Brokers play a significant role in the penny stock trading. They provide the trading platform for the interested investors. Besides, they have a powerful influential role on the investors. Beginner who enters the market with little or no knowledge may depend completely on the suggestion of the broker’s penny stock picks. The sales and marketing skills of the broker can influence the trading activities.
The penny stock brokers are very important as they can at times be manipulative. You must be very cautious in picking the right broker who can cater to all your trading requirements. The following checklist can help you pick the right one.
The platform for trading is provided by the broker and so you must take all steps to search for the best broker. Different trading platforms include the online, mobile app and traditional call and trade facility. Off this, the online trading is the fastest and most preferred form of trading. Check if your broker can provide the online trading. Or even a secure mobile app is even better as you can trade even when you are on the go.
After analysis you may have decided on the penny stock picks but being highly volatile their prices may change due to delay in processing. It is better to avoid the traditional call and trade model. There is a delay in the process and it may lead to loss in the profits.
Demat and nostro
The demat account provided by the broker must be enquired. Dematerialised form of shares can help in paperless transactions. Though many brokers will have a demat account only few give out nostro account. Nostro means the bank account kept specifically for maintaining the cash traded in shares. Pick brokers who give both as this will help in integrating the accounts and thereby transaction can be completed without much delay.
Understand the transactional charges involved in completing a deal. General brokerage charges which are usually a fixed percentage must be enquired. There are also other charges like minimum brokerage charge, large order surcharge, maintenance charge and so on. You must also enquire about other hidden charges as well.
Check if the broker allows short selling as many disallow the same. This is done by the brokers to manage their risk levels.
Check if the broker is able to provide high speed website and there are no technical hitches.