Day traders have particular needs when it comes to stock brokers. Because they specialize in buying and selling stocks at a rapid pace, often closing all of their trades on the same day they initiated them, day traders need a platform that’s fast and reliable and with low fees, to boot.
Let’s expand on that last point. Even the most successful day’s work trading the markets can be negated by hefty commissions and margin rates. Day traders need to factor these costs into how much they’ll net from a profitable trade. It’s totally possible for commission fees for a single day of high-volume trading to run more than a few thousand dollars.
Speed is also of paramount importance. Day traders tend to target volatile stocks in which every second counts. An execution delay of only a few seconds can lose big money. Most trading platforms offer real-time trading, but with very fast-moving trades, lag times are still possible.
A Word of Caution About Day Trading
If you’re not currently a day trader — but are thinking about becoming one — make sure that you understand the risks before diving in. Becoming a day trader is a big commitment, both of time and of money.
In fact, the Securities and Exchange Commission (SEC) requires a $25,000 minimum margin requirement for anyone who executes four or more “day trades” within five consecutive business days.
If you have less than $25,000 and want to invest, we suggest that you check out this practical guide instead.
The Best Stock Brokers for Day Trading
That said, if you’re involved in day trading, you’re going to need the right brokerage platform. Here’s a rundown of the best brokers for day trading.
TD Ameritrade is currently Investor Junkie’s recommended stock broker. With a fee of $6.95 per trade, it seems a bit on the pricey side. However, its research, apps and platforms are excellent and are worth the price. The service’s proprietary thinkorswim platform was designed with serious, active traders in mind. Not only will you execute trades at a rapid-fire pace, but you’ll also have access to completely customizable charts, real-time assistance from a trading specialist, notifications delivered to your desktop or app, and a social network of active traders.
- Minimum Investment: $0
- Stock Trades: $4.95/trade
- Options Trades: $4.95/trade
Ally Invest is a great choice for traders who want to cut back on fees. While the platform usually charges $4.95 per stock trade, Ally offers a discount for high-volume traders. Make a least 30 trades in the previous calendar quarter, and you’ll be charged only $3.95 per trade in the next. And if you’re an options trader, Ally’s regular 65-cents-per-contract charge will be slashed to 50 cents.
- Minimum Investment: $500
- Stock Trades: $5.00/trade
- Options Trades: $5.00/trade
If you’re a research junkie, TradeStation is for you. The platform is well known for its excellent research. And the TradeStation store is jam-packed with apps designed for traders by traders to help tailor the platform to your needs. Commissions for trading stocks and ETFs are just $5 per trade.
- Minimum Investment: $10,000
- Stock Trades: $2.50/trade
- Options Trades: $0.20/trade
Lightspeed may not be the most intuitive platform we’ve seen, but if you’re a serious, high-volume trader, it may be a good fit thanks to its unique pricing model. For up to 250 shares per month, you’ll pay $4.50 per trade. But if you become a member of the Active Trader Commission Group (you have to call Lightspeed’s customer service to join), that rate dips down to as low as $2.50 per trade for more than 10,000 monthly trades. You can also take advantage of a per-share volume discount that can slash fees as low as $0.0010 for more than 15,000,000 shares. However, you need at least $10,000 to get started, and Lightspeed is definitely geared toward experienced traders who really know what they’re doing.