Scottrade Penny Stock Rules

A while back I had a reader question the Scottrade penny stock rules. There was a rumor that you couldn't buy penny stocks through them any more. I called Scottrade and asked them. It turns out that you can buy penny stocks through them but it is possible that there might be some restrictions. These are not so much restrictions that Scottrade puts on you but more of a behind the scenes third party clearinghouse issue that facilitates trading.

I wrote more about this in an article I wrote called Scottrade Blocks Buying Of Penny Stocks. These are restrictions that most likely any broker has to deal with. The market makers can't make markets in all stocks so these smaller issues may have some liquidity problems. This is another reason to steer clear of penny stocks. That and they are a target of manipulation.

If you have any questions about your brokers rules regarding trading, the best thing you can do is call them and ask. It's easy for people to say this or that about a companies procedures. Since they don't represent the company in question, you can't really know for sure if it's true.

I dealt with this first hand this week when a competitor of mine made false claims about the product I sell for a living. The people he tried to talk out of it called me up to see if it was true. They were surprised to learn that he was incorrect in their assumptions. But, the people who called me to check were right on target to call me to verify his claims.

With the advent of the internet, it's easy to believe stock market investing claims that might be outrageous. Verify them with your broker before you believe them outright. You also want to watch programs that tout penny stock strategy like I mentioned in my post about Killer Penny Stocks.

Good luck!