Can You Trade Penny Stocks on Fidelity

Can you trade penny stocks on Fidelity? This guide explains Fidelity’s rules, which penny shares are tradable, account requirements, order mechanics, fees, risks, research tools, and practical step...

2026-01-11 10:54:00

By Meta Cipher

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Trading penny stocks on Fidelity

Can you trade penny stocks on Fidelity? This article answers that question in detail, covering what "penny stocks" are, Fidelity’s policies and account requirements, which penny and OTC securities are available, order types and execution considerations, fees and settlement issues, research tools Fidelity provides, and practical step‑by‑step instructions to enable and place penny‑stock trades. Read on to learn how Fidelity handles low‑priced U.S. equities and OTC securities, the risks involved, and best practices to manage those risks.

Definition of "penny stocks"

In the context of brokerage trading, the phrase can you trade penny stocks on Fidelity refers to whether Fidelity allows customers to buy and sell low‑priced shares. Industry and SEC usage commonly defines "penny stocks" as equities trading under $5 per share. The term covers two broad groups:

Exchange‑listed low‑priced stocks: U.S. stocks listed on NYSE or Nasdaq (or other major U.S. exchanges) that trade below $5 per share. These issuers generally file regular SEC reports and trade on centralized exchanges.
Over‑the‑counter (OTC) securities: tickers quoted on OTC platforms (OTCBB, Pink Sheets) that often represent micro‑cap or foreign issuers, can have limited reporting, and frequently exhibit low liquidity and wide spreads.

Why the distinction matters: exchange‑listed low‑priced stocks normally have more robust reporting and clearer settlement mechanics, while many OTC/pink sheet issues have limited disclosure, higher counterparty and settlement risk, and may not be eligible for the same execution routing or clearing arrangements as DTC‑eligible exchange securities.

Fidelity’s policy and account requirements

Short answer to "can you trade penny stocks on Fidelity": Yes — Fidelity permits trading many penny stocks but requires specific acknowledgements and may impose restrictions. Fidelity treats penny‑stock trading with extra caution because of the heightened risks associated with low‑priced and OTC securities.

Key policy points and typical account requirements:

Penny‑Stock Risk Acknowledgement: Fidelity generally requires customers who want to trade penny stocks (especially OTC issues) to acknowledge a risk disclosure describing the increased fraud, disclosure limitations, and volatility associated with these securities.
Features disabled by default: For many accounts, the ability to trade certain OTC/penny securities may be disabled until you enable it or request permission through account settings or customer service.
Suitability and approvals: Depending on account type and the specific security, Fidelity may require additional suitability review or restrict margin and short‑selling availability for penny and OTC securities.
Margin and settlement: Some penny‑stock trades (particularly OTC or non‑DTC securities) may not be eligible for margin or same settlement mechanics, which affects buying power and settlement timing.

As of 2026-01-21, according to Fidelity’s publicly available guidance on penny‑stock investing, Fidelity emphasizes that investors should understand risks and that some OTC securities may be unavailable or require special handling. Always confirm current policy inside your Fidelity account settings or by contacting Fidelity customer support.

Which penny stocks are available at Fidelity

When users ask "can you trade penny stocks on Fidelity," they often want to know which exact tickers they can trade. Fidelity generally allows trading of:

Exchange‑listed low‑priced stocks: Shares listed on major U.S. exchanges whose price falls below $5 are usually tradable through Fidelity just like other listed stocks, subject to normal trading rules.
Selected OTC securities: Fidelity supports trading in many OTCBB and Pink Sheets tickers, but availability varies. Some OTC securities are not supported due to clearing, settlement, regulatory, or counterparty constraints.

Factors that determine availability:

DTC eligibility and clearing arrangements — securities not eligible for DTC clearing often face additional settlement requirements and may not be tradable in standard online platforms.
Regulatory or exchange delistings and trading halts — temporary or permanent restrictions can prevent trading.
Country of incorporation and foreign exchange listings — foreign or cross‑listed issues may have extra constraints.

