Though day trading was initially offered to huge financial firms and a few select professionals, it is now available to all traders. So long as you have a good internet connection, you can enjoy day trading from wherever you are. This can be attributed to the revised financial requirements, which were lowered in a bid to accommodate more traders.
However, if you want to succeed in day trading, you must have the right broker. One of the essential aspects of a good broker is regulation. The most respected regulatory bodies include the CySEC, which is in Cyprus as well as the Financial Conduct Authority from the UK. A brokerage firm with these credentials proudly displays them on their site. Additionally, it helps to know that you are investing your money with a firm that carries out all its transactions by the book.
Once all that is out of the way, you can look at other desired qualities of a day trading broker. But before we get into that, let us look at what day trading allows you to do.
With day trading, you are able to either buy or sell trading instruments a number of times during the day. As much as this technique is considered to be a risky exploit, it is extremely rewarding, especially if you are a shrewd trader.
So how can you choose the best day trading broker?
- The set commission fees
The cost of doing business is always on the mind of every trader. Most often than not, a trader will be looking for ways to reduce this cost. Depending on your trading capacity, a brokerage firm may be willing to lower its trading fee. Some of the firms provide a room for negotiation. These are the kind of brokers that you should be looking for.
Moreover, it is only fair to be charged a more favorable fee as your trade volume increases.
So what should you do? Look for a broker who has a flexible commission structure. This means that as you scale up, the cost of trading will come down. Although most brokers don’t advertise on this, you could always engage them and find out.
- Ensure that they offer suitable trading platforms
A trading platform is one of the most important tools for a trader. This is where you get a clear view of everything that is happening in the market. In fact, you make your trading decisions based on that information.
Usually, the right platform should give you unlimited access to updated information on the current market trends. This includes level 2 data and news. Also, depending on what kind of trader you are, there are some unique tools you would prefer to use. Does the broker’s platform provide that? If not, you can always look for another broker. Moreover, the kind of platform provided by Cobra trading isn’t the same as what you would get from Etrade.
- Customer Service
It is easy to overlook a broker’s customer service at first. But what if you experience a system delay or any other form of malfunction, won’t you need a prompt response from your broker? If you can barely get any kind of feedback, you may get inconvenienced in a number ways.
Although it’s not easy to know whether a select broker offers a top notch customer service, you can test them. There are a number of indicators you can look for before you completely commit your money. First, you need to write an email to them and gauge how long it takes to get a reply. Make a couple of random calls and see if they are picked up.
If you deem the response satisfactory and the feedback helpful, that is a good sign that you can rely on their customer support. This means that you would be in good hands.
- Track record of day trading broker
This is yet another great indicator on whether a day trading broker suits you. It is fairly easy to verify this.
You can choose to read other traders reviews. This will tell you if the brokerage firm has a good track record in its dealings with traders. If the reviews are riddled with a myriad of negative comments, then you should think twice before investing with the broker.
- Order routing
When you are buying and selling on a broker’s platform, your decisions automatically redirect to the brokerage firm. For instance, when you press the sell button of a particular instrument, it goes through the broker who then sends it to the market on your behalf. This can be time-consuming at times.
Fortunately, there are some brokers who give you quick and direct access to the market. This, in turn, helps you to execute your trade moves conveniently. If this is something that you value as a trader, then you should strive to find a broker who allows it.
- Associated platform and data fees
A majority of platforms offered by day trading brokers provide the most crucial tools of trade for free.
As a seasoned trader, you might want more than just a basic tool to perform various activities. These sophisticated tools are likely to come at an extra cost. It is therefore imperative to be aware of these platform fees as well as other additional data charges beforehand.
Before you pay for these services, which are normally charged on a monthly or quarterly basis, make sure that they give you an extra edge when it comes to profitability. Furthermore, the chances are that if you have been given access to more advanced tools, your trading skills qualify you for them.
Due to a large number of day trading brokers, it can be sometimes overwhelming to find the best. However, it shouldn’t be a daunting task if you know what to look for. If you carefully follow this guide, there is no reason why you should not get a broker who befits your day trading interests. The one thing that you should never compromise on is choosing a brokerage firm that isn’t regulated.