How To Choose The Right Broker For Day Trading

by Manny Backus, Day Trading Strategy Expert

Choosing the right broker for day trading is often determined by word of mouth; someone who has had a good experience with a particular firm.  It also depends on the level of trading you are inclined to participate in.  For example, are you trading 100 shares once a month, or 100,000 shares a day?  Various brokers cater to different needs based upon what it is you are trying to achieve.

Having been in the stock market, there are occasions when the broker is unable to take calls, which can be frustrating since a great deal of money is riding on his ability to intercept your calls and implement your instructions.

Thus, when choosing the right broker for day trading, it is incumbent upon you to research the many brokerage firms available to ascertain if they have a proven track record, are legitimate, and can fulfill your needs on a moments notice.  In addition, you also want to check the commission rates of various brokers to determine who offers the best deal as well as service.

Researching brokerage houses online will give you a good indication of what is expected of you.  Items such as the minimum amount of investment required, commission rates, and any additional fees that may be tacked on and so forth.  So too, you first have to decide how much you are willing to invest and why type of stocks, currencies, or other trading platforms you are going to utilize.  Another area you need to research is how accessible are the particular stocks, does the broker have up-to-date information, technical analysis, charts, breaking news, and all the necessary components you need to day trade.

Another component in choosing the right broker for day trading is dependent upon the type of broker you require.  There are discount brokers, full service brokers, and premium brokers.  All of these can be thoroughly researched online to determine the right one for you.  As you go through each broker’s website, you can write down the following questions and then compare and contrast.  For example, what is their commission; do they offer an interest rate on cash, do they offer mutual funds, investment products, banking amenities, trading tools, research, and customer service.  How are they rated by users? 

More importantly, how accessible are these brokers.  Do they offer quality service in a short turn-around time, which is vital to your profits at the end of the day?  Do they provide you with the software necessary to keep you informed on a daily basis and in real time?  While some day traders use brokerage house software, they are more inclined to add additional tools which provide a clearer assessment of the trades they are making and which may include easier and more user friendly software.

Another point should be made in choosing the right broker for day trading and that is day traders need to familiarize themselves with the software.  In this regard, most brokers offer tutorial versions to allow the day trader to become better acquainted with the software and also to ensure there are no unforeseen problems that may occur while beginning the first day of trading.

Choosing the right broker for day trading is analogous with choosing the right mechanic for your car.  While he may have the knowledge, he may not be able to carry out the actual work in due course.  In addition, once you receive the bill you may find charges which are not in keeping with the original work order.  So too, having a broker who is fully knowledgeable in the market and one who is honest and up front is essential to day traders.  After all, it is ensuring the trade is a profitable one and not bogged down by indecisiveness or non-communication.

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