The search for the best day trading platforms and brokers is an important part of any serious trader’s process. Speed, reliability, costs, customer service, and charting tools are all key elements of day trading platforms that these highly active investors tend to value the most. Moreover, for traders who implement systematic strategies, backtesting capabilities have gained greater importance as well.
As traders allocate more time and capital to their endeavors, it is important for online brokerages to provide them with the tools that they need, at a cost that doesn’t eat into their respective profits. Additionally, reliability of data is paramount, as is the ability to test trading ideas prior to deployment. We’ll look at several brokers who strike the right balance between day trading tools at a competitive price point.
Best Brokers for Day Trading:
Interactive Brokers: Best Online Broker for Day Trading, Best Broker for Advanced Day Traders, & Best Charting Platform for Day Traders
- Account Minimum: $0
- Fees: Maximum of $0.005 per share or 1% of trading value for the Pro platform, $0 for IBKR Lite.
Interactive Brokers: Best Online Broker for Day Trading
Why We Chose It
Interactive Brokers (IBKR) maintains our overall selection for Best Online Broker for Day Trading because it provides one of the most diverse asset portfolios accessible for trading while charging some of the industry’s lowest fees and margin rates.Pros
Wide range and depth of supported assets
Low commissions and margin interest rates
Multiple scanners across asset classes
Education portal within platform
Intraday news updates within the platform
Interactive Brokers, which was founded in 1978, is in its 45th year as a broker/dealer and has $10.6 billion in equity capital. IBKR, headquartered in Greenwich, Connecticut, employs 2,650 people worldwide and has operations in Europe and Asia. IBKR will enable spot gold trading in the United States beginning in 2021. In 2022, Interactive Brokers will increase its cryptocurrency trading through Paxos Trust Company.
The success of IBKR’s platform for day trading is mostly due to its Trader Workstation (TWS) platform. TWS provides access to a diverse range of assets, as well as consistent pricing, quick order flow, advanced charting tools, and automation possibilities. Furthermore, customers may personalize their TWS workstation while simultaneously monitoring newsflow. Traders on the move may utilize IBKR’s mobile app, which is accessible for both Android and iPhone users. Many of the same features are available on the app as they are on the desktop, especially when it comes to creating watchlists and making orders. The desktop platform, on the other hand, has more comprehensive charting features.
While IBKR may be used by both casual and serious traders, TWS has a more professional feel that seasoned traders will enjoy. Users may utilize the options analytics tool to see how changes in the options Greeks affect the options price for the asset in question. Because of Interactive Brokers’ market and asset coverage, traders may set up direct transactions based on global market dynamics.
IBKR Pro customers’ orders are routed via IBKR’s high-speed, best-execution order routing technology, SmartRouter, for order flow. Traders benefit from optimized price and transaction speed as a result of this. IBKR Lite users are directed to choose market makers with whom IBKR may have payment for order flow arrangements. As a result, IBKR Lite customers may see a decrease in price improvement on transaction executions.
Although IBKR Pro has certain upfront charges, it is anticipated that most day traders who want tight control over order execution will use it. Whether Lite or Pro, Interactive Brokers provides traders access to the industry’s lowest margin rates, allowing them to leverage up and increase position returns.
Interactive Brokers: Best Broker for Advanced Day Traders
Why We Chose It
Interactive Brokers is our #1 choice for advanced day traders. Their order execution speed and efficiency compliment their cheap margin trading rates, giving skilled traders a solid alternative for executing their strategy. IBKR has also continued to add tools to its already potent arsenal, as well as tradable assets and other critical features.Pros
Superior order execution
Contingent orders for every situation
Low margin interest rates
A plethora of tradable assets
IBKR has been our selection for Best Broker for Advanced Day Traders for a long time because it meets the demands of seasoned traders across numerous asset classes. Traders will discover a diverse range of assets to trade, as well as quick and fast order execution.
We anticipate that most expert traders will use the IBKR Pro offering to get access to SmartRouter. Traders may avoid having their order execution jeopardized by paying for order flow (PFOF), as Lite users may experience. Other characteristics that propel Interactive Brokers to the top of the list for expert traders include its broad asset selection, vast variety of equities on the easy-to-borrow list, and powerful charting tools. TWS is very customisable in terms of typical analysis and showing trading possibilities, and trades may be made immediately from the screen.
For mobile users, IBKR’s mobile app will be available for both Android and iOS. Traders may utilize the mobile application to evaluate stock fundamentals, monitor values, and verify environmental, social, and governance (ESG) ratings in addition to fast order execution. Traders on the move may trade options, examine order books, and execute exit strategies straight from the mobile app. Because the trading environment is more vast than even the most sophisticated mobile translation, advanced traders will, of course, work on Traders Workstation whenever possible. While the broker has addressed a significant void with the addition of cryptocurrency trading, the absence of a user-friendly backtesting environment will continue to irritate some more experienced traders.
