When you are new to stock trading, starting with a smaller network can be a lot easier than on a major exchange network, here is where the OTC network can be a good choice. But can you trade OTC on Webull and if you can’t, what are your options? Find out in this article.
Can you trade OTC stocks on Webull? You can’t trade OTC stocks on Webull. Webull doesn’t support trading OTC (over-the-counter) stocks, mutual funds, and forex. On the other hand, you can trade crypto, most US-listed equities, options, ADRs, and ETFs.
On the other hand, even though Webull doesn’t support OTC, it can happen that your stocks end up delisted from an exchange because their value falls under $5. Also, you can trade some penny stocks on Webull. So if you want to know can you buy otc on Webull and how to find penny stocks on Webull, keep reading.
Trading Over-The-Counter Stocks?
OTC stocks are usually too small to meet the criteria to end up on major exchange networks. They are usually called penny stocks, but this doesn’t mean all of them cost a penny. According to the Securities and Exchange Commission, any stock under $5 is considered a penny stock. These stocks are traded over-the-counter or OTC. They are considered riskier investments, and since they are so small, they are usually not traded on major exchanges. The trade is dealt with by brokers who negotiate the deal with one another through phone or computer networks.
Differences Between Major Exchange and OTC
The OTC exchange is not only limited to stocks – all financial instruments that are too small to end up to major exchange will end up on OTC. This means you can trade stocks, bonds, even derivatives. Here are the biggest differences between major and OTC networks.
|OTC exchange||Major exchange|
|Transaction transparency – you will be limited on bids and offers you can see||You can see all the orders available|
|It can happen that everyone is not delivered the same information||Every party receives offers from every counterparty|
|OTC has fewer rules||This network has more rules|
|Lower transaction costs||Transaction costs can be high|
What Is Webull and How Does It Work? Does Webull Have OTC Stocks?
Webull is a stock platform and app where you can trade stocks, ETFs, crypto, ADRs, and options. It is an excellent app for active traders – it takes no commission for ETF and stock trades. Setting up an account is easy, and there are no account minimums.
Webull offers commission-free trading on over 5,000 stocks and ETFs as well as margin trading and short selling. But if you wonder does Webull has OTC stocks, the answer is no. Still, you can invest in stock or ETF by purchasing 0.00001 of shares for a minimum price of $5.
Also, when you sign up, you will get two free stocks. And if you deposit $100, you will get another free stock with a $3,700 value. If you wonder, can you buy OTC after-hours on Webull, the answer is still no.
Even though Webull allows after-hours trade, the platform doesn’t support after-hours trade of OTC stocks.
Can You Trade OTC on Webull? No, but Your Stocks Can Become Penny Stocks
Now that you know the answer to the question “does Webull trade OTC,” let’s talk about your options when it comes to penny stocks and Webull. For example, if you own penny stocks and wish to transfer them to Webull, this will not be possible. Also, if your stock is going through corporate action, it will be temporarily unavailable for trading until the clearing firm doesn’t give it clearance. Here are corporate actions that will affect trading in stocks:
- Name change,
- Change to OTC,
- Stock is delisted from an exchange,
What to Do if My Stocks Become a Penny on Webull? Can You Trade OTC Stocks on Webull?
As you know, it can happen that your security loses its value and become a penny stock or OTC material. If that happens, Webull will not allow you to trade this stock.
If your stock gets delisted from a major exchange, the only thing you can do is to remove its position from the app. And if this doesn’t work, you can call Webull’s contact center and ask them to do this for you.
Webull considers these stocks to be high risk and will not allow you to continue trading. But if your stock gets delisted because of some corporate action, you will probably be temporarily forbidden to trade them.
It usually lasts 3 to 4 business days, but if this is prolonged, you should contact Webull’s help center.
Where I Can Trade Penny Stocks?
Even though you can’t trade OTC stocks on Webull, there are plenty of platforms that allow this kind of trade. You can even trade penny stocks on large networks such as New York Stock Exchange (NYSE) – most penny stocks trades are made OTC.
And even if you have penny stock on a larger network and you wonder can you buy penny stocks on Webull or transfer the ones you have, the answer is still no. Here are some of the best platforms where you can trade penny stocks:
- Charles Schwab.
Should I Trade Penny Stocks?
Even though they are considered to be riskier investments, there are some benefits to trading these stocks. For example, since you are trading with smaller companies, your investment will give you a much larger share in the company.
The transaction costs will be lower as well. The downside is that lack of liquidity can leave you with stocks that are impossible to sell. So before you decide to invest in penny stocks, do good research.
Most of these companies have a history of bad credit, and they tend not to give all the information that are necessary for the right assessment.