Why can't I buy penny stocks for under $1 on Fidelity?

You can buy and sell penny stocks on Fidelity on the over-the-counter market using a market order. But you can place a limit order by contacting a representative so you can acknowledge the risks that come with trading stocks on the pink sheets system.

Once you get in touch with customer service, Fidelity will modify your account to allow you to trade penny stocks. After this is complete, the issue will vanish and you buy and sell stocks under $1 without this inconvenience.

Penny stocks are a type of equity securities, of which the US Securities and Exchange Commission warns:

"Penny stocks are issued by companies that generally have no market listing or reporting requirements, which may be subject to delisting or other regulatory action."

Consequently, Fidelity customers can only buy and sell penny stocks after acknowledging their understanding of the specific risks associated with trading in them.

If you are considering trading penny stocks, you should be very careful. First, consider whether the risk of trading penny stocks is in line with your investment objectives, risk constraints, and time horizon.

If you are thinking of investing in an individual company or looking to purchase a stock, you should put as much research into your purchase or sale as possible. Consider the company's fundamentals, the qualifications of management and the total cost of the purchase or sale.

You can also find out more about that company by reading recent news articles about them.