Last updated on September 19th, 2022 at 10:27 pm
*This post may contain affiliate links. As an Amazon Associate we earn from qualifying purchases.
Robinhood is currently one of the most popular trading platforms where you can trade everything from stocks, futures, options, and most recently, cryptocurrency. But what if you want to trade penny stocks?
Does Robinhood have all of them?
Robinhood doesn’t have all the different penny stocks. Many penny stocks trade over-the-counter, while Robinhood only offers stocks that trade on major exchanges like Nasdaq and NYSE, which means they can only provide a limited number of penny stocks.
This article will go into more detail about trading penny stocks on Robinhood. It’ll cover if and how you can find penny stocks on the platform, how to buy them, and whether it’s a good idea to buy them on Robinhood.
Does Robinhood Have Penny Stocks?
A penny stock is considered any stock that trades for less than $5 per share.
Robinhood does have many different penny stocks, but the selection is limited since a lot of the cheapest penny stocks trade over-the-counter. Robinhood only has stocks that trade on the major US exchanges. Still, there are hundreds of penny stocks available to trade on Robinhood.
Remember that day trading penny stocks with Robinhood isn’t possible, unless you change to a cash account (everyone starts with a Robinhood Instant account which is technically margin). Additionally, penny stocks are relatively challenging to search on the platform, as they aren’t a distinct category like EFTs or Options.
You will likely need to do your research on different penny stocks that you like and then type the ticker into Robinhood to see if you can buy it there.
How Many Penny Stocks Does Robinhood Have?
Robinhood gives you access to hundreds of penny stocks in various sectors. In fact, all of the penny stocks trading on the major exchanges are available.
However, if you’re strictly looking to trade penny stocks, Robinhood probably isn’t the best platform to use since their selection is quite limited.
Is It Safe To Buy Penny Stocks Through Robinhood?
The Over-The-Counter Exchange is the most popular place to trade penny stocks. However, the requirements for stocks to make it on this exchange are very relaxed, making them very risky to invest in.
It is considered safe to buy penny stocks through Robinhood rather than over-the-counter since all of their penny stocks are listed on major US exchanges. For a stock to trade on the exchanges, it needs to meet all of the requirements and pay listing fees.
The requirements vary depending on the exchange, but they usually include minimum shareholder counts, minimum share prices, minimum equity amounts from stockholders, etc.
Still, most of these stocks have a limited financial track record, making them difficult to vet. Also, they have a much lower trading volume, which can be a problem, especially when you’re trying to sell.
Another risk associated with penny stocks is volatility. These stocks are highly unpredictable and can experience drastic price changes, sometimes, within a single day.
How To Find Penny Stocks on Robinhood
You can’t find penny stocks on Robinhood by looking for a specific category on the mobile app or mobile website. If you want to locate possible penny stocks to invest in, you’ll have to login into your account from a desktop web browser.
To filter the search results only to show penny stocks, follow these steps:
- Navigate under Popular Collections and click on Show More.
- Select the sector or category you’d like to see results for and click see all stocks.
- Set the price cap button on the right side of your screen and set the maximum amount to $5.
Since all stocks under $5 are considered penny stocks, by using these filters, Robinhood will only show you penny stocks from the sector or category you selected.
You should now see dozens of companies, and it’s up to you to do your research and find the right one (or ones) to invest in.
How To Buy Penny Stocks On Robinhood
Once you’ve searched and settled on a penny stock (or a few) to buy, you will follow the same process for buying any other stock on Robinhood. If you’re new to the platform, here is what you need to do:
- Fund your Robinhood account by linking your bank account and depositing some money.
- By following the steps above, pick a penny stock to buy.
- Choose the order type you would like to execute (using a limit order is the best option when buying penny stocks).
- Select the number of shares you want to buy.
- Submit your order.
The process is straightforward to complete, which is something that Robinhood is known for.
Be Sure To Do Your Research Before Buying
Dealing with penny stocks can be a risky business, and it’s essential to do your research before making a significant investment. Unfortunately, Robinhood is somewhat limited in research tools and data, so it’s best to gather information on the stocks you’re interested in elsewhere.
The Robinhood interface is quite simple and doesn’t offer much for doing technical analysis on the stocks you want to buy. If you prefer to stay on Robinhood instead of using other sources, you can purchase Robinhood Gold which comes with additional market data.
Deciding If You Should Buy Penny Stocks Through Robinhood
While Robinhood is rightfully one of the most popular trading platforms, as it offers free trades and is very easy to use, it’s probably not the best when it comes to penny stocks. This is primarily due to the fact that the selection of penny stocks is limited to those trading on major exchanges, while most penny stocks trade Over-The-Counter.
In addition, Robinhood data and analytics tools are very limited, especially for low-volume securities like penny stocks, so you would probably need to do your research outside Robinhood.
Not to mention that it can be quite challenging to find penny stocks while using the platform, as they aren’t listed as a separate category.
But if none of this deters you, then you’ll likely have a positive experience buying penny stocks from Robinhood.
Robinhood does offer penny stocks, but the number is limited to those trading on major exchanges like Nasdaq and NYSE, which means that a large portion of penny stocks aren’t available on the platform.
To filter your search result to only display penny stocks, you must set the maximum stock price to $5. After that, the process of buying a penny stock through Robinhood is the same as any other stock.