FROM OUR PARTNERS

Best OTC Brokers of 2022

Ashley Jackson

Set yourself up for success by selecting an OTC broker that understands your needs. We’ve considered the best brokers based on commissions, account minimums, ease of use, and overall quality.

Trade a wide range of financial assets

$0 - $9.95

Fee Per Trade

$0

Account Minimum

Overview

Ally Invest offers competitive pricing on financial securities and robust research tools to help you make better-informed investment decisions.

What we like

  • Low cost commissions 
  • Wide selection of product offerings 
  • Up to $3,000 cash bonus
  • No minimum deposit required
  • Up to $75 for brokerage transfers

What we don't

  • Crypto not supported
  • Mutual fund fees

Get up to $625 when you open and fund an account

$0

Fee Per Trade

$0

Account Minimum

Overview

J.P. Morgan Self-Directed Investing offers beginners and seasoned investors free trades and a portfolio tool to help build out their asset allocation.

What we like

  • Unlimited trades with $0 commissions
  • No minimum investment
  • Manage investments from a mobile app
  • Portfolio builder tool to help with asset allocation
  • Access to research and insights

What we don't

  • Limited accounts, such as no SEP-IRA
  • No fractional share trading

INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

Copy investments from successful traders

$0

Fee Per Trade

$0

Account Minimum

Overview

eToro is a multi-asset platform that offers both investing in stocks, cryptocurrencies, and trading in CDF assets. It provides an innovative approach to ‘Social Trading,’ also known as ‘Copy Trading.’ Social trading allows users to connect, share their trades, and copy successful traders’ trades for potential gains.

What we like

  • Commission-free real stock trading
  • Offers money and risk management tools
  • A lot of learning materials available
  • Offers a free demo account
  • Copy successful traders investments

What we don't

  • Higher spreads and rollover fees
  • High non-trading fees

Discover new ideas from an active investing community

$0

Fee Per Trade

$0

Account Minimum

Overview

Public provides access to a powerful suite of tools, daily insights from millions of investors, and curated content and news, so all members can have the tools and resources needed to invest with context.

What we like

  • All-in-one investing platform 
  • Wide selection of product offerings 
  • Commission-free
  • Insights from an investing community of millions
  • Invest in any fractional asset
  • Live in-app shows about the markets

What we don't

  • Limited account types
  • No in-person customer support

Margin trading available with premium account

$0 - $9.95

Fee Per Trade

$0

Account Minimum

Overview

Axos Self-Directed Trading provides investors commission-free trades and an all-in-one solution for banking and investments.

What we like

  • Commission free trading on most assets 
  • Easy to use platform
  • Wide selection of product offerings 
  • No minimum deposit required
  • Extended market hours for premium accounts
  • Joint accounts available

What we don't

  • Crypto not supported
  • Premium account required for certain features
  • No in-person customer support

Offers fractional share trading

$0

Fee Per Trade

$0

Account Minimum

Overview

SoFi allows you to trade cryptocurrencies, stocks, and ETFs. It also uses the SIPC protection scheme and offers up to $500,000 in insurance coverage.

What we like

  • Free trading on ETFs and stocks
  • Offers fractional shares
  • A wide variety of cryptocurrencies
  • Free financial advice
  • No account minimum

What we don't

  • Does not offer mutual funds, bonds and options
  • Limited track record

What do OTC brokers do?

OTC brokers are middlemen who buy and sell stocks, bonds, and other securities on behalf of investors. They’re not licensed by the SEC but are regulated by FINRA (Financial Industry Regulatory Authority). FINRA oversees all securities firms that sell products to consumers, including banks, mutual funds, and insurance companies.

OTC brokers enable investors to buy and sell publicly-traded companies’ shares without going through an exchange like the NYSE or NASDAQ. To trade OTC stocks, you need a brokerage account with an OTC broker that offers access to these types of securities. Your brokerage firm will charge commissions for every trade you make on its platform, which may differ depending on how active you are as a trader.

Why use OTC brokers?

There are many reasons you should use an OTC broker rather than a traditional one. Let’s take a look at some of them:

  • To have access to leverage: Leverage is the use of borrowed money to make trades. However, it also increases the risk that you will lose money if your investment price moves against you. Leverage can increase the size of your trades, which allows you to make more money. If you have a small amount of capital and want to make larger trades than you otherwise could on your own, OTC brokers can provide you with leverage.
  • To trade in real-time: OTC brokers allow you to trade directly with other investors instead of waiting for the market to open or close. This is especially helpful if you are trading stocks or currencies only available during certain hours of the day.
  • To buy or sell just about any asset: One of the biggest advantages of using an OTC broker is that they can help you buy or sell just about anything. If there’s an asset you want to trade, chances are you’ll be able to find an OTC broker who can help you do it.

Are OTC brokers safe?

Reputable OTC brokers are safe and secure places to trade on. The good news is that there are many brokers the government regulates, and they have to follow a strict set of rules. They need to maintain high levels of transparency, which is why you should be able to see all your transactions in real-time.

However, OTC financial securities can be risky and subject to fraud. You’ll have to do your due diligence.

What are the fees for OTC brokers? 

Several different factors can affect the cost of trading. For example, the broker’s commission and fees structure and the type of market participant you are, i.e., retail investor vs professional trader.

The fees for these brokers vary based on their offerings and pricing structures. Some offer free trades, while others charge as much as $5 per trade.

What kind of OTC financial securities can you invest in?

You can invest in various financial securities, including stocks and bonds. These are sold directly to investors rather than on a stock exchange.

  • Stocks: Stocks are shares in a company that gives you partial ownership of it. If the company does well, so do you. If it does poorly, then your investment suffers as well. Stocks have high risk but also high returns — if the company does well. You can buy stocks through an online broker or directly from an individual company.
  • Bonds: Bonds are loans made by companies or governments to investors in return for interest payments over time (usually fixed). Bonds are considered safer than stocks because they pay interest and have a higher claim than stocks if bankruptcy were to occur. However, they don’t offer as much growth potential as stocks because their value is fixed at the time of purchase and doesn’t change with market conditions as stocks do.
  • Derivatives: Derivatives are financial instruments that derive their value from other financial assets, indexes, and events. They usually require little investment, but usually involve considerable risk, which varies according to how they are traded.

Benefits of OTC brokers

The advantages of investing in bonds through an OTC broker include:

  • Cost-effective: With the help of an OTC broker, investors can buy or sell their investments directly from each other without going through intermediaries like banks or mutual funds, which charge commissions on transactions.
  • Transparent system of trading: Investing in bonds through an OTC broker is also very transparent as all transactions are recorded electronically on databases available for anyone who wishes to view them.

How to choose the best OTC brokers

Here are some factors you should consider when choosing an OTC broker:

  • Reliability: You want to ensure your money will be safe and secure with your chosen broker. Don’t forget that this is your hard-earned cash, so you should always choose a reliable firm that won’t disappoint you.
  • Account minimum: The minimum initial deposit required by an OTC broker varies from broker to broker and country. Some brokers need as little as $500, while others ask for more than $1,000 to open an account.
  • Platforms: If your preferred trading platform is MetaTrader 4, but there is no MetaTrader 4 version available from your selected OTC broker, trading with them might not be worth it since you will have to go through the hassle of switching platforms.
  • Promotions: Brokers often offer promotions when they launch new services or products — so keep an eye out for special offers from your favorite brokerage firms.