Improving the chances of turning a profit in day trading requires access to the right brokerage tools. Among these tools are advanced charting, access to margin for leverage, technical analysis, and real-time market data.
Richard Gardner, the CEO at Modulus, emphasizes the need for ultralow latency and real-time market data for day traders. Additionally, considering the fee structure is crucial, as day traders make numerous trades, and low commissions are essential to keep costs at a minimum.
A fast and reliable platform for executing trades is vital for day traders, given the nature of quick decision-making involved in this style of trading.
To find the best brokerage for day traders, nearly 20 firms were ranked based on various weighted factors. These factors encompass range of offerings, features, trading costs, account minimums and fees, margin interest rate, customer service, and security. A comprehensive evaluation of these aspects helps traders make an informed choice.
As traders venture into day trading, having the right brokerage tools at their disposal can significantly impact their success. Tools like advanced charting, real-time market data, and access to margin for leverage are crucial for their trading strategies.
Richard Gardner, CEO at Modulus, highlights the importance of ultralow latency and real-time market data for day traders. Moreover, keeping an eye on the fee structure becomes critical due to the high frequency of trades in day trading. Low commissions are preferred to reduce overall costs.
Speedy trade execution is a key requirement for day trading. Therefore, traders should seek a brokerage with a fast and reliable platform to facilitate quick decision-making and order placement.
To identify the most suitable brokerage for day traders, a comprehensive ranking system was employed, considering factors like range of offerings, features, trading costs, account minimums and fees, margin interest rate, customer service, and security. This approach helps day traders select a brokerage that aligns with their specific needs and preferences.
Compare the best brokers for day trading
| BROKER | COMMISSION-FREE STOCK TRADING | LEVEL II QUOTES | MARGIN INTEREST RATE UNDER $10,000 |
|---|---|---|---|
| Interactive Brokers | ✔ | ✔ | 6.83% |
| E-Trade | ✔ | ✔ | 13.20% |
| Fidelity | ✔ | ✔ | 12.58% |
| TD Ameritrade | ✔ | ✔ | 13.75% |
| Webull | ✔ | ✔ | 9.49% |
| Robinhood | ✔ | ✔ | 11.75% |
| TradeStation | ✔ | ✔ | 12.50% |
Methodology
Brokerage Ranking Methodology:
To rank the best online brokerages available in the U.S., we conducted an extensive review and research process. Our approach involved sending a digital survey with over 70 queries to each company under consideration. The data obtained from the survey were then verified by our researchers, who also reached out to the companies directly and conducted online research to fill in any missing information.
The evaluation process encompassed 10 major categories, each with its own weightage, to determine the overall rankings. These categories were range of offerings, trading costs, account minimums and fees, features, advisory services, insurance, customer service, education/research, security, and portfolio analysis.
Within each major category, various subcategories were considered, and their scores were combined to calculate an overall score for that category. The scores were then weighted to generate the final rankings for the brokerages.
Scoring was done on a scale of 0.00 to 1.00, with the highest possible score being 0.82, which translated to a 5-star rating.
Range of Offerings:
To assess the range of offerings provided by each brokerage, we considered factors such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), options, forex trading, futures, international stocks, fractional shares, cryptocurrency, and over-the-counter (OTC) stocks.
Trading Costs:
For evaluating trading costs, we compared commissions among the brokerages. Variables considered for scoring included stock commission, ETF commission, options commission (with discounts), futures commission, OTC stock fee (minimum balance requirement), and broker-assisted commission.
Account Minimums and Fees:
The account minimums and fees category assessed various variables, such as new account bonuses, free ACH deposits and withdrawals, inactivity fees, account closure fees, transfer account fees, domestic wire fees, international wire fees, and deposits with a bank card.
Insurance:
In the insurance category, we reviewed whether each brokerage offered Federal Deposit Insurance Corp. (FDIC) and Securities Investor Protection Corp. (SIPC) protections, along with additional asset protections and insurance.
By employing this comprehensive methodology, we identified the top seven brokerages that excelled in various aspects, providing investors with valuable insights for making informed decisions.
Why other brokers didn’t make the cut
Unique Needs of Day Traders:
Day traders have unique and extensive needs that not all brokerage platforms meet for inclusion in our rankings. Our scoring methodology heavily emphasizes features, and the best brokerages for day traders usually have robust, well-developed desktop-based platforms. These platforms offer strong functionality and technical capabilities, including advanced trading tools, customizable interfaces, and comprehensive charting. Additionally, features like a paper trading simulator, strategy backtesting, and automation are critical for day traders to succeed.
Emphasis on Trading Costs:
In our scoring criteria, trading costs received significant emphasis. Since day traders execute high volumes of trades, keeping fees low is crucial for their success. Brokerages that offer zero commissions for stocks, ETFs, and options, as well as low fees for futures and other assets, scored higher in our rankings.
Importance of Additional Brokerage Features:
Aside from the primary features, other standard brokerage features also played smaller but notable roles in our rankings. These features include the firm’s range of tradable securities, customer service quality, and margin interest rates. While not critical for day traders, they can significantly enhance their overall trading experience when implemented correctly.
Final verdict
Best Brokerage Platform for Day Traders in 2023:
Interactive Brokers (IBKR) stands out as the top choice for day traders in 2023 due to its exceptional services and features. The platform caters effectively to the needs of retail investors, professional traders, and everyone in between. With its sophisticated desktop platform, IBKR offers powerful tools like Risk Navigator, Model Navigator, and Options Analytics. These tools empower day traders to implement strategies, manage risks, and optimize position sizes efficiently.
One of IBKR’s key advantages lies in its direct market access and wide array of order types, ensuring traders receive the best possible order execution. The platform’s real-time monitoring capabilities further enhance the day trading experience, allowing traders to keep a close eye on their watchlists, alerts, profit and loss, trade activity, and margin requirements.
Furthermore, IBKR’s offering extends to a vast range of global markets and tradable securities, enabling day traders to explore numerous opportunities across the world. The platform’s fee structures, featuring tiered discounts based on trading volume, add to its attractiveness and make it a compelling choice for day traders seeking cost-effective solutions.
