Can You Trade Penny Stocks on Robinhood? Rules and Risks

Quick answer: You may be able to trade some low-priced stocks on Robinhood, but only ones it supports. Robinhood says it doesn’t support some over-the-counter (OTC) stocks, which is where many penny stocks trade. Search the ticker in the app to check. Penny stocks are highly speculative, and you could lose your whole investment.

We don’t recommend penny stocks or name “best” ones. This guide explains the rules and risks only.

What is a penny stock?

The term usually means stock in a very small company that trades for less than $5 a share. The SEC says these stocks are highly speculative, and they often have little trading.

Which penny stocks can you trade on Robinhood?

• Exchange-listed low-priced stocks: these may be available, if Robinhood supports them.
• OTC stocks: Robinhood lists an unsupported OTC stock as a reason you may not be able to buy or sell.
• Delisted stocks: Robinhood says you typically can’t open new positions, though you may be able to close one.
• Fractional shares: these only cover stocks on national exchanges, not OTC stocks.

For a specific stock, check it in the app. See Robinhood’s official Why can’t I buy or sell some stocks? article.

Why penny stocks are risky

• You can lose everything. The SEC warns investors to be prepared to lose their whole investment.
• They can be hard to sell. With few buyers, you may not get the price you expect.
• Prices can be manipulated. Low trading makes it easier for fraudsters to move a price.
• Information is limited. Small companies may publish little, and some have no real business.
• Watch out for hype. Be wary of tips on social media, in chat groups or in unsolicited messages.

Read the SEC’s guide to microcap fraud. Our is Robinhood safe? guide covers account safety.

Is there a best app for penny stocks?

It depends on what the app supports, not just the app itself. Some brokers allow OTC trades but charge for them. For example, Schwab lists $6.95 for online OTC equity trades. Compare options in our Robinhood alternatives guide, and check each broker’s rules.

Penny stocks FAQ

Does Robinhood have penny stocks?

It may have some low-priced stocks, but it doesn’t support every OTC stock. Search the ticker in the app.

Why can’t I buy a stock on Robinhood?

Robinhood lists reasons such as foreign stocks, unsupported OTC stocks and corporate actions.

Are penny stocks a good way to start investing?

We can’t give personal advice, but the SEC calls them highly speculative. Learn the risks first, and consider speaking with a licensed professional.

Sources: Robinhood support articles and SEC investor education, checked 1 November 2026. This is general education, not financial advice. RobinhoodTradeApp Guide is not affiliated with Robinhood Markets, Inc.