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Thadeus Geodfrey is an experienced and celebrated writer and self-taught trader specialising in cryptocurrencies and forex. Market analysis, identifying fraudulent brokers, and security are his cup of tea. At BrokerRaters Thadeus develops educational materials and user-guides, offer market insights, ensures our content conforms to the best standards. Join Thadeus to succeed in your trading endeavours.
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Penny stock trading can be your ticket to earning handsome returns. However, it’s also turbulent water with high volatility, unscrupulous platforms, and outright fraudsters. But trust us–daring traders like you can surf on its risky waves to success.
Your first assignment is to find the best penny stocks UK broker. You also need to understand how UK penny stocks trading works, its risks, plus pros and cons. But your plate is already full of other crucial things to do. Our experts did all the legwork for you. Below is our list of the top five providers you should consider. You only need to pick the platform that suits your needs and start trading.
List of the Best Penny Stock Brokers
- Interactive Brokers – Best Penny Stocks UK Broker for Advanced Trading
- IG Markets – Best Penny Stocks Broker for Market Variety
- Saxo – Best Penny Stocks Broker for Professional Traders
- AvaTrade – Best Penny Stocks Broker for Innovativeness
- eToro – Best UK Penny Stocks Broker for Social Trading
In This Guide
UK Penny Stock Brokers: Comparison Table
Our treasure hunt for the UK’s best penny stocks brokers wasn’t easy. As you’ll discover later, only a few brokers provide penny stock trading in the UK. Furthermore, the venture involves young companies that have yet to establish their roots, which carries many risks.
After researching every platform in the UK and checking if they provide this particular trading vehicle, the five brokers stood above the noise. We compared the chosen brokers to crown the best penny trading broker UK and pinpoint their strong plus weak areas.
As usual, we only provide objective, verifiable, and honest reviews. So, our experts go out of their way to visit reputable review sites and get what the users say. Such platforms include Google Play, App Store, and Trustpilot.
| Best Penny Stocks UK Broker | Licence & Regulation | Support Service | Software | Payment Methods | Demo Account |
|---|---|---|---|---|---|
| Interactive Brokers | FCA, SEC, CFTC, FINRA, SIPC | 24/5 | Trader Workstation (TWS), IBKR Global Trader, IBKR Mobile App, IBKR ForecastTrader | Bank Transfer, PayPal, Skrill, Neteller, Credit/Debit Cards | Yes |
| IG Markets | FCA, ASIC, FINMA, DFSA, JFSA | 24/7 | IG Trading Platform, IG App, ProRealTime, MetaTrader 4, L2 Dealer | Credit/Debit Cards, Bank Transfer, PayPal | Yes |
| Saxo | FCA, FINMA, ASIC, MAS | 24/5 | SaxoTraderGO, SaxoTraderPRO, TradingView, MultiCharts | Credit/Debit Cards, Bank Transfer | Yes |
| AvaTrade | FCA, ASIC, FSCA, FSA, ADGM | 24/5 | AvaTradeGO, MetaTrader 4, MetaTrader 5, AvaOptionsAvaSocial, DupliTrade | Credit/Debit Cards, Bank Transfer, PayPal, Skrill, Neteller | Yes |
| eToro | FCA, FMA, CySEC, FSCA, ASIC, SFSA, ADGM, MFSA, FSAS, GFSC, SEC | 24/5 | eToro Platform and App, Multi-asset platform, Social Trading, Copy Trader, Smart Portfolios | Credit/Debit Cards, Bank Transfer, Klarna, PayPal, Skrill, Neteller | Yes |
Brokers Short Overview
Penny stock trading requires volume trading if you desire to make significant profits. But the voluminous trades can quickly scale up your fees-related costs. So, ensure your broker provides a transparent and reasonable fee structure.
You may also want to expand your territory or hedge against the high risks of penny trading. Therefore, the broker should provide access to multiple assets across diverse industries and countries.
