Best Broker Platforms for Day Trading
Day traders are excellent risk takers. One area where they can’t afford taking risks however, is the trading platform they utilize. Day traders need a fast, reliable platform loaded with tools and features to ensure an optimal trading experience. In this guide, we lay out the best brokers for day trading, showing the pros and cons of each platform.
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Day traders typically know exactly what they want when it comes to online brokers…
They pick brokerages with fast, high-quality executions, reliability, and low costs. Day trading platforms are designed to attract traders that are very active during an average stock market day. They start off with zero positions in their typical portfolios, and they trade so frequently that by the end of the day, they have closed all of their transactions.
Some day traders operate manually, making trade by trade hour by hour using a chart. Others set up an automated process that generates orders to buy and sell for them. While day traders don’t really look at fundamental data, they are interested in liquidity, trading volume, price volatility, and breaking trends of the day that will change a stock price considerably.
A general rule of thumb for a day trader is to pick a broker that charges per share. Typically, investors like brokerages that charge per trade. However, traders want to see real-time margin and hourly buying power updates.
This means that day traders must be able to enter orders quickly by entering a custom size of trades and even forgoing the trade confirmation step. Day traders are also known to use a large amount of capital.
There are some amazing benefits if you are a successful day trader. As the author of Trading for a Living Alexander Elder said, “You can be free. You can live and work anywhere in the world. You can be independent from routine and not answer to anybody.”
So what brokers are best for day trading? Let’s find out.
What is the Best Broker for Day Trading?
We based our selections on brokerages that were known for fast and reliable trade executions with benefits for day traders, such as placing multiple orders at the same time and allowing day traders to designate which trading venues finalize the order. The brokerage should also have custom trading defaults so that day traders can buy and sell even faster.
Here’s our list of the best online brokers for day trading:
- Interactive Brokers – Best Overall
- Tradestation – Best Technology
- TD Ameritrade – Best Trading Platform
- Lightspeed – Best for Advanced Traders
- tastyworks – Best for Research and Education
1. Interactive Brokers – Best Overall
For many years now, Interactive Brokers is the go-to platform for day traders. The brokerage leads in low-cost trading, and it is geared for extremely active traders. Currently, they charge a measly $0.005 per share with their traditional platform, but you get $0 per share on IBKR Lite.
- Very low fees
- Very customizable platform with hundreds of watchlists, you can add 450 columns to your dashboard
- Access 120 technical factors for charting
- Excellent and most accurate market scanner that helps you stay on top of the market
- Use algorithmic, automated trading via the API
- Very difficult learning curve
- Accounts need to have more than $100,000 each month or else you will incur inactivity fees
- Not enough technical analysis tools
Interactive Brokers or IB is the platform for frequent day traders who want fast executions at reliable accuracy. Their fees are also notably low. If you’re looking for the cheapest brokerage for day trading, there’s a good chance IB is for you.
The brokerage’s main priority is keeping fees low while helping traders execute at a faster rate. You can use their desktop platform for speedy trades called Trader Workstation, which allows you to access professional trading algorithms and automated trading options.
You can customize any algorithm to fulfill your market orders, thereby making it easier to seek opportunities within a spread and get pennies more for your profits. There are some drawbacks to trading this way if you are not used to the platform and don’t know how to automate your trades as expertly as another trader, so you may need to look at their YouTube tutorials and other educational resources to help with this part of the platform.
IB has very low margin rates for those who like to borrow and bid. If you use more than $100,000 on margin, then you’ll like the low-interest rates at IB. You can also set up an automated strategy using the API on IB or you can pick up a strategy from their Investors’ Marketplace.
With the onslaught of no commission trading, IB launched IBKR Lite that lets clients pay no commissions on US-based trades, but they can only make these trades using the desktop client portal or the mobile app.
2. TradeStation – Best Technology
If you are a frequent trader, you probably have tried TradeStation before. The platform has made some changes to its charting tools, and you can use technical triggers for your automated strategies.
- Excellent charting tools and technical analysis options
- Huge database of historical data
- Portfolio Maestro helps you fine-tune your trading strategies
- Easily customizable real-time market scanners
- No trading for forex
- Cannot use on mobile or browser
- Account minimum of $500
- No commission-free trades unless you sign up for TSgo and trade in equities, which have $0 fees
- Difficult learning curve if you don’t know trading languages to develop your own automated process
TradeStation is a little behind when it comes to their fee structure. However, they make up for it with the best charting tools and trade testing strategies.
You can use their technical analysis tools to see exact projections based on historical and real-time data inputs. There are a ton of features that make it a great option for frequent traders who trade at high volume and don’t mind the account minimum.
