| Stock Traders Daily wants you to succeed. In order
to do that, choosing a broker that fits your needs is
one of the most important things you can do as a trader.
The explosion of online trading over the past several
years has given rise to countless institutions that that
claim you should trade with them because of their low
commissions, their execution speeds, their level of service,
How do you know which is the right one for you? First
you must examine your goals as a trader. Do you intend
to trade every day the market is open? Do you want to
buy and then sell stocks and make a living of it? Or
do you want to trade stocks for investment purposes
and hold them? If you goal is long term investing, then
almost any broker that charges reasonable fees and gives
you online access to your account will do.
If you intend to make a living at trading however,
then you need a broker that can handle executions fast.
If the broker does not offer a DAT (Direct Access Trading)
platform then you are doing yourself a disservice by
trading with them, regardless of the commissions and
level of service they offer. When the Market is moving
fast, as it often does, the difference between getting
rid of a loosing stock in under five seconds as opposed
to thirty seconds or longer can mean hundreds, sometimes
thousands of dollars.
Rule #1. Use a broker that has Direct Access
Trading, often called DAT systems.
What type of software are you going to use to make
your trades? See our Software Guide for a list of programs
we have used that meet or exceed the minimum requirements
for Day Trading. If the software you are using does
not offer Level II (2) quotes, then you are trading
blind. L2 quotes give you a view of a stock and how
it's trading. It shows you who is buying and who is
selling and at what price.
Rule #2. Use a broker that offers Level II
What is a fair commission to pay a broker for a trade?
While some big brokerage houses are still charging $40
or more, most have come to their senses. As the number
of online brokers increase, the price you pay for commissions
tend to go down. They want your business. Some brokers
that were advertising $19.95 per trade last year are
now offering it at $9.95. Some still try to stick you
with a low introductory offer, only to raise their commission
rates after their trial offer expires. It's our opinion
that if you are paying more than $12 per trade, then
you are paying too much. There are too many brokers
charging much less than that for you to even consider
paying more. They don't call them brokers for nothing.
Depending on the amount of shares that you normally
will trade, you may come out much better finding a broker
that does per share pricing instead of per trade. A
good per share price is around .015 (1.5 cents per share).
For example, trading 500 shares of a stock will cost
you $7.50 in commissions, plus ECN fees. In many cases,
this may come out to less than $10 per trade.
Rule #3. Do not even consider paying more than
$12 in commissions per trade.
In addition the above, you should also have a NASDAQ
Futures and Index chart on your screen at all times.
A three minute or tick chart would be the ideal timeframe
Below are are brokers that we feel offer best value.
As the online trading market evolves, some of these
brokers may change their services or price list. At
the time of this writing, each of these all fulfill
our three basic rules. Note however that the commissions
may vary depending upon the amount of trading that you