Our top-in-class providers met these criteria. Here are the tables that give snapshots of their fees and assets:
Fees
| Best Penny Stocks UK Broker | Minimum Deposit Requirement | Commission/Spread | Deposits/Withdrawals | Inactivity Fees |
|---|---|---|---|---|
| IBKR | £0 | From £0.0035 | Free | None |
| IG Markets | £0 | From 0.05% | Free | None |
| Saxo | £0 | From 0.05% | Free | None |
| AvaTrade | £100 | From 0.13% | Free | £50 after three months |
| eToro | £100 | From 0.09% | £5 withdrawal fee | £10 per month |
Assets
| Best Penny Stocks UK Broker | Stocks | Forex | Crypto | Commodities | Indices | ETFs | Options |
|---|---|---|---|---|---|---|---|
| IBKR | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| IG Markets | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Saxo | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| AvaTrade | Yes | Yes | Yes | Yes | Yes | Yes | No |
| eToro | Yes | Yes | Yes | Yes | Yes | Yes | No |
Our Expert Opinion about Penny Stock Brokers
Let’s now take a closer look at each of the platforms. We assure you all of them operate under the hawk-eyed FCA’s regulations.
Furthermore, these brokers aren’t new players in the industry–they’ve cemented a reputation of serving millions of users worldwide without failure. Their customer care department also scored massive points.
1. Interactive Brokers – Overall Best Penny Stocks UK Broker
We awarded Interactive Brokers five stars for unmatched penny stock trading in the UK. The FCA authorizes the broker to operate in the UK.
Moreover, the platform’s low entry-to-trade fee shines brightly. It requires zero minimum deposit and has no withdrawal or deposit activity fees. We also realized that the broker kicked out its inactivity fee. And its commission rates are among the lowest in the industry, starting from as low as £ 0.0035 in the UK. The icing on the cake? No hidden charges will ambush you from nowhere.
Interactive Brokers is also a gateway to more than 90 market centers worldwide. That means you can spread your wings and explore opportunities beyond the UK territories. For instance, you can trade small-cap firms in North America, Asia, and Europe to diversify your portfolio.
The broker’s professional-grade trading platforms amazed us. Its desktop, mobile, and web-based interfaces are an arsenal of powerful tools. We particularly loved the advanced market scanners and the ability to access over 90 order types and algorithms.
We can’t forget the Risk Navigator, a helpful companion for analyzing your portfolio, managing risk exposure, and maximizing your positions. Indeed, this broker understands that only quick decision-makers with top-tier trading precision can make a significant kill in the highly volatile penny trading world.
Are you looking to sharpen your trading prowess before conquering the unpredictable world of penny stocks? We recommend the broker’s comprehensive suite of educational tools. You can attend the IBKR Campus or Traders’ Academy for over 65 free online courses covering everything from stocks to technical analysis.
Interactive Brokers
✔$0 minimum deposit requirement
✔No account inactivity fees
Pros & Cons
Fees
Trading Assets
Pros
- No minimum deposit requirement
- Zero deposit, withdrawal, and inactivity charges
- Access to over 90 global market centers
- 90+ order types, powerful market scanners, and several other advanced tools
- Robust research and educational resources
Cons
- The interface is a bit challenging to navigate
- Zero-commission stocks are only available in the UK
After conducting thorough research and extensive assesments, we can confidently categorize Interactive Brokers as one of the most affordable service providers out here. As we’ve already mentioned, this company has no minimum deposit requirement. Plus, it allows traders to fund their accounts with payment methods like ACH and wire transfer at no additional cost. We also highly recommend IBKR because, unlike other brokers, it doesn’t require traders to pay inactivity fees for dormant accounts.
