Penny stocks have long been the market’s wildcard: cheap to buy, potentially explosive, and increasingly visible thanks to platforms like Robinhood.
But penny stocks, typically priced under $5 and often trading with thin volume, demand more caution than most realize, especially those under $1.
In the sections ahead, we walk through how to find ultra-low-priced equities on Robinhood while outlining the risk considerations every trader should take seriously before diving in.
Step-by-Step: Finding Stocks on the App
If you’re trying to locate the top penny stocks on Robinhood, understanding how to use the app’s built-in filters can save you time. Robinhood’s search features, discovery tools, and thematic collections all offer different paths for uncovering sub-$1 and other low-priced equities.
Step 1. Using the Search Bar (The Direct Approach)
The fastest method is to start with the search bar.
Traders can type specific tickers if they already have companies in mind, but broader terms also work. Searching phrases like “stocks under $1,” “biotech penny stocks,” or “small-cap tech” can surface companies that fit those categories.
Step 2. Utilizing the Discover Tab (The Exploration Approach)
Robinhood’s Discover tab is designed for users who prefer to scan the market rather than search for a single stock. Here, traders can view trending names, daily movers, and sector-level activity. While not every feature filters for price automatically, reviewing active sectors and heavily traded names can reveal lower-priced stocks listed on major exchanges.
Step 3. Using “Collections”
Collections group companies by themes: healthcare, technology, renewable energy, and others. Smaller or emerging companies occasionally appear here, offering a way to browse categories you may not have considered.
However, Collections are broad and not optimized for price-based filtering, so they work best as a supplementary tool rather than a primary method for finding sub-$1 stocks.
Off-App Research & Due Diligence
While Robinhood offers a simple interface for discovering low-priced stocks, it shouldn’t be the only resource you rely on, especially with volatile penny stocks.
The External Screener Imperative
Robinhood doesn’t provide advanced screening tools, which is why external platforms make such a difference. Websites like Finviz, Yahoo Finance, and MarketWatch allow users to filter stocks by price, market cap, volume, and sector.
Starting with a filter for equities under $5 or even under $1 helps narrow the universe before checking whether those tickers are available on Robinhood.
Essential Due Diligence Checklist
Once you have a shortlist, reviewing a few core fundamentals can help separate legitimate companies from those that pose unnecessary risk.
- Volume: Look for consistent daily trading volume to avoid illiquid stocks.
- Financial filings: Check recent earnings reports and balance sheets for red flags.
- News catalysts: Confirm whether any significant events are influencing the price.
- Dilution risk: Many micro-caps issue new shares to raise capital, which can pressure the stock.
- Exchange listing: Stick to stocks listed on major exchanges; Robinhood doesn’t support OTC securities.
Technical Analysis Basics
Robinhood’s charting tools are simple but useful for spotting trends. Beginners can start with Moving Averages to see the overall direction and the Relative Strength Index (RSI) to gauge whether a stock is overbought or oversold.
What are the Limitations and Challenges in Trading Penny Stocks on Robinhood?
Robinhood makes trading accessible, but it doesn’t eliminate the complications that come with penny stocks. Here are the main constraints and risk factors that every beginner should recognize before getting involved.
| Challenge | Risk Implications |
| No OTC Support | Robinhood doesn’t allow trading of OTC stocks, where most penny stocks are listed. This dramatically limits the available universe of micro-cap opportunities. |
| Low Liquidity | Many low-priced stocks trade in small volumes, making it difficult to buy or sell without affecting the price. |
| Wide Bid–Ask Spreads | Illiquid stocks often have large pricing gaps between buyers and sellers, which can increase trading costs. |
| High Volatility | Sharp intraday swings are common, increasing both opportunity and risk, especially for inexperienced traders. |
| Pump-and-Dump Exposure | Thinly traded micro-caps are more vulnerable to promotional activity and sudden collapses. |
| Weak Fundamentals | Many penny stocks face ongoing losses, heavy dilution, or unproven business models, which limit long-term potential. |
Final Thoughts
Trading low-priced stocks on Robinhood requires a simple two-step approach: first, use external screeners to find eligible, exchange-listed companies, then confirm availability and pricing within the app. This method helps filter out the noise and focus on stocks that meet basic liquidity and listing standards.
Even so, penny stocks remain highly speculative. Limit your position sizes, manage your exits, and avoid overexposure. Never trade with money that would put you in a difficult spot if lost. Meaning, only commit capital you can afford to lose. Discipline is the single biggest advantage a new trader can have.
Shikha Negi is a Content Writer at ztudium with expertise in writing and proofreading content. Having created more than 500 articles encompassing a diverse range of educational topics, from breaking news to in-depth analysis and long-form content, Shikha has a deep understanding of emerging trends in business, technology (including AI, blockchain, and the metaverse), and societal shifts, As the author at Sarvgyan News, Shikha has demonstrated expertise in crafting engaging and informative content tailored for various audiences, including students, educators, and professionals.
