Day Trading, which is buying and selling shares during the same trading session, exploded in popularity back in the booming stock market of the 1990s. Everyone was trying to get in and out of securities and make a profit on an intraday basis. After the dot-com market crash in 2000, the SEC and FINRA established the “Pattern Day Trader” rule in 2001, which increased the requirements to day trade in an effort to better protect consumers.
To day trade today, you have at least $25,000 to comply with the Pattern Day Trader rule. Traders must also meet margin requirements. The government put these laws into place to protect investors. Bottom line: day trading is risky.
To day trade effectively, you need to choose a day trading platform. As a day trader, you need a combination of low-cost trades coupled with a feature-rich trading platform and great trading tools. Price isn't everything; therefore, many day traders are willing to pay more to get the tools they need to trade more efficiently.
Best Day Trading Platforms
Here's a breakdown of some of the best online brokers for day trading.
- TD Ameritrade - Best Overall, $0 trades
- Interactive Brokers - Best for professionals
- TradeStation - Excellent trading platform, flexible rates
- Fidelity - Balanced platform, $0 trades
- Charles Schwab - Balanced platform, $0 trades
Best platform, expensive rates - Open Account
Exclusive Offer: Get up to $600 and trade commission-free with TD Ameritrade.
TD Ameritrade's thinkorswim is our No. 1 desktop platform for 2019 and is home to an impressive array of tools. These include company profiling, advanced earnings analysis, plotting FRED data, charting social sentiment, back testing and replaying historical markets tick by tick, or viewing economic and corporate calendars. The brokerage also enables traders to create and conduct real-time stock scans, share charts and workspace layouts, and perform advanced options analysis. The rabbit hole goes as far as any trader's imagination will take them. It’s a dazzling offering of choices that will set your mind spinning – in a good way. Read full review
Best rates, professional platform - Open Account
Exclusive Offer: New clients that open an account today receive a special margin rate.
Our No. 1 pick for day trading, Interactive Brokers, wins this category because the broker caters specifically for active and hyperactive traders. You won’t find the broker’s platform built for beginners, and you can mostly forget about research. What you will find, though, are programmable hotkeys and a slew of order types for placing every possible trade imaginable, including algorithmic orders, alongside the lowest margin rates in the industry. Popular among the institutional community, including hedge funds, IB offers the lowest commissions in the industry. Read full review
Great platform, flexible rates - Open Account
Promo Offer: Commission-Free Trades on Stocks, ETFs & Options Trades
As a trading technology leader, TradeStation shines, supporting traders through its web-based platform as well as its desktop platform, which we rated No. 1 for Platform Technology. The tools provided in TradeStation desktop are widespread and professional. For example, more than 40 years of historical data are available for trading equities when it comes to charting and studies. Furthermore, a staggering 274 indicators/studies are available, each of which can be reworked or adjusted to the trader's specifications using TradeStation’s proprietary coding language, EasyLanguage. Read full review
Competitive rates, balanced platform
Fidelity was ranked first overall for order execution, providing traders industry-leading order fills alongside a competitive platform. For day traders, Active Trader Pro (ATP) is Fidelity’s flagship desktop platform, and is packed with tools. Charting is cleanly laid out and encompasses pretty much everything a trader could want: 22 different drawing tools, 166 optional studies, overlays, custom profiles, trading off the chart, displayed alerts, notes, and more. Recognia is also incorporated to automate the identification of common technical patterns. Read full review
Competitive rates, balanced platform - Open Account
Current Offer: $0 online stock, ETF, and options commissions at Schwab.
For day traders, Charles Schwab offers its desktop download StreetSmart Edge platform, which provides the majority of trading tools and functionality active traders need to succeed. If there is one advantage of trading with Schwab's flagship platform, it's that the platform easier to learn than Interactive Brokers TWS, TD Ameritrade thinkorswim, and TradeStation 10; however, there are less features and customization options overall. Read full review
Day Trading Platform Features Comparison
Is there a specific feature you require for your trading? Popular tools used by day traders include ladder trading, level II quotes, trade hot keys, direct market routing, stock alerts, streaming time & sales, and strategy backtesting, among many others.