Here’s an overview of the Interactive Brokers fees and charges our team unearthed during our evaluation and exploration:
| Type | Fee |
|---|---|
| Account opening and maintenance | $0 |
| Deposit | $0 |
| Withdrawal | Yes |
| Inactivity | $0 |
| Overnight charges | Yes |
| Currency conversion | 0,5% |
2. IG Markets – Best Penny Stocks Broker for Market Variety
IG Markets is an unparalleled gateway to a wide range of markets. We verified that it indeed gives access to over 17,000 global markets. You won’t miss access to penny stocks from over 13,000 shares across countries like the US, the UK, and Australia.
Is the market closed? No problem–IG Markets is your go-to if you desire flexibility in trading hours. In fact, using this broker, we could access over 70 US shares and shares from other time zones.
We also noted the variety of penny stock trading styles. We could leverage trades with the tax-efficient Spread Betting, making IG Markets a standout spread betting broker. It’s recommendable because it doesn’t attract stamp duty and CGT. You can also opt for CFD trading for leverage and price speculation without being a stock owner. But if you desire to own penny stocks, Share Dealing will sort you out.
Any delay in execution speed can make a massive difference in penny stock trading. We assure you IG Markets ticked all the boxes here. It surprised us with 0.5 seconds during our test, helping us profit considerably.
The broker doesn’t overlook trust and security in penny stock trading. It operates under the watchful eyes of FCA and several other top-tier regulatory bodies. And since its inception, it has built a long-standing reputation. Verifiable documents show that it currently boasts 346,000 clients worldwide.
Education is the first step towards conquering such a sea of goldmines. Fortunately, the platform provides a wealth of the latest market news to keep you abreast of potential opportunities. Don’t forget the technical analysis, stock updates, and detailed reports on various sectors. We particularly loved their reports on industries currently making waves, such as AI and robotics.
IG Markets
✔17,000+ financial markets
✔No minimum deposit requirement
Pros & Cons
Fees
Trading Assets
Pros
- Extensive market access to over 13,000 shares
- There are no minimum deposit requirements and deposit/withdrawal fees
- Competitive commissions starting from 0.05%
- A rich collection of educational resources
- Responsive and helpful customer care
Cons
- Limited research for penny stock trading
- Indices and other securities have high spreads
Both low-budget and high-budget individuals can trade on IG Markets since this broker has no minimum deposit requirement. You can top up your account with whatever is within your budget limitations after signing up with this terrific service provider. Note that IG Markets charges spreads and commissions that vary from one asset to another. For instance, the spreads for currency pairs like AUD/USD and EUR/USD start at 0.6 points. On the other hand, the charges for shares start at 0.08% commission per side. You can also trade spot gold and other commodities, whose spreads start at 0.3 points.
We’ve highlighted some of the fees and charges that our experts discovered while exploring and evaluating IG Markets.
| Fees and Charges | Details |
|---|---|
| Account opening charge | $0 |
| Spreads and commissions | Starting from 0.1 points/ 0.08% commission per side |
| Overnight funding | Yes |
| Guarantee stop premiums | Yes |
| Direct Market Access | Variable commission |
| Live price data fees | Variable monthly fee |
| Currency conversion fee | 0.8% |
| Account inactivity fee | $0 |
3. Saxo – Best Penny Stocks Broker for Professional Traders
Saxo is your best choice if you’re a professional penny stock trader. Why? Because of its global reach, friendly fees, and deep market access.
Access over 23,500 stocks across 50+ global markets. Some of the industry-leading exchanges on the platform include London, New York, and Hong Kong. This international exposure is crucial in diversifying your trades and spreading risks.
One objective of buying and selling penny stocks is to minimize costs. Saxo offers stocks as low as £1. It also has ultra-low commissions, especially when you scale up through its tiered account system.
Climb the professional ladder with the brokers’ cutting-edge resources. SaxoTraderGO and SaxoTraderPRO are home to tools like independent analyst ratings, key stats, and advanced charting. We recommend them for their unmatched in-depth product analysis.