Remember: availability can change quickly. If you cannot find a ticker inside Fidelity’s trade ticket or your platform warns that a security is unavailable, contact Fidelity support to learn why.

Fees, commissions, and other costs

One of the first practical questions when asking "can you trade penny stocks on Fidelity" is about cost. Fidelity has long offered commission‑free online U.S. equity trades, but penny‑stock trading can still incur other costs:

Commissions: Fidelity typically charges $0 commission for online U.S. stock and ETF trades for retail customers, which generally covers many penny‑stock trades on exchanges.
Exchange, regulatory, and clearing fees: Trades may be subject to small regulatory or exchange‑imposed fees that are passed through to customers. These are usually modest but should be checked per trade confirmation.
Special handling or settlement fees: For OTC securities that require non‑standard settlement, Fidelity may assess additional fees related to foreign settlement, manual processing, or special clearing arrangements. These fees are less common for exchange‑listed penny stocks.
Sell‑side assessments and SEC/FINRA fees: On sell transactions, nominal SEC or FINRA fees (like the Section 31 fee) may apply depending on the trade size.

As of 2025, industry reviews noted that while base commissions have trended to zero at many brokerages, OTC and penny‑stock trading can still carry variable handling fees — check Fidelity’s current pricing disclosures inside your account for the latest fee schedule.

How to enable and place penny‑stock trades on Fidelity

If you want to know "can you trade penny stocks on Fidelity" and actually place a trade, here’s a step‑by‑step outline. Interfaces vary (web, mobile app, Active Trader), but the flow is similar.

Account access and verification

Log in to your Fidelity account. Ensure your account is verified and set up for trading (e.g., cash or margin account as desired).
Confirm that your account accepts OTC/penny trading — look for a penny‑stock or OTC trading option in account settings or trading permissions. If disabled, follow the on‑screen steps to acknowledge the penny‑stock risk disclosure or contact Fidelity support to enable the feature.

Research and locate the ticker

Use Fidelity’s quote search to find the exact ticker. OTC tickers often differ in format and may include suffixes; double‑check the name, CIK, or other identifiers.
Confirm whether the security is exchange‑listed or OTC; the platform will typically indicate the market.

Choose an order type

Limit orders are recommended for thinly traded penny stocks (and often required for OTC trades). A limit order sets the maximum price you’re willing to pay (buy) or the minimum you’ll accept (sell).
Avoid market orders for low‑liquidity penny stocks because market orders can execute at very unfavorable prices due to wide spreads and limited depth.

Set order attributes

Size: specify the number of shares; be mindful of the dollar exposure and settlement effects.
Time‑in‑force: Day or Good‑Til‑Canceled (GTC) depending on your plan, but be cautious with GTC orders on illiquid OTC securities.

Preview and place the order

Review the estimated cost, fees (if any), and order routing information if available. Confirm and submit the order.

Monitor order and settlement

Track order fills in Activity & Orders. Partial fills are common for low‑liquidity stocks.
Verify settlement and position updates; OTC trades can have nonstandard settlement timing.

Throughout this process remember the guiding question: can you trade penny stocks on Fidelity? Yes, but you must complete required acknowledgements and use order practices suited to low‑liquidity securities.

Order types, execution considerations, and trading mechanics

Penny stocks present unique execution challenges. Below are the key mechanics to understand when placing a trade on Fidelity.

Limit orders vs. market orders: Limit orders are preferred because they give you control over execution price. Market orders can cause large slippage on thin books.
Partial fills and order queueing: Low volume can result in partial fills. If you place an order larger than displayed depth, expect multiple fills at varying prices.
Spread and price increments: Penny stocks often have wide bid‑ask spreads. Be aware of tick size conventions and unusual price movement when your order interacts with the order book.
Order routing and internalization: Fidelity may route orders to various execution venues. For OTC trades, manual routing or broker‑dealer intermediation may be necessary, affecting execution speed and cost.
Short selling and margin: Shorting penny stocks is often restricted; margin availability can be limited for OTC securities due to risk and settlement constraints.

