Best Brokers for Day Trading
What are the best brokers for day trading and day trading platforms? 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 best online brokers for for active traders. Let’s discover the best day trading platforms, lowest commission rates and the best customer support.
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Best Day Trading Brokers
- Cobra Trading: Best Direct Access Broker Overall
- Interactive Brokers: Best Nasdaq-listed Broker
- Lightspeed Trading: Best for Day Trading Over 15mn Shares per Month
- CenterPoint Securities: Best DAS-Trader Pro based Platform
- TradeStation: Best Retail Broker for Day Trading
1. Cobra Trading
Cobra Trading was founded in 2003 by Chadd Hessing. The direct-access broker is fast, has the best commission rates and defined customer service as their priority. Traders can open and close trades via phone at no additional cost.
Cobra Trading is located in Texas and member of FINRA, NFA and SIPC. Traders can choose between three powerful day trading platforms; CobraTraderPro, DAS Trader, and Sterling Trader Pro.
Typically, the commissions per share start at $0.003, with a trading volume between 0 to 100k shares per month. As a daytrading.com reader, you can save 25% on your commission rate and start at only $0.00225 per share. There is also a free platform demo available here.
I wrote a comprehensive Cobra Trading review where I guide you through Cobra Trading’s platforms, commissions, and other benefits like short locate lists, low margin rates etc.
2. Interactive Brokers
Interactive Brokers has the best API for automated trading. 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.
Unfortunately, Interactive Brokers uses filtered tick data. Direct-access brokers like Cobra Trading provide unfiltered tick data.
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.
3. 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.
4. 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.
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 day trading brokers in this list, and selling order flow can lead to slower trade-executions.
Consider, commissions for direct access brokers cost fractions of a cent. So if your trade execution is just 1 cent better by trading with a direct-access broker, then you already saved money even by paying commissions.
The platform doesn’t cost anything, and 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.
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, TradeStation is a good choice for those who are still uncertain if they want to invest, swing-trade, or day trade.
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.
Best Broker for Day Trading: Comparison
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Best Broker for Day Trading: Conclusion
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.
See Also: Best App for Day Trading
How to choose a day trading platform and broker
Finding the best online brokers for day trading is easier said than done. There are many dependencies to think about before making a decision. Trading strategies, type of stocks to trade, the pattern day trading rule, trading costs, paper trading accounts, the minimum deposit and supported financial instruments are just a few examples.
Day trading involves risk, and you need trading experience to become successful by using analysis tools, an advanced trading platform, technical indicators for technical analysis, a pattern day trading account and good day trading strategies to become profitable.
Here are the things to consider on how to chose a day trading platform and a broker.
Evaluate if you have $25,000 available to fund a day trading account
Day trading means that you buy and sell security like stocks on the same day. If you do it only 3 times in a 5 business day range, you can even day trade with small accounts. But real day trading means trading thousands of shares with hundreds of orders per week.
As defined by the Securities and Exchange Commission, you need to have a margin account and maintain an account size of $25,000. Otherwise, your account will get locked for day trading activities. How much money do you have? Outside the United States, things are different in some countries. Still, if you open an account with a broker in the United States, then you have this hurdle in front of you and handle it by providing and maintaining sufficient funds.
Define how often you want to trade and what share sizes
Stock trading, options trading and futures trading can be done with any broker. But it makes a massive difference about the best day trading platform for you if you either plan to trade frequently or not. The more you trade, the more likely you will use the best direct access broker to route your orders based on the trading strategy used for your favorite stock exchange. Active traders, experienced traders, and professional traders most often go this route.
That’s because even using the best online broker in the retail brokerage segment will not serve your expectations about order execution speed. On the other hand, if you trade not that often and prefer to have online trading platforms with some trading tools to analyze the stock markets or buy mutual funds and exchange traded funds, a brokerage account with a retail broker does the job well. Do you want to short stocks? The best brokers for short selling are direct access brokers since they have the largest list of easy-to-borrow shares and a better chance of locating hard-to-borrow shares for a reasonable price.
Decide whether to use retail online brokers or direct access brokers
Retail brokers like TD Ameritrade and Robinhood offer zero commissions. But they will sell the order flow resulting from client orders to third parties. Direct access brokers directly route your order to your preferred stock exchange or ECN. Investors most often decide for the retail broker while day traders focus on high-speed executions using direct market access.