Stay on top of your portfolio’s performance using the portfolio tracker. Everything from history to costs and returns is right in front of you. The platforms also have customizable risk management tools like stop-loss and take-profit orders. Staying glued to the screen is a thing of the past, as you can automate them to work for you.
Saxo is where professionalism meets comprehensive market insights. Live market updates help you react swiftly to market events. You can also digest expert analysis via podcasts, webinars, and in-platform content. And if you thirst for some inspiration, the stock screeners plus investment themes have your back.
As a professional trader, you yearn to capitalize on late or early price shifts in volatile markets. Saxo is your go-to platform here. It wins regarding pre-market and after-hours trading. Thanks to the US extended trading hours, our experts could act on breaking news or earnings announcements.
You’ll admire the broker’s transparent account tiers – Classic, Platinum, and VIP. With these professionally tailored levels, there’s something for everyone. We recommend the top two tiers for their better pricing and up to 30% lower commissions. Furthermore, they come with SaxoStrats for customized market strategies. Other benefits include direct access to trading experts, exclusive event invitations, and priority local-language support.
Pros & Cons
Pros
- 23,500+ stocks from 50+ worldwide markets
- Competitive charges for penny stock trading, as low as £0.005 per share
- Extended trading hours
- In-depth educational and research resources
- Advanced and customizable risk management and other tools
Cons
- Minimum deposit requirements of £200,000 and 1 million for Platinum and VIP accounts
- The platform may be complex for some users
4. AvaTrade – Best Penny Stock Broker for Innovativeness
AvaTrade earns an enviable spot regarding cutting-edge technologies. Its AvaTradeGO mobile app allows you to trade on the go. It also offers industry-grade platforms like MT4 and MT5, enriching your trading journey with advanced analytics and customization.
Kickstart your social trading adventure on AvaTrade. Their innovative AvaSocial features bring a unique dimension to trading by allowing you to copy the strategies of experienced traders. Thus, newbies have a reason to smile.
AvaProtect is another outstanding tool for penny stock traders. As the name suggests, it safeguards your gains against volatile conditions. It’s a must-have tool, given the unpredictable nature of penny stock markets. You also need to enter and exit markets at optimum points. But how can you identify the right moment? Usher Trading Central into your journey and shove guesswork out of the door.
AvaTrade knows that innovativeness includes education. For this reason, it offers AvaAcademy, a library of eBooks, webinars, and video tutorials. It also has a section for the latest market news.
You can also access global stock CFDs to help you diversify your game. You can go beyond the UK to access penny stocks from Europe, Asia, and other countries. And if you’d like to venture into assets, it offers indices, forex, commodities, and other trading vehicles.
AvaTrade
✔Regulated by FCA
✔The platform supports algorithmic trading
Pros & Cons
Fees
Trading Assets
Pros
- Competitive leverage for controlling larger positions
- Advanced platforms like MT4 and MT5
- Risk management tools like AvaProtect
- In-depth education materials
- Innovative social trading features
Cons
- £50 dormancy charge after three months of inactivity
- Scanty product range compared to its peers
Our experts investigated the AvaTrade broker’s fees and charges. We first noticed that the platform has a modest minimum deposit requirement of $100. What’s more, its users pay no additional costs while depositing funds or cashing out. That makes AvaTrade an ideal broker for both cost-conscious and newbie traders who want to test their waters with small capital before going all in.
That said, AvaTrade requires dormant account holders to pay $50 after every 3 consecutive months of inactivity. Moreover, if you let your account remain inactive for over successive months of inactivity, the broker will charge you a $100 administration fee. Not to forget, AvaTrade requires traders who hold positions overnight to cover a premium.
Here’s a breakdown of the fees you should expect to encounter while trading with this service provider:
| Fees and Charges | Amount |
|---|---|
| Spreads | From 0.9 pips |
| Administration fee | $100 |
| Inactivity fee | $50 |
| Overnight premium | Yes |
5. eToro – Best UK Penny Stocks Broker for Copy Trading
Shove aside that fear of heightened risks in penny stock trading– eToro’s copy-trading and social-trading tools help you learn from experienced traders.
