Over the years, day trading has risen to popularity as one of the most viable side hustle options. In day trading, people buy and sell financial instruments or securities within the same day for some profit. As easy as it may appear, it is no child’s play to trade securities consistently for a profit. Of all the challenging tasks, finding the right broker takes the prize. A lot of your profits and losses will be dependent on your selection of an online broker.
According to Kimberly Torres, you should never choose a broker in haste, and low commissions should never be the “only” deciding factor. The best way to choose the right broker for your day trading journey is by comparing multiple broker platforms and picking the one that excels in most aspects. Additionally, you should pay special attention to the following key points.
Choose a Broker Specializing in Your Niche
Today the market is filled with various brokers serving traders in different niches. For example, Tastytrade serves options traders, Vanguard serves passive investors, Lightspeed serves day traders, etc. Before you begin comparing a broker on different parameters, be sure to create a list of all the brokers serving your niche.
Once the list is prepared, start evaluating them on important fronts, like ladder trading, stock alerts (basic & advanced), direct market routing, short locator, and other significant aspects. Give enough time analyzing every option. Assuming you’re just starting as a day trader, it will be best to take suggestions from professional day traders before finalizing a broker.
Faster Trade Execution
As day traders buy and sell financial instruments once or multiple times within the same day, a difference of even a few seconds would affect the money angle. If your broker has poor trade execution speed, you may end up losing money on a lot of your trades. The only way to save yourself from a similar disaster is by choosing a broker that gives you direct market access.
Some people have a misconception that all brokers offer direct market access- which is not the case. Most brokers are middlemen that route your order to the market. If you select a middleman by mistake, your orders risk getting combined with other clients’ orders, and the broker may give priority to other orders over yours while selling the order flow. As a result, you won’t be able to trade the stock at the price you wanted, and you’ll start making more losses than profits. So choose a broker that gives you direct market access, allowing you to trade directly for significant gains.
Reasonable Commissions
Owing to the huge number of trades you’ll be making regularly, it will be the commissions that will decide whether you’ll be having a profitable month or a losing month. But it doesn’t imply that you should choose a broker charging the lowest commission, as a low fee doesn’t make anyone a better option.
In the market, per-share and per-trade are the two pricing structures for day trading brokers. While per-trade is the widely used commission structure, proprietary trading firms and day trading brokers prefer the per-share structure. You need to go with an option that doesn’t strip away most of your profits.
Get Ready to Trade Like a Pro
Once you’ve made an informed decision of choosing the right broker, you can now concentrate on other essential areas, like working on the trading strategy, finalizing the best stock scanner, charting platform, and others. The planning phase takes time, so don’t lose patience as you prepare the floor for a remarkable day trading journey.
