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IBKR Penny Stocks: How to Trade Penny Stocks on Interactive Brokers

Updated on May 6, 2024
Fact checked

Hello! You’ve certainly heard of Interactive Brokers, a leading multinational online brokerage firm that lets you trade nearly any asset class. And you’re probably wondering if you can trade penny stocks, as they are unavailable on all brokers’ platforms.

In this article, you’ll find out if you can trade penny stocks on Interactive Brokers and how to find them. We’ll also briefly discuss penny stocks and their risks, and offer some tips we think might be helpful. So, let’s get right into it.

What are Penny Stocks?

As its name implies, a penny stock is:

  • A micro-cap company that trades at a very low price;
  • Highly speculative and risky due to low trading volume, significant bid-ask spreads, and limited information availability;
  • Appealing to many investors since it allows them to buy a large number of shares, hoping that they are buying the next Amazon or Apple and expect a large price increase in the future.

Although penny stocks usually trade below $1, €1, or £1, the SEC changed the criteria to include all shares traded below $5. Some are traded on exchanges, whereas others are traded over the counter (OTC). As such, not all brokers give you access to buy and sell penny stocks. As described in the following sections, penny stocks can offer big profit opportunities. Still, on the other hand, you should be aware that you will be exposed to huge risks due to low liquidity, volatility, and lack of information.

It is worth noting that not all penny stocks are illiquid securities, and you might encounter a penny stock with a high trading volume. Some might be trading at meager prices following a sudden decrease in price due to many factors, such as stock splits and changes in the company’s operational outlook. Moreover, some companies have a large number of outstanding shares, and their stock’s fair value is within a low price range.

Some of the penny stocks currently available on the market and available on IBKR:

  • UK: Rolls-Royce, Lloyds Banking
  • Spain: Banco Sabadell, Unicaja Banco SA
  • Italy: Agatos SpA, Casta Diva Group SpA
  • France: Makheia Group, Prologue
  • Germany: Elexxion AG, Arcandor AG
  • Portugal: Banco Comercial Portugues
  • US: American International Holdings Corp, Balincan USA Inc, Cannabis Global Inc

Can you trade Penny Stocks on Interactive Brokers?

Yes, you can trade penny stocks on Interactive Brokers. But you need to get additional permission to be granted access to trade penny stocks. As per their website:

 “Before you can trade penny stocks, you must request penny stock trading permission in Account Management: click Manage Account > Trade Configuration > Permissions, select Penny Stocks, and then acknowledge our Penny Stock Disclosure.

You and all trading users in your account must be using two-factor authentication to be eligible to trade penny stocks. This means that you and all trading users in your account must be using either a Secure Login Device or our sDSA security app to log in.”

How to trade Penny Stocks on Interactive Brokers?

To start trading penny stocks on Interactive Brokers, you simply have to follow the below steps:

  1. Open an account at IBKR. If you want, you can check our review before proceeding.
  2. After funding your account, you will have to get the additional permissions as mentioned on their website: Manage Account > Trade Configuration > Permissions, select Penny Stocks, and then acknowledge the Penny Stock Disclosure.
  3. Check what you can trade on IBKR by going to the IB Trader Workstation (TWS) and clicking on the file menu > new window > scanners > advanced scanners > selecting which market > choosing the filter “price less than $1” (or less than $5 if you go for the SEC definition).
  4. We recommend conducting in-depth research before deciding which penny stock to buy. You can check the historical prices to see whether the stock has been trading for some time at these low prices or if it has plunged recently due to some information. You should also research the company to determine if it is worth the investment. As it is listed on the exchange, you can check its financial statements on its website and read what analysts say about its outlook.
  5. Decide if you want to buy or sell the penny stock, determine the size of your trade, and then choose a stop loss and take profit levels. Once you have all this information, you can execute your order by clicking the “Submit” button on the screen. (As penny stocks are highly volatile, you might want to use limit orders to place your orders).
Penny stocks on IB Trader Workstation (TWS)

Pros and cons of trading penny stocks


  • Probability of high returns
  • Very low price per share
  • You can get exposure to penny stocks with a very small amount of money


  • Limited information available on the company
  • Low trading volume
  • Price easily manipulated
  • Very risky investments

Penny Stocks investment tips

After giving this brief overview of penny stocks, including the risks connected with trading such instruments and the potential returns that you might generate, we will list a few of the best penny stock tips that might be helpful while investing in penny stocks:

  • Do some research on the company: You should invest in something you are well aware of.
  • Utilize Stop-loss orders: It is best to have a stop-loss order predetermined before entering a trade. As such, you would set a price limit that is considered the maximum loss you are willing to bear. Once this level is reached, it will automatically close your position.
  • Keep the penny stock fraud scheme in mind. As we mentioned, some misleading information may circulate in order to inflate the price of penny stocks. So it is best to stay focused and update your order limits regularly. (This mainly applies to stocks trading OTC due to fewer disclosure requirements)
  • Check the fees you are paying to buy and sell those penny stocks and assess the cost/benefit of the trade.

Bottom line

In conclusion, Interactive Brokers is one of the few brokers that lets you trade penny stocks, you just need to have some additional permissions. Remember that penny stocks are very risky investments due to increased volatility, low trading volume, and limited visibility of the company’s financials and operations.

Simply put, it is like buying a lottery ticket. Therefore, we believe that such stocks are suitable for investors with a high-risk tolerance (willing to accept the high risk and able to bear high losses).


What is the best Penny Stock?

There are no best penny stocks. Penny stocks are highly volatile and speculative investments, and you need to do appropriate research before investing in penny stocks.

Can I buy OTC Penny Stocks on Interactive Brokers?

Yes, Interactive Brokers give you access to trade over-the-counter penny stocks.

Should you invest in Penny Stocks?

It depends on your willingness to accept risk, as penny stocks are considered highly risky, thus a high potential loss should be expected.

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About the author
Toni Nasr, CFA, FRM
Fintech Analyst

Toni is a Fintech Analyst with over 8 years of experience in the financial industry where he worked as a financial control analyst at a regional bank and later conducted independent investment research analysis.

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