best Low-Cost Broker award.	Go to site More Info		loading Fetching your data...
Robinhood Robinhood		Stocks, Options, ETFs, Cryptocurrency	$0	$0	Get a free stock when you successfully sign up and link your bank account.	Make unlimited commission-free trades, plus earn 4% interest on uninvested cash in your account with Robinhood Gold.	Go to site More Info		loading Fetching your data...
tastyworks tastyworks		Stocks, Options, ETFs, Cryptocurrency	$0	$0	Get $200 in US stocks when you open and fund an account with min. $2,000 for 3+ mos.	Highly commended for Best Derivatives Trading Platform award.	Go to site More Info		loading Fetching your data...
Public.com Public.com		Stocks, ETFs, Cryptocurrency, Alternatives	$0	$0	Get up to $300 in either stocks or crypto when you use code FINDERUS to sign up and fund a new account.	Trade stocks and ETFs commission-free, plus gain access to alternative investments like art, NFTs and more.	Go to site More Info		loading Fetching your data...
Interactive Brokers Interactive Brokers Finder Award		Stocks, Bonds, Options, Mutual funds, ETFs, Cryptocurrency, Futures, Forex	$0	$0	N/A	Winner of Finder’s Best Overall Stock Broker award.	Go to site More Info		loading Fetching your data...

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Bottom line

• Penny stocks on Robinhood include exchange-traded stocks and a handful of ADRs that trade OTC.
• Robinhood users with margin-enabled accounts are limited to three day trades within a five trading day period, unless they have at least $25,000 of portfolio value at the end of the previous day. Robinhood doesn’t apply day trading restrictions to cash accounts.
• Penny stocks can be volatile and risky, and they may not be a suitable stock trading strategy for everyone.

Frequently asked questions

• How hard is it to sell penny stocks?

  Selling penny stocks can be hard if that particular penny stock lacks liquidity, which means it trades infrequently.

• What are OTC penny stocks?

  OTC penny stocks are stocks sold through the electronic OTC Bulletin Board (OTCBB) or on the OTC Link market instead of through a publicly traded exchange like the Nasdaq or NYSE.

• What are the cheapest penny stocks on Robinhood?

  Some of the cheapest penny stocks on Robinhood as of September 21, 2022, include:

  • Color Star Technology (CSCW) – $0.0682
  • Missfresh (MF) – $0.0954
  • Digital Brands Group (DGBI) – $0.096
  • HEXO (HEXO) – $0.1852
  • Esprit Holdings (ESPGY) – $0.20

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