CopyTrader is the broker’s game-changer in replicating successful investors’ trades. You can cherry-pick a top performer from over 20 million registered users on the platform. Why stress yourself with time-consuming market analysis?
Transparency is a boon on this platform. eToro’s website includes images and names of seasoned investors for your cherry-picking homework. For example, we could see an investor called NoImportan3 with 148.75% returns. We choose to copy this trader for our test and research work.
As a penny stock trader, you must deal in high volumes of low-priced stocks. However, fees may accumulate to unreasonable figures if you aren’t careful. But we give eToro a pass for its low barrier to entry–you can invest as low as $10 in fractional shares and enjoy a low commission structure. Furthermore, the CopyTrading feature doesn’t charge extra fees for trade copying and automation.
eToro extends its wings beyond the UK’s London Stock Exchange. You can choose from over 4500 stocks across 20 global exchanges, including the New York Stock Exchange. And in whatever sector you desire, you’ll find your preferred stocks–from healthcare to technology. Furthermore, you get real-time updates and insights into these markets. These diversification opportunities are another reason you don’t have to fear the risks of penny stock trading.
Another strong area is the user-friendly interface. Once you log in, key features are just a tap away. You can navigate through markets, select gurus to copy, and monitor your performance in real time.
Before trading in penny stocks, we recommend you use its rich educational resources, such as eToro Academy, News and Analysis, and Retail Investor Beat. After that, try out the platform using its demo account. This feature comes with £100,000 virtual for your practice and building your trading confidence. And guess what? The account is open for copy trading, too!
eToro
✔ User-friendly trading platform
✔ Over 6000 trading instruments
Pros & Cons
Fees
Trading Assets
Pros
- Robust copy trading capabilities
- Fractional shares going as low as £10 and below
- User-friendly platform
- Commission-free non-leveraged trades
- There are no fees for automated copy trading
Cons
- Limited Over the Counter (OTC) penny stocks
- Monthly £10 inactivity fee
eToro has a transparent fee structure that is easy to understand and helps you plan accordingly. From our analysis, we discovered the following trading and non-trading eToro fees.
| Trading and Non-Trading Charges | Details |
|---|---|
| Account Opening | $0 |
| Management Fee | $0 |
| From $50, depending on your jurisdiction | 0.6 |
| Commission | From 0% on stocks and ETF trading |
| Spreads | From 1 pip on major currency pairs |
| Deposits and Withdrawals | $5 withdrawal |
| Inactivity | $10 monthly |
| Currency Conversion | 1.5% or 3.0%, depending on the currency or payment method |
| Overnight Funding | Varies based on global market conditions |
| Copy Trading | Free |
Penny Stock Trading in the UK
UK penny stock trading is legal. However, given the susceptibility of such assets to fraud and volatility, it’s a highly regulated venture.
A broker must get an okay from FCA to operate within the country. The companies issuing these assets must also meet stock exchanges’ requirements. Furthermore, they should adhere to practices set by the Market Abuse Regulation (MAR) and the Financial Services and Market Act (FSMA).
You must be 18 or older to buy, hold, and sell penny stocks. Some brokers may need further verification details to ensure compliance with age requirements.
The country demands capital gains tax on profits earned from penny stock trading. The good news? You enjoy a tax-free CGT allowance of up to £6000 (in 2023-2024). Beyond this level, you pay 10% or 20% for basic-rate or higher-rate taxpayers, respectively.
What is Penny Stock Trading?
Penny stock trading is buying and selling low-value stocks, often from small companies. These stocks are usually traded outside major exchanges on platforms like OTC.
A few elements of penny stock trading include:
- They’re typically under £5
- Their prices can quickly fluctuate
- Low liquidity due to fewer buyers and seller
- Are high risk due to company failure and less transparency
That said, penny stocks can potentially make significant gains if the company grows substantially.
