Best Day Trading Brokers for Beginners
Which brokers should you use to start day trading? Whether you’re trading a small account, larger account, long-biased or short-biased, or trying to avoid PDT restriction, I have the answers for you in this blog.
Contrary to what most people think, the deciding factor for which broker you should use should never be whether they are commission free. You should be choosing a broker that gives you the most optimized platform, at a reasonable cost, to trade your own trading style and strategies, whether it’s buying breakouts, shorting parabolics, swing trading or options trading.
Think of it this way, I don’t want to be saving $5 in commissions but actually getting filled with 50 cents slippage. On even just 100 shares that's losing $50 dollars of potential profits. At the same time, I don't want to be saving a couple dollars per trade, but never have any stocks too short available when I see an amazing low float penny stock being pumped 400% and very extended on the day. Broker commissions and fees are just the cost of doing business. If paying those fees means you end up with better execution speed, fills, and a lot more profit. Then by all means that's absolutely worth it. In this blog we’ll be going over the brokers I think are the best for day trading, in these specific areas.
Best brokers for going long stocks:
1. Interactive Brokers:
Account minimum: $2,500 USD
Pros: Cheap commissions. Getting better at having short borrows on small call penny stocks. I use this broker for day trading penny stocks. Plenty of easy to borrow stocks to short at no extra borrow cost.
Cons: Expense on monthly individual data subscriptions add up. Terrible customer service. No hard to borrow stocks and short stock locate function.
Let’s start with the most basic brokers for most beginner traders to get started. Going long. I personally started with learning long strategies and that's how I built my small account that way. Interactive brokers is the first broker I got when I started day trading six years ago. At first glance, IB is indeed a lot cheaper than most other brokers out there. Basically the cost for buying and selling US listed stocks is $0.005/ US per share, with a minimum of $1USD per trade. So for newer traders with small accounts this is really affordable and their execution and fills are decent as well.
Keep in mind to trade on IB you will need to purchase additional market data subscriptions on their platform Trader Workstation (TWS). If you are day trading mostly the US Nasdaq and NYSE stocks and options like myself, this is what the subscriptions would look like and it adds up to about $30 US a month. That includes things like equities and options quote for nasdaq exchanges, level ii etc etc. But if you trade those true sub dollar penny stocks, you need to purchase additional OTC or pink sheets data for I think $10 extra per month.
As for the ability to short, IB has generally good short locations for the large cap stocks, basically anything but a low float runner on day one. They do not offer the function of locating borrows but any short availability is free of any extra charge. Interactive brokers are available in the US, Canada, and most international countries. If you are in the US, there is the option of IB Lite, which is free commission trading but I believe you would only be able to trade on IB Lite on mobile or web, not on their TWS desktop platform.
Check out Interactive Brokers HERE
2. Fidelity Active Trader Pro
Pros: Good execution fills and customer service.
Con: Outdated trading platform, sometimes the buttons lag.
Let's talk about Fidelity Active Trader Pro. I have not used this broker myself, but I hear from many traders I trade with every day that they have great execution fills. For a broker that’s gone commission free, that's amazing. Another thing to note is their customer service support line. They pick up the phone with only one minute wait and this broker has good short availability for mainstream large cap stocks, such as the ROKU and TSLA, at no additional borrow cost. Basically they are around the same level as interactive brokers.
But the cons of Fidelity Active trader pro, is their platform. The reviews from the traders I know are generally the same. Their platform functions are outdated and clunky. So keep that in mind. Fidelity is available outside of the US as well so make sure to check their international website for details.
Check out Fidelity Active Trader Pro HERE
3. TradeStation
Pros: Great for trading automation, direct access broker, Matrix feature for faster order entries.
For all you traders interested in trading automation and coding your own making it rain Lamborghini trading bots, you might be interested in Trade Station. Trade station is another direct routing broker that offers good executions for traders. Their shorting availability is on par with Fidelity and IB, where most general large cap stocks are available to short for free. Their platform has this Matrix feature, which is a more advanced but easy to follow L2 montage. The matrix offers lightning fast order entries on all different kinds of orders like bracket, sell and buy stop orders. Like I mentioned earlier, tradestation platform also allows you to build your own automated trading strategies. If you ever build a bot that will make it rain Lamborghinis, make sure to call me. However, their fees are on the higher side in comparison to all the brokers we mentioned before, but the direct routing executions and fills make it worth it.
Check out Trade Station HERE
Best brokers for Shorting Stocks with a Large Account ($30K Min)
Next let's talk about the exciting topic of the best brokers for shorting. When it comes to shorten these hard to borrow runner stocks on day one, at an extremely affordable price… The winner has to be Cobra Trading.
