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When choosing an online broker, day traders place a premium on speed, reliability, and low cost. Features designed to appeal to long-term, infrequent traders are unnecessary for day traders, who generally start a trading day with no positions in their portfolios, make a lot of transactions, and end the day having closed all of those trades.
Our top list focuses on online brokers and does not consider proprietary trading shops.
Best Online Brokers for Day Trading in November 2020:
- Interactive Brokers: Best Online Broker for Day Trading, Best Broker for Advanced Day Traders,and Best Charting Platform for Day Traders
- Fidelity: Best Low-Cost Day Trading Platform
Interactive Brokers: Best Broker for Day Trading, Best for Advanced Day Traders, and Best Charting Platform for Day Traders
- Account Minimum: $0
- Fees: Maximum $0.005 per share for Pro platform or 1% of trade value, $0 for IBKR Lite
There is obviously a lot for day traders to like about Interactive Brokers. Interactive Brokers allows day traders to invest in a wide array of instruments on a global scale with access to 125 markets in 31 countries. The broker also offers you the widest array of order types and a wealth of analysis tools to find your next trading opportunity.
The only real weakness is the fact that Interactive Brokers went from one of the lowest cost brokers for day traders to one of the few that still charges fees (albeit still very low) while the rest of the industry has moved to zero. This fact has allowed Fidelity to prevent Interactive Brokers from sweeping the day trading portion of our review. Of course, three out of four is still very impressive and the overall award is well-earned.
Interactive Brokers’ primary platform for day traders, the Traders Workstation (TWS) platform, is excellent across the board. There are a few platforms that can beat it in a particular type of trading, such as options trading, but none offer the overall quality of trading experience across the same number of markets and instruments. TWS is the most customizable platform we reviewed, which comes as a trade-off in terms of a learning curve you have to climb before you can use the software to its full potential.
Interactive Brokers tied with TD Ameritrade in terms of the range and flexibility of the charting tools. These platforms allow you to trade directly from a chart and they allow you to customize your charting views to almost any conceivable specification. Interactive Brokers took this category for day trading based on its overall strength and the fact that there are so many more charts because the overall asset pool is much larger.
Advanced day traders will find that Interactive Brokers’ TWS gets better as you need more from it. Backtesting and all the other tools required to implement multi-layered trades with contingent orders are present and all among the best available. Moreover, TWS shines when it comes to controlling your entry and exit, which is critical to trading success in less liquid markets or assets. In addition to 60 supported order types, Interactive Brokers has third-party algorithms that can further fine tune order selection. The algorithms give you control over how a position is entered or exited so that you can minimize slippage or maximize speed. The algorithms take different approaches ranging from blasting orders to exchanges simultaneously to subtly working them into market close or breaking up a position through an iceberg order.
On top of the rich features, wide range of assets, and extensive order types, Interactive Brokers also offers the lowest margin interest rates of all the brokers we reviewed. While this may not matter to buy and hold investors, this changes some of the cost calculations for advanced traders expecting to utilize margin heavily in their trading. That being said, most day traders will see the cost aspect as secondary once they experience the capabilities of TWS and see the buffet of markets and assets offered by Interactive Brokers.
No broker can match Interactive Brokers in terms of the range of assets you can trade and the number of markets you can trade them in.
TWS is the strongest overall platform for day trading with customizations and tools that will satisfy even the most sophisticated traders.
Interactive Brokers allows fractional share trading - something that many of its direct competitors are still catching up on.
Interactive Brokers still charges nominal fees, meaning that other brokerages can offer an overall lower trading cost.
Day traders can only stream data to one device at a time, which may affect traders with a multi-device workflow.
TWS is very powerful and customizable, but this also means it takes some time to learn and fully unlock the potential.
Fidelity: Best Low-Cost Day Trading Platform
- Account Minimum: $0
- Fees: $0 for stock/ETF trades, $0 plus $0.65/contract for options trade
Fidelity is not only the best low-cost day trading platform in our review, but it was actually the overall runner-up to Interactive Brokers, coming in just slightly ahead of TD Ameritrade. When we are looking at Fidelity from the day trading perspective, it is all about Active Trader Pro. Active Trader Pro is an excellent free platform for trading that will meet the needs of most traders without missing a beat. That said, it is Fidelity’s pricing that adds the real value for a typical day trader.
