Looking to find reliable and trustworthy penny stock brokers? Do they do exist? Learn how to identify the duds from the stars. In order to accomplish this, be prepared to spend some time researching and comparing their services to determine the best one that fits your needs. Fortunately, with the massive amount of information accessible on the Internet, the time spent doing due diligence can be minimized.

The penny stock market can be a minefield for someone whom doesn’t know what they’re doing. Hence, if you’re a beginner contemplating this type of investing, finding a good penny stock broker is worth considering when buying penny stocks.

In general, stock brokers are essentially “salespeople” who are paid by salary, commissions on sales, or a combination of both. Their job is to fulfill your trade orders. To become a broker in the US, one must first pass two licensing exams called Series 7 and Series 63. Once one successfully completes these exams, one is then allowed to advise you, to seek business from you, and to execute your transactions for you. There are two categories of stock brokers or stock traders: full service and discount.

As the name implies, full service brokers offer “total service”. They provide more hand-holding and personalized attention to deliver advice and investment recommendations. But there is a price to pay for these recommendations. They usually have very high commission fees and are more suitable for investors who have a great deal of money to invest. If you’re more into the relatively lower dollar value and frequent trading volume of penny stock investing, then full service brokers may be too expensive for you as you may end up splitting a larger chunk of your profits with your broker.

Discount stock brokers do not typically offer any advice or research. They mainly execute your trade orders to buy or sell. They can be available to answer your questions, just not to the same attentive level as their full service counterparts. You can communicate your trade instructions via phone order or online computer order entry. Many discount stock brokers offer a wealth of research from third parties within your account on their website. Discount stock brokerages charge considerably lower fees than their full service equivalent. These lower fees are attractive to the penny stock investor whom tends to trade frequently.

The type of stock broker you should seek out will depend on the level of service that you need. If you are unable or unwilling to do your own homework on choosing potential stocks, then a full service broker will best meet your needs. If you plan to buy penny stocks for the long term, then you won't be trading so often and the higher commissions won't be such a defining factor.

Alternatively, if you plan to trade more often, discount brokers are suitable for you as they offer you the lower trading fees, which is important seeing that you will be trading more often. Note that you will need to invest your own time to research and choose your trades.

You should be choosy when making your decision to ensure that you pick a good broker. Important criteria when selecting a broker include comparing commissions, reliability, policies (ie. minimum balance and fees requirements, trading restrictions, etc), accessibility, and customer service. Brokerage firms are highly competitive and there are lots of them so you won’t be short on choice. Whichever type of penny stock brokers you ultimately decide on, ensure that they best fit your investment strategy.