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Understanding your classification as a trader is critical when you select a broker for day trading. As an active trader, you are likely comfortable paying $4, $5, $6, or even $7 per trade. You want low-cost trades, but a feature-rich platform and great tools are important to you too; therefore, you are willing to pay more.
However, speak to a hyperactive trader or day trader, and you will find the platform/software design don't matter nearly as much; commissions and order execution talks while everything else walks. Day trading as a profession is risky business.
Our ranking in this category considers both types of trader.
Best Active Trading Brokers 2019
- Interactive Brokers - Best rates, complicated platform
- Fidelity - Competitive rates, balanced platform
- TradeStation - Great platform, flexible rates
- TD Ameritrade - Best platform, expensive rates
- Charles Schwab - Competitive rates, balanced platform
Day Trading Tools
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 new investors, 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, this broker offers the lowest commissions in the industry.
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.
Order routing aside, our other top brokers for day trading shine for different reasons. TradeStation provides three commission structures with quality executions and an insanely powerful desktop platform rivaled only by TD Ameritrade’s thinkorswim, which also offers traders an excellent mobile trader app. Meanwhile, Fidelity was ranked first overall for order execution, providing traders industry-leading order fills alongside a competitive platform.
All in all, finding the right broker for day trading first requires defining “active.” 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.
Top finishers at a glance (overall)
Day trading platform features
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.
Best Day Trading Platforms 2019
- TD Ameritrade - thinkorswim
- TradeStation - TradeStation 10
- Interactive Brokers - Trader Workstation (TWS)
- Fidelity - Active Trader Pro
- Charles Schwab - StreetSmart Edge
Day trading laws and regulations
To day trade, 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. 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."
What is a day trade? FINRA rules define a day trade as, "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."
Best day trading brokers summary
|Online Broker||Trading Platform||Minimum Deposit||Commissions||Active Trading|
|Interactive Brokers||Trader Workstation (TWS)||$0||$0.005 per share||5 Stars|
|Fidelity||Active Trader Pro||$0||$4.95||5 Stars|
|TradeStation||TradeStation 10||$500||$5.00||5 Stars|
|TD Ameritrade||thinkorswim||$0||$6.95||4.5 Stars|
|Charles Schwab||StreetSmart Edge||$0||$4.95||4.5 Stars|