You can also route all of your orders yourself, use a specific trading venue, or use the smart order routing engine on TradeStation. The best part about this platform is the ability to create, backtest, and execute an automated trading strategy based on a technical trigger.
Traders can also set up real-time streaming data, and they are extremely accurate. You never have to worry about an erroneous feed that costs you a ton of money when it’s wrong. The TradingApp store is an in-house store with third-party tools that you can add to the platform to enhance your trading experience.
TSgo is their latest platform, and you don’t have to pay any commissions on trading for US-based equities, which includes OTCBB and penny stocks. However, it’s still $0.50 for options trades. All other commissions also have fees and higher margin rates.
3. TD Ameritrade – Best for Desktop Trading
With no account minimum, commission-free trades, and various charting tools, TD Ameritrade has some significant advantages for the extremely active day trader. (Not to mention, their $600 bonus when you open and fund your new account.)
- Extensive research and streaming dashboard capabilities for real-time updates
- Commissions were removed as of October 2019
- Extremely customizable thinkorswim platform is best for day traders
- Mobile apps make it easy to access your trades on the go
- Not as streamlined for fast automated, algorithmic trading but the options exist if you are savvy enough
- Too many education options that don’t apply to day traders typically
You can customize this as much as you want, and you can stream real-time quotes through intra-day charts. Day traders who like to purchase right from the chart can easily do so within this platform.
If you want to follow multiple stocks at once, you can tile the charts across your screen. You can also automate a trading strategy using the thinkScript language. You can pick from 300 built-in strategies or create your own using technical indicators included with thinkorswim. There are hundreds to choose from.
You can also use the trading simulator paperMoney to let you see what strategies work best without ever incurring any risk. The best part is that TD Ameritrade is the larger brokerage arguably, so they have the best commission-free trading options for ETFs, equities, and options if you are a US-based client. While there are a number of top stock trading apps available, we believe TD Ameritrade offers the best day trading app.
4. Lightspeeed – Best for Advanced Traders
With a lightning-fast platform, stable trades, and plenty of customization options, Lightspeed is a highly secure day trading brokerage. However, there are some account minimums and fees to watch out for.
- Use fast order routing and data feeds for automated trades
- Excellent customer support and very stable platform
- Livevol X is a free trading platform available to Lightspeed customers and works exceptionally well for options analysis
- Low balance accounts need to generate at least $25 each month in commissions or inactivity fees are charged
- Futures trading is available only on RealTick Pro, which has an additional cost of $325 per month
- Cannot trade in mutual funds or forex
For day traders who want low-cost access to stock, ETF, and options trading, Lightspeed offers an incredibly stable platform with high-quality trade execution. In fact, reports show that Lightspeed had no trouble with many of the trading surge periods over the past few years. The platform is also designed to be customized for how you like to trade.
Traders can set up real-time quotes on any assets, and the charts display and update quickly in real-time, which allows you to apply technical analysis and Level II quotes.
The other benefit of Lightspeed is security. The platform operates behind a virtual private network (VPN), which is crucial for those who trade on wireless Internet connections. You also need a soft token if you are using the browser platform. You can set up complex order entry defaults that can be executed using hotkeys if you want to execute orders extremely fast.
Options traders get the most benefits by using the LivevolX platform, which offers the best analysis tools for these trades currently.
5. tastyworks – Best for Research and Education
Tastyworks was built to be a fast trading platform that offers more options analysis and commission-free stock trades.
- New and intuitive pricing structures allow for low-cost trades
- Fast and stable technology, rebuilt in 2017
- Scanners allow you find securities that are increasing in volatility
- Watchlists can be sorted by 50 different data sets
- No throttling on quotes so loading is extremely fast
- Fixed commissions may cause issues for some day traders
- Margin fees also higher than average for very active traders, but you can negotiate these fees down
- Investors are not able to place multiple orders at the same time or stage orders for later entry
While tastyworks may not be the best platform for all-day traders, particularly those who like to place multiple bulk orders at once, you can use their platform to make extremely reliable trades throughout the day. If you like securities, options, and stock trading, tastyworks has a ton of advantages. There are also no inactivity fees or account minimums.
As far as fees go, you’ll pay $0 for stock trades and $1 for open options trades, and it’s $0 to close. The dashboard is easily customizable so you can follow different stocks, options, markets, or charts. You can also use the platform right from the browser, which is different from most brokerages that make you download the platform.