1.Cobra Trading:
Pros: Great list of hard to borrow stocks to reserve short, affordable fees for overnight short swings. Get 25% off commissions, mention "Humbled Trader" at the time of account opening.
Cobra Training is a direct access broker that offers the function of reserving hard to borrow stocks to short, at a mostly reasonable price. Sometimes they even offer their clients free locations on these stocks. All these runners recently that everyone wants to short, such as GNUS, PSTV, APDN were available at Cobra Trading. If you short any of these stocks overnight guess what? While other brokers I’m going to talk about charges 3x or 5x overnight fees … Cobra trading does not. 0 extra overnight fees. You can link your Cobra account with Das Trader pro, it's a platform that offers the best execution fills, whether you are longing or shorting.
Cobra trading is available for US clients with an account over $30K, and International clients with accounts over $50K. But sorry, at the moment they do not service Canadians, but I have another option for you soon. If you are interested in opening an account with Cobra trading, I have a link for you to sign up below, and if you mention Humbled Trader at the time of account opening, you’ll get 25% off your commissions. That's a pretty sweet deal.
Check out Cobra Trading HERE
2. CenterPoint Securities (Broker for shorting with Large account)
Pros: Great list of hard to borrow stocks to reserve short, at a more premium price. Great customer service.
The next broker is also amazing for shorting HTB stocks, and that is CenterPoint Securities. They are a little bit more expensive in terms of short local fees than Cobra Trading, and there is also additional 3x overnight fees if you swing stocks short at CenterPoint. However, they do offer amazing customer support service, direct access trading, and connection with DAS Trader pro.
CenterPoint Securities is available for traders in the US, Canada, and many other international clients with an account over $30K.
Check out CenterPoint Securities HERE
Best brokers for Shorting Stocks with a Small account
1. Trade Zero (PDT rule still applies for US)
Account minimum: $2500 USD
My Trade ZeroPro platform set up:
Ok let's talk about the top choice for shorting if you have less than $25K. That is Trade Zero. Trade zero is an offshore broker in the Bahamas. They have great short locations on these hard to borrow penny stocks just like Cobra Trading and CenterPoint, and you can open an account with them for $2500 minimum. However, their location fees are a lot higher. Even though they claim to have free commission trades on limit orders, Trade zero loves to ding traders for like, wire fees, statement fees, deposit fees, and everything like that definitely adds up. Another thing to keep in mind is their platform Zero pro. The executions and fills are extremely clunky and sometimes it freezes during times of volatility.
TZ is definitely a great option for short sellers with a small account. Americans can open an account with Trade Zero America, but you’ll still have the PDT rule restriction under 25K. Canadians and other international traders can open accounts with TradeZero international.
Now what if you want to avoid trading under PDT restriction. PDT stands for pattern day trader rule. Basically it limits how many times you can trade if your account is under $25,000. Under the PDT rule, the day trader can only place 3 day trades in a consecutive 5 day period.
PDT rule only applies to US traders with US based brokers, such as all the ones we talked about earlier, IB, Trade Station, fidelity, thinkorswim. Premium brokers like Cobra and Centerpoint don't even take clients under PDT. If you are in the US and want to avoid this restriction, you can open a cash account with any of the brokers I mentioned earlier, or open an offshore trading account with CMEG.
Check out Trade Zero HERE
Broker to Avoid PDT Rule:
1. CMEG- Capital Markets Elite Group:
CMEG is one of the few reputable offshore brokers I know many of my trader friends use. They are based out of Trinidad and Tobago. They take clients from US and many international clients but not Canadians, again I'm sorry.
CMEG offers DAS trader pro connections as well, but their commission fees and borrow fees are extremely high. Their short local availability is not as good as Trade Zero or Cobra Trading either. So make sure you look into their details and fine prints before opening an account with them. If you want to learn more about other ways to get around PDT, make sure to check out this video.
Now let's talk through a few more popular brokers I know many traders use. Charles Schwab Streetsmart Edge is one platform I know to be very popular for options traders. Then there's also Thinkorswim. I love TD Thinkorswim’s charting platform with all the customizations and flexible grid and free market data. Ever since they started with free commission trading, the platform executions have been laggy and sometimes the market data even froze all together. Which seems to be the problem with all the brokers that have gone commission free, such as ETrade, IB lite, and popular free trading apps such as Webull and Robinhood.
Again I think these free commission trading platforms are great for beginners to get started and dip their toes in with low upfront cost, or to practice free real time paper trading.
If you want to take trading seriously as a business down the road after six months or a year, it's very much worth it to switch to a premium direct access broker. The platform speed, the execution fills, the routing options and the ability to short hard to borrow stocks are worth the extra couple dollars of commissions, that's just the cost of doing business.
Check out Capital Markets Elite Group HERE
