Day traders focus on buying and selling stocks on the same-day rather than holding positions overnight, which sets them apart from swing traders or long-term investors. Since they enter and exit trades so quickly, day traders have unique needs when it comes to a brokerage firm. They must carefully consider commission rates, margin rates, execution times, and the financial stability of the broker given that they tend to trade with large amounts of capital. (Related: How to Become a Day Trader).

In this article, we will take a look at how to evaluate day trading brokerages and the top ten firms for day traders to consider for their needs.

Tips for Evaluating Day Trading Brokers

The most important considerations for most day traders are commissions, margin rates, and other expenses associated with trading. Even if a day trader can consistently beat the market, the profit from those positions must exceed the cost of commissions. And 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 their website, but most brokers offer special rates for highly active day traders.

The next most important consideration for day traders is the quality of the trading platform, which can impact things like execution speed and price quotes. In an environment where more than half of trades are high-frequency trades, day traders can find it very costly to experience a second or two delay in processing their orders. Most brokers offer real-time execution, but slippage remains a concern, and traders should always test-drive a platform to see for themselves what the execution speeds are likely to be.

It’s also important for day traders to consider factors like customer service and the broker’s financial stability. Customer service plays a key role during times of crisis – such as a computer crash or other failure when you need to reach support to place a trade. Many 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 brokerages can and do go out of business, which can lead to a loss of account value in some cases.

Top 10 Day Trading Brokerages

There is no best brokerage for every day trader since each person has different needs and trading styles. For example, some day traders employ automated computer programs that trade on their behalf, which are only supported by some brokerages. Others prioritize brokers with the lowest commissions or fastest execution speeds to maximize their profit. Based on these factors, here is a list of the top 10 brokerage firms for day traders to consider, as well as what sets them apart from others on the list.

  1. Interactive Brokers – Interactive Brokers, often referred to as IB, specializes in day trading and offers direct access to stocks, options, futures, and forex exchange. Commission rates are some of the lowest in the industry and the platform is specially designed for day traders with programmable hotkeys and customizable order types. The platform also supports algorithmic trading and remains popular among institutions.
  2. TradeStation – TradeStation is best known for its powerful desktop and mobile platforms, which have built-in support for automated trading and tie in directly to its brokerage services. Their multi-tier commission structure also provides competitive prices for active traders, while the broker is known for its high-quality execution speeds and strong customer support.
  3. Lightspeed Trading – Lightspeed Trading is built for fast execution times with highly competitive multi-tier commissions and several different platform options including RealTick Pro for equities. The broker’s customer support line also has wait times of less than a minute, which is attractive to those who may need support and don’t want to wait on hold very long.
  4. TD Ameritrade – TD Ameritrade entered the day trading market with its acquisition of Thinkorswim, which rivals TradeStation in terms of its power and functionality. Unlike IB, TradeStation or Lightspeed, the broker doesn’t offer unbundled rates, but they do still offer competitive commissions for day traders. The platform also has among the best customer service team with well-trained reps and low response times.
  5. Fidelity – Fidelity may not be traditionally known as a day trading broker, but its leading order execution and Active Trader Pro platform have put it in the running with the market leaders. The downside is that commissions tend to be more expensive than other brokers in the category and they don’t offer unbundled rates.
  6. eTrade – eTrade has become popular among day traders, especially following its acquisition of OptionsHouse. The company’s platforms have received a significant boost after acquiring OptionsHouse, which had acquired unique tools like liveACTION from tradeMonster. The company also offers a 2-second execution guarantee on S&P 500 stocks and every ETF with an average speed of 0.09 seconds.
  7. OptionsXpress – OptionsXpress offers a single platform to trade stocks, options, futures and foreign exchange. But, the broker’s real strength lies in options trading where it enables traders to identify options strategies based on their personal risk tolerance and offers competitive commissions in the space.
  8. SpeedTrader – SpeedTrader offers direct market access with faster executions and better fills than many other brokers with over 25 different routing options. Commissions are very competitive and the company offers a variety of different platforms including its all-in-one trading workstation that offers hotkey support and direct access order routing functionality.
  9. Generic Trade – Generic Trade provides low cost trading at just 59 cents and access to a solid trading platform, while priding itself on avoiding any salespeople, bells, or whistles. The company also offers relatively low day trading margin requirements, which may make the broker attractive for new day traders.
  10. MB Trading – MB Trading, by Ally Invest, sets itself apart from other day trading brokerages with its extensive API that enables software-focused traders to integrate easily run their own automated trading applications. The company’s own MBT Desktop Pro and Mobile also offer great options for non-software focused traders.

The Bottom Line

Day trading is among the most challenging professions in the world, but the rewards can be substantial for the few that succeed. If you are transitioning into day trading, the odds are that your current brokerage isn’t the best fit. Consider these brokers that better serve the needs of day traders with lower commissions and faster executions. To optimize your odds of success, choose a broker that’s best suited for your trading strategy and market of choice.

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.