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How to buy penny stocks on Robinhood

Learn how to find penny stocks on Robinhood and what to watch out for.

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.

Penny stocks on Robinhood at a glance

  • Penny stocks on Robinhood include exchange-traded stocks and a handful of ADRs that trade OTC.
  • You need to have an account with Robinhood to buy penny stocks on its platform.
  • Robinhood users with margin-enabled accounts are limited to 3 day trades within a 5 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.

How to buy penny stocks on Robinhood

  1. Open and 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 of your funds instantly for trading. Access up to $50,000 of your funds instantly as a Robinhood Gold subscriber.
  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.
Robinhood

Sign up with Robinhood now

  • $0 stock trade fee
  • $0 min. deposit to open
  • Make unlimited commission-free trades, plus earn 4.9% interest on uninvested cash in your account with Robinhood Gold.

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 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 type OTC. Select New OTC securities.
  3. Sort the list in ascending order to show the different penny ADRs available on Robinhood.

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.

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 Charles Schwab 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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