Best Online Brokers for Day Trading
What are the best online brokers for day trading? If you plan to actively trade the financial markets with hundreds of buy and sell orders per month, you need the best day trading broker.
Fast order executions make a massive difference for your daily profit. The faster the orders are executed, the better the profitability.
This list contains the five best brokerages for active stock and options traders. Let's discover the best day trading platforms, lowest commission rates and the best support.
What to Consider
Choosing a day trading broker is different from choosing the best online stock broker for beginners. If you know my other articles about brokerage firms, you know that since 2019, most prominent retail brands offer commission-free trading. It began with Charles Schwab and other brokers like TD-Ameritrade, and E-Trade immediately followed.
Those brokers still make money even if they do not charge commissions. That's because they sell the order flow to 3rd parties. That means that once you click on a buy or sell button, your order will not be routed to the stock exchange or market maker. Instead, it gets routed to the 3rd party order routing systems first. In exchange for providing liquidity to the 3rd parties, the broker receives compensation.
While zero commissions sound benefiting at first, it is not for day traders because the order execution is not that fast anymore. If you go through the list below, then most of the brokerages mentioned have commissions. They are reasonably low, but they exist. In exchange for the commission, your orders get routed to the stock exchange directly without delay.
Another thing to consider is the pattern day trader rule. If you want to execute more than three orders in a 5-day rolling period, you need $25,000 in your account. Otherwise, your account get's locked, and you can only close open positions.
Finally, you need to be aware of the fees for the day trading platform and the real-time data subscription fees. Both will be charged every month. While you can avoid day trading platform costs when trading frequently, the real-time data will always be charged by the stock exchange. But no worries, as long as you are a private investor, those fees are reasonably low.
1. Interactive Brokers
Interactive Brokers has the best overall offer to traders. Their trading platform, called TraderWorkstation, is one of the fastest platforms out there. Traders can connect the TWS via API to different other data feeds and trading platforms.
It takes a bit of time until you entirely understand the settings in detail. Day traders can choose between various order routings, API-connects, order types, layouts, and commission structures.
One of the big advantages of Interactive Brokers is the fully-integrated paper trading account. New traders should use this tool for a couple of weeks to get used to the platforms placing orders with paper money.
If you want to day trade, you should forget about IBKR light. You need to go with the standard Interactive Brokers account to day trade actively.
Beginners tend to start with the fixed pricing structure, where U.S. stocks cost $0.005 per share with a minimum of $1.0 per order. But instead, you should check the tiered pricing to enable you to correctly compare all day trading brokers. Most beginners will trade less than 300,000 shares per month at first. For such kind of order volume, the price per share is $0.0035 per share plus exchange fees. A big plus for IB is that there is no platform fee for using the inhouse TraderWorkstation. Proceed reading the Interactive Brokers review for all details.
2. Lightspeed Trading
Lightspeed Trading is what the name stands for - lightning-fast. The trading platform is one of the fastest ones with tons of customization options. You need at least $25,000 to open an account with them, which is fine since you want to day trade, and the SEC requires to have $25,000 in your account to day trade. That also means that Lightspeed is not for long-term investors or people who want to try the world of trading in general.
As with any day trading platform, at first, things seem to be complex. Take your time to go through all educational videos first, and make small steps. Setting the right hot-keys, order routings, and pre-configured position sizes are crucial for success.
The commission entry-level at Lightspeed Trading is at $0.0045 per share plus exchange fees if you stay under 249.000 shares per month. In most cases, that means that the costs are a bit higher than with Interactive Brokers. But on the other hand, Lightspeed is fast and has an excellent platform. The trading platforms' fees are a bit hidden on the website, but you can find them at the bottom of the platform comparison. The inhouse LS Trader costs $130 per month, while Sterling Trader costs about $250 per month. The LS Trader costs will be waived if you generated at least $130 in commissions in the previous month. There is no way to get the Sterling Trader costs waived. Try a demo if you are uncertain and read the full Lightspeed Trading review.
3. Centerpoint Securities
Centerpoint Securities is a low-cost day trading broker. They have one of the best short-sale locate lists, which enables day traders to short nearly every stock. Commission rates are as low as $0.002 per share. The entry-level for trading volumes lower than 300.000 shares per month is $0.0040 plus routing fees. Therefore, Centerpoint Securities is right in the middle between Interactive Brokers and Lightspeed Trading.
DAS Trader Pro and Sterling Trader Pro are the platforms offered. DAS Trader pro costs $120 per month while the base terminal fee will be waived if >200k shares are traded in any given month. Sterling Trader Pro costs whopping $250 per month, and the costs will only be waived if you trade more than 500k shares in any given month.
Centerpoint Securities requires you to fund your account with at least $30,000. Read the Centerpoint Securities review for all facts.
SpeedTrader is a direct access stock broker for day traders. Similar to Interactive Brokers, Lightspeed Trading, and Centerpoint Securities, SpeedTrader does not sell orderflow. They give you direct market access and charge a little commission in return. SpeedTrader exists for over 20 years now, and they are one of the most popular day trading brokerage firms out there.
The price per share can be as low as $0.0025 plus routing fees, while the entry point with <250k shares per month traded is $0.0044.
SpeedTrader Pro is the inhouse day trading platform solution which is based on DAS Trader's technologies. Within the platform, 25 routing options are available along with stock scanners, watch lists, and 100 hot-key options. The platform costs $104 per month, where Level 2 data is already included. Clients who generate commissions of $499 per month can use SpeedTrader Pro for free in the next month. Proceed by reading the SpeedTrader review.
TradeStation is a powerful trading software suite. Some of you may remember, 20 years ago, they offered the popular trading platform TS2000. These days, the platform got even better. But the point with TradeStation is that they sell order flow. This is a massive difference to the other four day trading brokers in this list. Yes, the TS select commissions structure allows to trade with zero commissions.
Also, the platform doesn't cost anything. Similar to Interactive Brokers, the account minimum is only $2,000. But to day trade, you need more than $25,000 in your account to day trade actively. And this holds true for all brokers in the list. To day trade, you need $25,000. Check out the TradeStation review for more details.
Offshore brokers make it possible to avoid the pattern day trader rule - PDT - but the recent SureTrader suspension shows what can happen if you go offshore. TradeZero is another broker, and they have split their offer for the U.S. and the rest of the world. But if you are serious about day trading, then you need the $25,000 of capital, and you need to go with a brokerage house with financial strength. Back to TradeStation, you see that the costs aspect is the big pro. But they sell orderflow, which slows down order execution.
TradeStation is a good choice for those who are still uncertain if they want to invest, swing-trade, or day trade.
Best Online Broker for Day Trading: Fee Comparison
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