Lucky for you, StockBrokers.com operates the largest verified database on the web for online brokerages. For a deeper comparison of 150+ features, use our online brokerage comparison tool.
|Feature||Interactive Brokers||Fidelity||TradeStation||TD Ameritrade|
|Stock Trade Fee (per trade)||N/A||$0.00||$0.00||$0.00|
|Stock Trade Fee (per share)||$0.005||N/A||$0.01||N/A|
|Stock Alerts - Basic Fields||Yes||Yes||Yes||Yes|
|Stock Alerts - Advanced Fields||No||Yes||Yes||Yes|
|Streaming Time & Sales||Yes||Yes||Yes||Yes|
|Direct Market Routing - Stocks||Yes||Yes||Yes||Yes|
|Direct Market Routing - Options||Yes||Yes||Yes||Yes|
|Trade Hot Keys||Yes||Yes||Yes||Yes|
|Level 2 Quotes - Stocks||Yes||Yes||Yes||Yes|
|Level 2 Quotes - Options||Yes||Yes||Yes||Yes|
|Trade Ideas - Backtesting||Yes||Yes||Yes||Yes|
|Order Liquidity Rebates||Yes||No||Yes||No|
What is a day trading?
FINRA rules define a day trade as, "The purchase and sale, or the sale and purchase, of the same security on the same day in a margin account. This definition encompasses any security, including options. Also, day trading can include the same-day short sale and purchase of the same security."
Day trading is a strategy in which stock traders buy and sell throughout the day with a goal of making small profits with each trade. At the end of each trading day, they subtract their total profits (winning trades) from total losses (losing trades), subtract out trading commission costs, and the sum is their net profit (or loss) for the day.
How much money do I need to day trade?
To day trade, traders must maintain an account balance of at least $25,000 to comply with the Pattern Day Trader rule, which grants them access to 4:1 margin during the day. It is important to remember, day trading is risky.
What is a "pattern day trader"?
FINRA rules define a pattern day trader as, "Any customer who executes four or more 'day trades' within five business days, provided that the number of day trades represents more than six percent of the customer's total trades in the margin account for that same five-business-day period."
Why does the pattern day trading rule require $25,000?
The SEC believes that while all forms of investing are risky, day trading is an especially high risk practice. The pattern day trader rule was said to be put in place to limit potential losses and protect the consumer.
As a result, the pattern day trader rule is enforced by every major US online brokerage, as according to law. The SEC believes that those whose account value is less than $25,000 are more likely to be less sophisticated traders. After the dot-com market crash, the SEC and FINRA decided that previous day trading rules did not properly address the inherent risks with day trading.
How do I choose a day trading platform?
All in all, finding the right platform for day trading first requires understanding the laws and making sure you have at least $25,000 for Pattern Day Trader status. Next, ask yourself, “How important are low trading commissions?” and, “How important are tools?” Assume that lower trade costs usually mean less quality in such areas as research, trading tools, mobile trading apps, or ease of use. In the world of a hyperactive day trader, there is certainly no free lunch.
Which brokers offer market rebates for adding liquidity?
Interactive Brokers, Lightspeed, TradeStation, Cobra Trading, and SpeedTrader all offer what are known as “unbundled” rates, which means they pass 100% of all market rebates (or charges) for adding (or taking) liquidity back to their clients. Many market exchanges (examples include Citadel, Bats, and KCG (Virtu)) will pay your broker for routing your order to them. These rebates are usually no more than a tenth of a penny or two per share, but they add up. See: Order Execution Guide.
Using a broker such as Lightspeed, routing a 1,000-share buy limit order on the NYSE will currently net you $0.0014 per share. Lightspeed’s base rate is $.0045 per share, so the original $4.50 trade now becomes only $3.10, thanks to a $1.40 rebate from the NYSE. This represents a savings of 31 percent. Note, however, this goes both ways, as routing a straight market order to the NYSE instead would incur a charge of $.0027 per share, thus increasing the cost of the trade.
Summary: Best Day Trading Platforms
|Online Broker||Trading Platform||Minimum Deposit||Commissions||Active Trading|
|TD Ameritrade||thinkorswim||$0||$0||4.5 Stars|
|Interactive Brokers||Trader Workstation (TWS)||$0||$0.005 per share||5 Stars|
|TradeStation||TradeStation 10||$500||$0||5 Stars|
|Fidelity||Active Trader Pro||$0||$0||5 Stars|
|Charles Schwab||StreetSmart Edge||$0||$0||4.5 Stars|
- Order Execution Guide
- Best Stock Brokers for 2019
- Best Discount Brokers
- Best Brokers for Options Trading
- Best Brokers for Penny Stocks Trading
- Compare Online Brokers
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