Brokerage Firms for Day Traders: A-F
Day traders almost always work through online brokerage accounts. Many firms offering these accounts handle trading in almost all securities. The firms usually belong to all the exchanges, so you can trade almost anything anywhere in the world through them. Here are a few firms in alphabetical order. The list is not exhaustive and does not imply an endorsement of anyone’s services.
Brokerage firms don’t make money just on the commission. Other sources of revenue include monthly service charges, fees for real-time quotes, interest on margin loans to customers, and the spread, which is the difference between what you pay for a security and what the firm paid to get it.
So don’t let the commission be the critical factor in deciding among brokerage firms. Think about the services you need and the relative cost to you of different account offerings.
Charles Schwab Active Trading
Charles Schwab was one of the first discount retail brokerage firms, and it now offers just about every financial service one could want: financial planning, banking, and mutual funds. The Schwab Active Trading account includes trading demonstrations and education services that are particularly useful for active stock traders, although the firm has trading and support capabilities for options and ETFs, too.
The platform works directly through an Internet browser. Schwab participates in different electronic communications networks and liquidity pools, which may improve execution.
ChoiceTrade offers software-based equity stock and option trading services to individuals and small trading firms. Customers can opt for a basic platform or pay a monthly fee for additional charting, analytic, and money management services. Traders can opt for direct access trading, which may offer faster execution for some strategies. Some of ChoiceTrade's platforms include mobile trading capabilities, which may be useful as a backup system.
Started as a stock brokerage firm, Cobra now offers trading in futures, options, and foreign exchange. It has a lot of features for short sellers, such as an "easy to borrow" list that helps identify stocks that can be shorted with little market disruption. The firm offers different software platforms to suit different trading styles, as well as a web-based platform.
E*TRADE offers trading in stocks, options, and futures, as well as services for active traders through its web-based trading platform. It also offers a software-based platform, Power E*TRADE Pro, with direct access trading and customization abilities. The company also has market scanners, to help you spot when a target pattern shows up, and efficient backtesting systems. If you really want to trade from your phone, E*TRADE has platforms for that.
Fidelity Active Trader Pro
Fidelity started life as a mutual fund company and continues to dominate that business. It now also offers a wide range of financial services, including online trading. Fidelity Active Trader Pro is a software-based system with lots of bells and whistles, including systems for analyzing and testing options strategies. (A web-based version is available but has less functionality.)
To use Active Trader Pro, you need to place 36 trades over a rolling 12-month period; placing 120 trades over a year gets you free Level II quote access. Both levels should be a slice of cake for most day traders.
Designed for stock traders, Firstrade offers screeners, alerts, and commentary through its web-based trading platform. The education features include some good advice about taxes, and community features help traders with ideas. In addition, Firstrade offers its platforms in both traditional and simplified Chinese, if you'd rather not work in English. (No surprise, Firstrade has a lot of Chinese-speaking customers.)