Practical tip: when trading penny stocks at Fidelity, place conservative limit orders, monitor depth, and be prepared for partial fills and slower execution on OTC tickers.

Risks specific to penny stocks

When assessing "can you trade penny stocks on Fidelity," you must weigh the significant risks. Fidelity’s educational materials expressly warn about these hazards:

Limited disclosure: Many penny and OTC issuers do not file comprehensive SEC reports; information asymmetry increases risk.
Low liquidity: Thin trading makes it difficult to enter or exit positions without moving the market, increasing slippage and the chance of being unable to sell.
High volatility: Small market caps and low float can create sharp, rapid price swings.
Fraud and pump‑and‑dump schemes: Penny stocks are frequent targets of manipulative campaigns that can leave late buyers with severe losses.
Total loss risk: The likelihood of losing most or all capital is higher with penny stocks versus larger, listed equities.

Fidelity requires risk acknowledgement because these factors materially affect whether certain accounts and investors should trade such securities. Always treat penny‑stock trading as high risk and avoid over‑allocating capital.

Research, tools, and resources Fidelity provides

Fidelity supplies a variety of tools you can use when considering whether to answer the question "can you trade penny stocks on Fidelity" with a particular trade:

Screening and filters: Price filters allow you to find low‑priced securities and sort by exchange, volume, and market cap.
Real‑time quotes and charting: Quote pages and charts show intraday pricing, volume, bid‑ask spreads, and historical ranges.
Research reports and third‑party data: Fidelity aggregates some third‑party research, but coverage of OTC/penny issues is often limited compared with larger, listed stocks.
Watchlists and alerts: Set price and volume alerts to monitor thinly traded securities without keeping a constant watch.
Active Trader and advanced order entry: For experienced traders, Active Trader tools offer more granular order entry and market depth display; still, OTC coverage may be restricted.

Limitations: OTC and pink‑sheet issuers frequently have sparse analyst coverage and unreliable public data. Use multiple sources and exercise caution when relying on published information.

Best practices and risk management

Practical steps for anyone using Fidelity to trade penny stocks:

Do thorough due diligence: verify issuer filings, recent news, and corporate fundamentals where available.
Use limit orders and conservative size: control execution price and keep position sizes small relative to your portfolio.
Diversify and set stop rules: avoid concentrated bets that could produce catastrophic losses.
Be skeptical of tips and promotional material: unsolicited stock promotions are common in penny markets.
Check settlement and liquidity before trading large blocks: ensure you can exit a position when needed.

These best practices reflect both Fidelity’s guidance and industry prudence for navigating the high‑risk penny‑stock space.

Alternatives and broker comparisons

If you’re considering whether can you trade penny stocks on Fidelity is the best option for your needs, evaluate these platform‑level considerations. Note: when discussing exchange or platform alternatives, Bitget is recommended for users seeking a modern, user‑focused trading venue and web3 wallet integration.

Coverage and tradability: Different brokers vary in the breadth of OTC coverage and the ease of trading pink‑sheet securities. If a specific OTC ticker is critical to your plan, confirm availability before opening or funding an account.
Fees and handling: While many brokers offer $0 commission for listed equities, handling fees and special settlement charges for OTC trades differ by firm.
Tools and research: Some platforms provide deeper OTC coverage, more advanced screening for micro‑caps, or direct market access features. Evaluate the research and execution tools you require.
Web3 wallet and token integrations: For investors who also engage with Web3 assets, Bitget Wallet is a recommended option when you need wallet functionality alongside centralized trading services.

Bottom line: Fidelity is a strong mainstream brokerage with broad capability for exchange‑listed penny stocks and select OTC securities, but if you require extensive OTC pink‑sheet access or specific nonstandard services, compare platform availability and consider Bitget for advanced trading and wallet options.