The mobile apps are also powerful and let you tap into most of the tools available on the desktop or web platform. If you are a visual person who likes to prospect trades, then you’ll like the organization and flow of data on tastyworks. The major focus is on liquidity, probability of profit, and volatility for their charting tools.
What is Day Trading?
For one, day traders are extremely active in the markets that they trade-in…
They spend every day testing new strategies, automating their trades, and setting up new charts to follow other markets. They are constantly digging into trends and understand the markets very well.
When it comes to choosing a brokerage, they value the quality and speed of the trades as much as low-cost fees. The platform should have fast execution times and real-time price quotes that stream quickly.
If you are a day trader who creates their own algorithms for automated trades, then you also want extremely clean data that is highly reliable. Any data errors could cost a day trader thousands of dollars.
What is a Good Brokerage Fee for Day Trading?
Most day traders test different platforms to see which one offers the most reliable data and order execution. In addition, commissions, margin rates, and other fees are considered. Ultimately, fees will vary by broker and depend on the asset traded.
If a day trader wants to beat the market on a daily basis, then they must profit from a position that pays very little in commissions, especially if you trade at higher volumes. Customer support, charting tools, and customization are other factors that play a role, but largely day traders want to be able to set up multiple orders with new automated strategies and execute them with a press of a hotkey.
To understand more about day trading brokerages, we’ve put together the following guide.
The Guide to Day Trading Platforms: How to Use Them (and Profit)
If you want to learn about day trading, the best way to do so is by practicing on a no-risk trade simulator. You can test out different strategies and use charting tools with real-time data to further understand how to track markets like a day trader.
One thing to keep in mind is that day traders understand they will likely lose money on some days, but their biggest priority is to win big on days that truly matter. There may only be a couple days a year when a day trader achieves thousands of dollars in gains, but it does happen.
Learning How to Day Trade
Before getting into a brokerage too deep, you should try a stock market stimulator such as the paper money simulator on TD Ameritrade. It’s no-risk and does not require any investment. These are called paper-trading accounts because they only simulate what the market would do.
The key is also to test out your automated strategy abilities. Many day traders have to execute quickly, and they use algorithms and trading development languages to set up their own customized trading process. These can be executed with a single press of a hotkey.
Understanding Risks of Day Trading
In short, you should not get into day trading if you don’t have money to play with on the stock market. Chances are you will likely lose money most days of the week, and the rest of the time, you will break even. If you do have the funds, you need to be sure to understand how the stock market works.
Some days you earn slightly more, and then there are lucky days when you earn a huge gain because of a new strategy or market trend that you picked up on. This is the goal of everyday trader, so the competition is pretty high.
Day traders also buy and sell many stocks, options, and ETFs during the day, so if you don’t know what you’re doing, you can lose a ton of money in the beginning. Day traders make a small profit on each trade, and it’s important to have a large amount of capital to mitigate your risks.
Economics research from Yale shows that only 1 percent of day traders earn money on a consistent basis. You also need to treat it as a full-time job. You have to watch, track, and time your trades at the perfect moment to make bigger returns.
If you already have a portfolio, then you should only invest 5 to 10 percent. If you lose money, then at least your losses are capped at the amount you allocate to day trading.
How Much Money do You Need for Day Trading?
While it is risky, day trading is not illegal. There are regulations imposed by the Securities and Exchange Commission (SEC) specifically on pattern day trading.
The SEC has defined day trading as the act of buying and selling or short-selling and buying the very same security, such as a stock, on the very same day. According to SEC rules, pattern day trading includes:
- Day-trading four or more times within five business days
- Day trades consist of more than 6 percent of their total trading activities during a five-day period
The SEC requires that you maintain a $25,000 balance of equity in your account. This can be cash or securities.
A broker must identify you as a pattern day trader according to the above criteria. You will likely be placed in a pattern day trading account moving forward, even if you don’t always meet the definition.
This means that if you ever stop day trading or don’t use pattern day trading, you will have to contact your broker to change your account status. This can be very time-consuming and causes your account to be restricted to minimum equity requirements.
What Do You Need for Day Trading
For pattern day trading, you need to maintain $25,000 in equity in your account, a rule set forth not just by the SEC but FINRA regulation, too. This can be in securities or cash. You also need money to trade with, so essentially, you’ll need at least $30,000 to be successful as a day trader.
You also want to find a broker that has low commissions, strategy tools, and speedy trade executions with extremely accurate data.
You also want to learn more about markets where you can trade in large volumes at high liquidity. The best day trading stocks are ones that you know inside and out. They should also be trending or newsworthy as these will be the most volatile and offer the biggest chance to earn a profit.