Interactive Brokers: Best Charting Platform for Day Traders
Why We Chose It
There are several rival platforms with powerful charting embedded into the trading interface, but none can dethrone Interactive Brokers as the Best Charting Platform for Day Traders. Although IBKR holds its own in terms of charting functionality and the ease with which customized views and indicators can be applied, the robust selection of assets, ability to chart and trade within one platform, and breadth of technical tools available to users all combine to keep IBKR firmly in first place.Pros
Trades can be placed directly from customizable charts
Charting and trading assets from numerous marketplaces on a single platform
Robust offering of technical tools
Intra-day traders will immediately discover that IBKR offers them with useful tools, a diverse asset selection, swift order execution, and competitive pricing. Day traders that use technical analysis will feel at ease when applying studies and indicators to a diverse range of assets across marketplaces. There are several tools to pick from, and users are unlikely to need to go further for indications or analysis. Moreover, individuals who do not rely just on technical analysis will discover more than enough tools to meet their trading demands by detecting tradable events and fundamental data.
The problem will be determining which tools not to utilize rather than whether the tool exists on IBKR’s platform. The traditional relative strength index (RSI), Bollinger Band, and stochastic cocktail of tools, as well as more sophisticated ones like DeMark indicators, Connors RSI, and Donchian channels, are offered. Another tool that demonstrates IBKR’s dedication to assisting traders in identifying price inefficiencies is the option to add statistical bands to the volume-weighted average price (VWAP) research.
Mobile users may access the same tools and indications as desktop users, albeit they may find it more difficult on the mobile platform, which is not unusual in the sector. Finally, traders may trade straight from the charts using IBKR’s Chart Trader feature.
Overall, IBKR’s charting software provides day traders with tools, dependability, cheap cost, and quickness. This, of course, is in addition to all of the other features that earned IBKR the overall and best for advanced day traders awards.
Webull: Best Low-Cost Day Trading Platform
- Account Minimum: $0
- Fees: There is no commission to trade stocks, listed options, or ETFs.
Why We Chose It
Webull is our top pick for Best Low-Cost Day Trading Platform because it offers great platform features while charging its customers no direct fees.Cons
Limited selection of assets
Payment for order flow can lead to slower execution speeds
Below average customer support
Limited educational materials
No Income on excess cash
Webull offers basically zero (direct) fees, however many brokers claim to be low cost brokers. Webull users will benefit from commission-free stock and ETF trading, as well as no account minimums or deposit limitations.
Webull, a Chinese-owned broker and trading platform based in New York City, was founded in 2017. Webull describes itself as a financial technology startup. Webull provides a great low-cost platform for day traders who want to concentrate on stocks and ETFs. Webull does not provide traders with access to managed futures, FX, fixed income, or complex options capabilities.
Webull’s low cost structure comes with a cost, as it does for certain other bargain brokers. This is mostly due to Webull collecting paid for order flow, which creates the possibility of transaction execution delays. Furthermore, the social facilities provided by Webull and many other online brokers might encourage overtrading through gamification. Webull users, on the other hand, get access to all US-listed stocks, ETFs, cryptocurrencies, and options on a platform that is fairly strong overall. Day traders who want to create short positions on Webull’s easy-to-borrow list have access to about 2,500 equities.
For a budget broker, the Webull trading platform boasts quite remarkable charting capabilities, with several common technical indicators accessible, as well as stock screeners and freshly introduced options screeners. Such who want to turn those screens to watchlists may do so easily. Users may only place basic market, limit, stop, and stop limit orders for order entry and exit while trading. Paper trading is also available for people who want to test their ideas without putting their money at danger. Users get up-to-date news flow, and the Webull platform maintains track of the top performing industries and most popular ETFs. Some disadvantages that traders may encounter include the inability to backtest or automate trading methods, as well as a lack of sophisticated trading tools.
IBKR has several competitors that might pose a threat in various sectors. TradeStation provides superior backtesting, TD Ameritrade’s strong thinkorswim interface is more intuitive than TWS, tastyworks from tastytrade provides a better overall options trading experience, and Webull is less expensive. However, given the present condition of the business, no broker can compete with IBKR on a point-for-point basis. It offers the tools, asset range, speed, and global reach to make it a day trader’s dream when it comes to continually discovering fresh pricing inefficiencies to exploit across markets and asset classes.
Of fact, Webull provides a fairly solid framework for its no (direct) cost approach. If you want to day trade on the cheap, Webull allows you to enter the market for almost nothing up front. However, as you progress as a trader, the appeal of IBKR’s more broad offering will become greater.
What Is Day Trading and How Does It Work?
Day trading is the practice of purchasing and selling (or selling and buying) the same security within the same trading session in order to benefit from tiny, frequent gains. Some day traders are discretionary traders, which means they pick when to start and terminate deals depending on market circumstances and their instincts. Others are system traders, who place trades according to a set of rules. System traders often automate their techniques, instructing computers to search for, initiate, manage, and close deals.
