How to trade Penny Stocks on Trading 212

What are penny stocks?

A penny stock is typically:

• A micro-cap company trading at a very low share price;
• Highly speculative, with thin trading volume, wide bid-ask spreads, and limited public information;
• Attractive to some investors because the low price allows them to buy a large number of shares, hoping to catch a company early.

While penny stocks generally trade below $1, €1, or £1, the SEC defines them as any share trading below $5. Some trade on major exchanges, others over the counter, and not every broker offers access to both.

Note that a low share price does not automatically mean a small or illiquid company. Some penny stocks trade in high volume. Others fell to low prices after a specific event – a profit warning, a restructuring, or a deterioration in outlook. And some companies simply have a very large number of shares outstanding, which keeps the per-share price low regardless of the company’s size.

That distinction matters when assessing risk: a share priced at £0.50 because the company has 6 billion shares in issue is a fundamentally different proposition from one priced at $0.50 after losing 95% of its value.

A note on examples: penny stock lists date quickly. Companies exit the category by rising in price, and many are delisted after failing entirely – which is itself a useful indication of the risk. Rather than name specific stocks, we would suggest screening current candidates directly on Trading 212’s platform.

Can you trade penny stocks on Trading 212?

Yes. Trading 212 gives access to penny stocks across major global exchanges and the over-the-counter market.

Note, however, that Trading 212 has previously suspended buying in certain highly illiquid microcap stocks during periods of extreme volatility, while still permitting sales. Availability can therefore change without notice, and a stock you can buy today may be restricted tomorrow. Here is Trading 212’s own explanation from its help centre:

How to trade penny stocks on Trading 212

1. Open an account with Trading 212. You can read our review first if you want. Trading 212 charges 0% commission, though other fees apply, including a 0.15% currency conversion charge. See terms and fees;
2. Once funded, search by ticker or company name, or browse the full instrument list on their site;
3. Research thoroughly before committing. Check whether the stock has traded below $5 consistently or fell there recently, and why. Review the financial statements, cash position, and whether the company can fund itself without further share issuance – dilution is one of the most common ways penny stock investors lose money even when the business survives;
4. Decide your position size and set stop-loss and take-profit levels before entering. Use limit orders rather than market orders. With wide spreads and thin volume, a market order can fill at a materially worse price than the one displayed;
5. Monitor the position and company announcements. Bear in mind that penny stocks carry risks well beyond those of established shares.

Position sizing matters more here than in any other part of a portfolio. Given that a meaningful proportion of penny stocks eventually go to zero, treat any individual position as capital you could lose entirely, and size it accordingly.

Penny stocks pros and cons

Penny stock investment tips

• Research the company properly: invest only in businesses you understand. Check the cash position and whether the company can operate without raising further capital;
• Use stop-loss orders: decide your maximum acceptable loss before entering and set the stop accordingly. Be aware that in illiquid stocks, a stop may execute well below your trigger price during a sharp fall;
• Be alert to promotion schemes: misleading information is used to inflate penny stock prices, particularly in OTC markets where disclosure requirements are lighter. Treat unsolicited tips, social media hype, and paid newsletters as warning signs rather than opportunities;
• Watch the spread, not just the commission: with commission-free trading, the bid-ask spread is your real cost, and on illiquid stocks it can run into several percent on entry and exit combined;
• Keep it a small share of your portfolio: whatever your conviction, penny stocks should be a modest allocation alongside a diversified core, not the foundation of a portfolio.

Bottom line

Trading 212 is among the brokers offering commission-free investing that also gives access to penny stocks, across both major exchanges and OTC markets.

Be clear-eyed about what that involves, though. Penny stocks combine extreme volatility, thin liquidity, limited disclosure, and a high rate of outright failure. The occasional large winner receives far more attention than the many positions that go to zero, and that asymmetry in coverage distorts how the category is perceived.

These are speculative positions suited to investors who can genuinely absorb losing the full amount, held as a small allocation alongside a diversified core rather than as a strategy in themselves.

New users can also receive a free fractional share worth up to £/€100 by signing up with the Trading 212 promo code IITW*.

If you need further guidance, feel free to reach out to us.

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