How Does Penny Stock Trading Work?
First, find the best penny stock broker in the UK. These assets don’t meet the stringent requirements of major exchanges, such as financial reporting and transparency. Thus, they often trade on less-restriving OTC platforms. But that doesn’t mean you can’t find a few penny stocks on NYSE, NASDAQ, and other top-tier markets.
After registering with a broker, the next step is to place an order. For example, you can buy/sell at the current place (market orders) or specify a price you’re willing to trade (limit orders). However, remember to have a robust exit strategy due to the risk factors of these assets.
How to Choose the Best Penny Stock Broker or App
Penny stocks sound like a quick road to success in the UK. Buying many can catapult your profits potential when you sell them later. But their inherently volatile nature can send your dream crumbling down. So, do your homework like a pro.
The first step is to consider the following when choosing a broker:
Licenses and Regulations
Platform Tools and Speed
Fees
Diverse Markets
Customer Service
User Reviews
Did you come across a broker without a valid license from FCA and other top-tier regulatory bodies? That one is a no-go zone. Proper regulatory licensing guarantees the safety of your money and trading activities.
Penny stocks experience rapid price changes. Therefore, the platform must have a lightning-fast execution speed that keeps up with the changes. Also, ensure it has robust trading tools, including educational materials and trade analysis features.
Yes, anyone can afford penny stocks. However, since your profitability depends on the number of trades, hidden fees in each transaction can accumulate quickly and swallow your profits. So, ensure the broker has a clear and reasonable fee structure.
A reputable broker offers access to multiple markets worldwide. This allows you to diversify the heightened risks, choose promising companies, and continue trading beyond the UK standard hours.
Does the broker offer an in-depth FAQ or help center that suits your trading level? Also, watch out for clueless or sluggish customer service teams and unresponsive support channels.
Visit review sites for reviews from actual users. Pay attention to how the broker handled a complaint. Did it resolve the issue? You don’t want to be the next victim.
Risks to Trade Penny Stocks for UK Traders
Risks rear their ugly heads in any market. And penny stock isn’t an exception. So, what are the things to watch out for?
- Low liquidity
Penny stocks often trade on OTC markets or smaller exchanges. That translates to lower trading volume due to reduced traders and buyers. Thus, it can be hard to trade them quickly at your preferred price.
- Price volatility
Even a tiny market change can cause the stock’s price to plummet or skyrocket quickly. You may suffer a significant loss within a short period if the movement goes against your position.
- Limited details
The oversight authority may not require the issuing company to provide full financial disclosure. This lack of transparency leaves you in the dark regarding the company’s health.
- Pump and dump scams
A fraudster can inflate a stock’s price artificially using misleading information. If you buy it at its peak, you may have a worthless asset.
Pros & Cons of Penny Stocks Trading
Penny stock trading comes with its downsides and upsides. Our experienced team of researchers identified the following:
Pros:
- Low initial capital due to low-priced stocks
- High growth potential if the company grows
- Opportunity to learn stock trading without the huge financial commitment
- You can invest in multiple low-cost stocks to diversify your trades
- It can be a vehicle for quick speculative gains
- Provide an excellent day trading opportunity
- If a company is undervalued, you can buy its stocks at a low price before it recovers
Cons:
- Higher volatility than many other markets
- Low liquidity
- Limited details regarding the stocks’ companies
- Heightened potential for pump-and-dump frauds
- Unstable companies
Conclusion
You now know the best penny stock brokers in the UK. It’s time to pick one that suits your needs. But remember, risks like low liquidity, poor transparency, and financial instability of issuing companies usually haunt penny stocks.
Therefore, continue scouring the broker’s website and other online resources for the latest fees, regulations, tools, and other elements. Also, look into the issuing company’s financial statements and news updates. And here’s some expert advice: beware of pump-and-dump schemes, where an unscrupulous trader inflates a stock artificially and sells it off for a profit.
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