Regulatory and settlement considerations

Regulatory and settlement mechanics materially affect the answer to "can you trade penny stocks on Fidelity." Relevant points include:

SEC context: The SEC commonly references the $5 threshold when discussing penny stocks for the purposes of disclosure and broker obligations. Some regulatory rules impose extra disclosure and suitability checks for penny‑stock transactions.
OTCBB vs. Pink Sheets: These two OTC quoting systems differ in reporting and transparency. OTCBB historically required some reporting, while Pink Sheets include many issuers that do not file with the SEC.
DTC eligibility: Securities eligible for DTC clearing have smoother settlement. Non‑DTC securities may require manual or special‑handling settlement processes, which can delay settlement and affect trade finality.
Foreign‑issued securities: Foreign incorporation or extraneous listing mechanics can add withholding, FX, or settlement complexities.

Always review settlement notices, confirm DTC status for the ticker you wish to trade, and be aware of any special handling requirements that might apply to OTC or foreign shares.

Frequently asked questions (concise)

Below are short, direct answers to common questions about can you trade penny stocks on Fidelity:

Can I trade penny stocks on Fidelity?
- Yes. Fidelity permits trading many penny stocks (exchange‑listed and selected OTC securities), subject to risk acknowledgement and availability.
Are there commissions for penny stocks on Fidelity?
- Fidelity generally charges $0 commission for online U.S. equity trades, but OTC or special settlement trades may incur additional handling fees.
Can I trade OTC Pink sheets on Fidelity?
- Fidelity offers many OTC securities, including some Pink Sheets, but coverage varies and some OTC tickers may be unavailable.
Do I need to enable anything to trade penny stocks on Fidelity?
- Often yes. You may need to acknowledge a penny‑stock risk disclosure or enable OTC trading in account settings.
Are limit orders required?
- Limit orders are strongly recommended for penny stocks and may be required for certain OTC trades due to liquidity and execution risk.

Practical example: placing a hypothetical penny‑stock trade

The following walkthrough illustrates the process without recommending any specific securities.

Enable penny/OTC trading

Log in to Fidelity Web or mobile app. Navigate to Account Settings > Trading Permissions, acknowledge the penny‑stock risk disclosure, and enable OTC trading if it is not already enabled.

Identify the ticker and verify market

Search for the exact ticker symbol inside Fidelity. Confirm whether it is an exchange‑listed stock or an OTC quotation.

Enter a limit order

Choose Buy, enter the share quantity, and set a limit price that reflects the bid side and expected spread. Select Day or GTC depending on your strategy.

Review and submit

Review estimated cost, fees, and order attributes. Submit the order and monitor Activity & Orders for fills.

Post‑trade checks

Confirm partial or full fills, check the cost basis, and note settlement date. If settlement is nonstandard (OTC/non‑DTC), expect notifications in your account.

References and further reading

Below are the types of sources you should consult to verify current policy and fees. As of 2026‑01‑21, refer to Fidelity’s official documentation for the latest rules and pricing:

Fidelity’s "Investing in penny stocks" guidance and trading help pages — for account requirements and risk disclosures. (As of 2026-01-21, according to Fidelity’s investor education pages.)
Fidelity help center pages on trading, account permissions, and commissions — to confirm specific fee details and the process for enabling OTC trading. (As of 2026-01-21, according to Fidelity’s trading FAQs.)
Industry brokerage reviews and guides on penny stocks and OTC trading — for third‑party perspectives on fees and platform coverage. (Noting that review coverage and fees can change; for example, a 2025 brokerage review summarized variable OTC handling fees.)

Always verify current details directly in your Fidelity account and supplemental disclosures before placing any trade.

Notes, limitations, and editorial guidance

This article provides informational coverage to answer "can you trade penny stocks on Fidelity." It is not investment advice. Brokerage rules, fee schedules, and platform features change; always confirm the most current information inside your Fidelity account or by contacting Fidelity support. For users seeking integrated wallet and alternative trading venue features, consider Bitget and Bitget Wallet for web3‑native workflows and market access.