In contrast to long-term investors, who normally want to buy cheap and sell high, many day traders are equally inclined to sell short. This implies they sell high and purchase cheap in order to benefit from price declines. While long-term investors ride out market volatility by maintaining positions for the long term, day traders try to benefit from it on a daily basis by entering and exiting positions to capitalize on modest price variations. Because day traders depend on intraday price changes and quick order execution, the instruments they use often trade at high volume (with strong liquidity) and with significant volatility.
What Are the Risks of Day Trading?
Day trading may be profitable, but there are hazards, as with any sort of investment. One of the most important hazards for retail day traders is fighting against a stacked field of professionals who have the resources to win (e.g., speed, trading funds, technology, and software). It might be difficult for retail traders to earn on a consistent basis in the absence of a fair playing field.
Another significant danger is that day traders often utilize leverage to join positions, which means they might lose more on any one transaction than they risk. This is particularly dangerous with short transactions, in which the trader sells “high” in the hopes of purchasing “low” at a profit, which involve almost infinite risk since prices may continue to rise forever. Another major danger is being undercapitalized. Traders with insufficient trading money might soon deplete their accounts, putting an end to their day trading careers. Furthermore, traders who fund their accounts with anything other than risk capital risk losing more than their trading accounts.
How Do You Start Day Trading?
If you decide that day trading is for you, create an account with a broker that provides paper trading (also known as simulated or “sim” trading) so you may practice trading before risking real money. Simulated trading environments are available from Interactive Brokers, TradeStation, and Webull to help you polish your abilities and experiment with new ideas. Practice your order-entry abilities to reduce the danger of making expensive mistakes while placing trades, such as pressing the buy button when you intended to sell. Take the time to study the platform’s features so you can fully use them when actual trading begins.
You may design and fine-tune your trading strategy while practicing and learning how to utilize the platform. Before risking actual money, you should have a detailed trading strategy that you can check before every trading session. Make it a habit to review your transactions at the conclusion of each session so you can keep track of what works and what doesn’t. Remember that markets alter over time. A lucrative day trading strategy today may not be profitable next year or even next month, therefore you must constantly assess and change your strategy.
When you begin trading with real money, start small. Once you have more experience (and a proven track record), you can trade larger positions.
How Do Day Traders Use Online Brokers?
Day traders may place their trades manually, often from a chart, or set up an automated system that generates orders on their behalf. Fundamental data is not a concern, but the ability to monitor price quotes, price volatility, liquidity, trading volume, and breaking news, is key to successful day trading.
Day traders often prefer brokers who charge per share (rather than per trade) (rather than per trade).Traders also need real-time margin and buying power updates. Each broker ranked here affords their day-trading customers the ability to enter orders quickly by customizing the size of trades and turning off the trade confirmation screen. We sought brokers that allow traders to place multiple orders simultaneously, designate which trading venue will handle the order, and customize trading defaults.
What Should You Consider When Choosing a Day Trading Platform?
A key consideration for day traders is trading platform quality, which can impact things such as execution speed and price quotes. Day traders, especially those who trade using their own algorithms, need flawless data feeds or they risk entering orders based on errors in the data. In an environment where high-frequency traders place transactions in milliseconds, human traders must possess the best tools. Most brokers offer speedy trade executions, but slippage remains a concern. Traders should test for themselves how long a platform takes to execute a trade.
Commissions, margin rates, and other expenses are also top concerns for day traders. Even if a day trader can consistently beat the market, the profit from those positions must exceed the cost of commissions. For a high-volume trader, commission costs can easily run into hundreds or even thousands of dollars per day. Traders can check these rates by contacting the broker or checking the broker’s website, but most offer special rates for highly active day traders.
It is also important for day traders to consider factors such as customer service and the broker’s financial stability. Customer service is vital during times of crisis. A crisis could be a computer crash or other failure when you need to reach support to place a trade. The best brokers offer dedicated account representatives for highly active day traders to assist in this regard.
The financial strength of the firm is also important since small brokerages can and do go out of business, but the main player in whether or not you can recover your assets is the clearing firm. Take a look at FINRA’s BrokerCheck page before signing on with a small firm to make sure they have not had claims filed against them for misdeeds or financial instability.
Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. This year, we revamped the review process by conducting an extensive survey of customers that are actively looking to start trading and investing with an online broker. We then combined this invaluable information with our subject matter expertise to develop the framework for a quantitative ratings model that is at the core of how we compiled our list of the best online broker and trading platform companies.
This model weighs key factors like trading technology, range of offerings, mobile app usability, research amenities, educational content, portfolio analysis features, customer support, costs, account amenities, and overall trading experience according to their importance. Our team of researchers gathered 2425 data points and weighted 66 criteria based on data collected during extensive research for each of the 25 companies we reviewed.
Many of the brokers we reviewed also gave us live demonstrations of their platforms and services, either at their New York City offices or via video conferencing methods. Live brokerage accounts were also obtained for most of the platforms we reviewed, which our team of expert writers and editors used to perform hands-on testing in order to lend their qualitative point of view.
Read our full Methodology for reviewing online brokers.
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