Fidelity charges no fees on stocks, ETFs, or OTCBB (penny stock) trades. Although no-fee stocks and ETF trades are now commonplace, no-fee penny stocks are still relatively rare. There are some brokers that match Fidelity in this, but many of them scored lower in terms of trading technology and customizability. Another edge for Fidelity, however, is the firm’s order execution. Over 96% of Fidelity orders take place as a price that is better than the national best bid or offer. This results in cost savings for day traders on almost every trade. If you are primarily trading equities and you want to keep your costs down as low as possible, then Fidelity is the brokerage for you.
Fidelity’s costs are low, its order execution is exceptional, and it sweeps your idle cash to give you a little more return while you are waiting to deploy your money.
Fidelity offers a range of excellent research and screeners.
Active Trader Pro is a flexible and powerful trading platform that is a close competitor with Interactive Brokers’ TWS in terms of functionality.
Fidelity does not offer futures, futures options, or cryptocurrency trading.
Day traders looking for more fundamental research may have to use the web platform in addition to Active Trader Pro.
How Day Traders Use Their Online Broker
Day traders may place their trades manually, often from a chart, or set up an automated system that generates orders on their behalf. Fundamental data is not a concern, but the ability to monitor price volatility, liquidity, trading volume, and breaking news, is key to successful day trading.
Day traders often prefer brokers who charge per share (rather than per trade). Traders also need real-time margin and buying power updates. Each broker ranked here affords their day-trading customers the ability to enter orders quickly by customizing the size of trades and turning off the trade confirmation screen. We sought brokers who allow traders to place multiple orders simultaneously, designate which trading venue will handle the order, and customize trading defaults.
Are You a Day Trader?
A key consideration for day traders is trading platform quality, which can impact things such as execution speed and price quotes. Day traders, especially those who trade using their own algorithms, need flawless data feeds or they risk entering orders based on errors in the data. In an environment where high-frequency traders place transactions in milliseconds, human traders must possess the best tools. Most brokers offer speedy trade executions, but slippage remains a concern. Traders should test for themselves how long a platform takes to execute a trade.
Commissions, margin rates, and other expenses are also top concerns for day traders. Even if a day trader can consistently beat the market, the profit from those positions must exceed the cost of commissions. For a high volume trader, commission costs can easily run into the hundreds or thousands of dollars per day. Traders can check these rates by contacting the broker or checking the broker website, but most offer special rates for highly active day traders.
It is also important for day traders to consider factors such as customer service and the broker’s financial stability. Customer service is vital during times of crisis. A crisis could be a computer crash or other failure when you need to reach support to place a trade. The best brokers offer dedicated account representatives for highly active day traders to assist in this regard.
The financial strength of the firm is also important since small brokerages can and do go out of business, but the main player in whether or not you can recover your assets is the clearing firm. Take a look at FINRA's BrokerCheck page before signing on with a small firm to make sure they have not had claims filed against them for misdeeds or financial instability.
Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on its platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting thousands of data points that we weighed into our star-scoring system.
In addition, every broker we surveyed was required to fill out an extensive survey about all aspects of its platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of its platforms at our offices.
When choosing an online broker, day traders place a premium on speed, reliability, and low cost. Features designed to appeal to long-term infrequent traders are unnecessary for day traders, who generally start a trading day with no positions in its portfolios, make a lot of transactions, and end the day with having closed all of those trades. The ability to monitor price volatility, liquidity, trading volume, and breaking news is key to successful day trading. Traders need real-time margin and buying power updates. Each broker ranked here affords its day-trading customers the ability to enter orders quickly by customizing the size of trades and turning off the trade confirmation screen. We sought brokers who allow traders to place multiple orders simultaneously, designate which trading venue will handle the order, and customize trading defaults.
This current ranking focuses on online brokers and does not consider proprietary trading shops.
Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking online investing platforms for users at all levels. Click here to read our full methodology.