Three Questions to Keep in Mind

 

When day traders are looking for a new (or better) broker, there are three basic questions they should ask themselves;

What is the execution speed?
Your brokerage firm is your vehicle to trade and they execute your orders. If you have a slow broker that fills your order late, you lose money, even if you are trading properly and accurately.

What is the commission structure?
Any brokerage asks a certain amount of money in return for executing each of your orders. This varies from broker to broker and can make or break your trading profits – especially if you’re trading in small accounts. In these two respects – execution speed and commission – many brokers are either terrible or expensive or both.

What about PDT status?
The pattern day trader (PDT) rule, stipulated by the U.S. Government, states that all U.S.-based brokerage accounts need to have a minimum of $25,000 in order to place more than four trades within five business days. And to give some context here, most day traders place more than four trades on a single day. Therefore, all U.S-based brokers are legally obliged to enforce the pattern day trader rule for all U.S. residents.

But not to fear: you can day trade with less than $25,000 in your account and many people do. You only have to use a non-U.S. based broker such as Capital Elite Market Group (CMEG). More about this below.

 

Five Brokers to Consider

 

Here’s an overview of five brokers that are often used by day traders:

 

Interactive Brokers

 

 

Summary

Interactive Brokers (IB) clients enjoy one of the lowest cost access to stocks, options, futures and forex from a single account. Traders can choose a service level aligned with their needs and switch between plans at any time. IB offers two service plans for traders, and we recommend that you choose IBKR Pro.

 

IBKR Lite

Designed for swing traders or long-term position holders who do not have a need for powerful trading platforms or execution; this option is free of commissions and account or platform fees. The Lite version offers $0 Commissions on US exchange-listed stocks and ETFs as well as free streaming of market data for US exchange-listed stocks and ETFs (not including Nasdaq Level 2 or market depth).

Default Platform: Web-based Client Portal and IBKR Mobile trading platforms. No access to DAS Trader Pro or TWS. Not suitable for active trading. No activity fees or required minimum balances, but accounts under $25,000 are limited to three trades per week for U.S.-based traders.

PDT restriction: Yes for IB U.S. (minimum $25,000 for active trading, otherwise three trades per week maximum). No for IB Canada (it is a Canadian company). For IB U.K. and other countries, please check the IB website.

Margin: Offering a 4:1 margin with a minimum of $2,000 balance in your account. This means that you may trade stocks worth four times more than you have in your account. A $10,000 account can have up to a maximum of $40,000 buying power for trading. Brokers can limit the margin on some volatile stocks.

 

IBKR Pro

This option is designed for active traders, such as day traders, who need excellent execution and powerful platforms; therefore, there are associated fees such as commissions, market data and platform fees.

Default Platform: Trader WorkStation (TWS) and other powerful trading platforms such as DAS Trader Pro.

Margin: Offering a 4:1 with a minimum of $2,000 balance in your account. That means that you may trade stocks worth four times more than you have in your account. A $10,000 account can have up to a maximum of $40,000 buying power for trading. Brokers can limit the margin on some volatile stocks.

Commission: You can choose from two commission structures: Fixed or Tiered. Commissions are at the broker’s discretion and subject to change. Check brokers’ commission agreement at the time of sign-up.

PDT restriction: Yes for IB U.S. (minimum $25,000 for active trading, otherwise 3 trades per week maximum) No for IB Canada. For IB U.K. and other countries, please check with the IB website.

Note: To use DAS Trader Pro for your IBKR Pro trading account, you need a subscription directly with DAS Trader Pro. Check the DAS Trader website for subscription prices for Interactive Brokers accounts, which range between $150 to $200 per month (at the time of writing). DAS Trader Pro has offered members of the Bear Bull Traders community an exclusive deal on data for use with their platform for IB users.

 

✓ Pros	✕ Cons
✓ Direct access broker	✕ IBKR's SmartRouter is not available to IBKR Lite clients
✓ Unparalleled range of available investment assets	✕ TWS can be intimidating to less experienced/active traders
✓ Low commission and margin rates
✓ Superior order execution
✓ Vast array of technical and fundamental trading tools
✓ Built to serve global traders and international investors
✓ Fractional shares

 

CAPITAL MARKETS ELITE GROUP (CMEG)

 

Capital Markets Elite Group (CMEG) is a fairly new brokerage firm. Launched in 2013, it currently offers trading in stocks only. CMEG customers get to choose from several software platforms. CMEG is headquartered in Trinidad and Tobago, which means there’s no US PDT regulation from FINRA or the SEC. This situation creates both advantages and hazards. CMEG is not a member of SIPC (Securities Investor Protection Corporation), either.

Platform: You can use DAS Trader Pro with CMEG platform for a monthly fee. DAS Trader Pro is free for active traders generating over $650 commission per month.

PDT restriction: Yes for IB U.S. (minimum $25,000 for active trading, otherwise 3 trades per week maximum) No for IB Canada. For IB U.K. and other countries, please check with the IB website.

Margin: 6:1 margin for accounts with over $2,500. That means that you may trade stocks worth 6 times more than you have in your account. A $10,000 account can have up to $60,000 buying power for trading.

 

✓ Pros	✕ Cons
✓ No PDT rule	✕ Most investment vehicles, like options, not offered
✓ 6:1 leverage for accounts above $2,500	✕ Offshore account only regulated by Trinidad and Tobago’s SEC
✓ Direct access broker	✕ Inactivity fees
✓ Multiple software platforms to choose from	✕ No fractional shares
✓ DAS is free for generating over $650 commission/month	✕ CMEG doesn't accept Canadians. Canadians use IB Canada

 

MONDEUM CAPITAL

 

 

Mondeum Capital is a regulated online broker-dealer that offers advanced technology, progressive pricing, and modern solutions to active traders. Their leadership team has extensive experience working with active trading clients and has the necessary infrastructure and economies of scale to be competitive in the marketplace.

Mondeum Capital has designed a modern solution with the technology, pricing, and support active traders need to trade successfully. Their fully digital onboarding process, easy money transfers, and straightforward account management make it easy for traders to get started and stay with Mondeum.

Mondeum Capital understands that competitive pricing, execution speed, and robust, stable technology are essential for skilled traders to be successful. They strive to provide their clients with exactly what they need, exactly when they need it. Customers can benefit from their highly customizable smart order router, which allows traders to expose their orders to dark or lit venues and even select PFOF venues to collect a portion of the rebate themselves.

Mondeum offers a flat commission rate of 5 mils, with no hidden fees and software, routing, margin, and market data fees that are among the lowest in the industry.

Traders can choose between Sterling Trader Pro and DAS Trader Pro (coming soon), two of the most advanced platforms in the active trading community, both of which offer exceptional speed, stability, and functionality to execute all trading strategies.

 

TD AMERITRADE

 

 

TD Ameritrade is well suited to the needs of both novice and experienced investors, especially those who are looking for a full-featured online broker that offers great educational resources. TD Ameritrade may be best known for their trading platform, thinkorswim, with great charting capabilities, research tools, screening features, and financial calculators with backtesting capabilities. Nevertheless, thinkorswim with its slow executions is not the most suitable platform for day traders.

If you want to benefit from this zero-commission broker, you need to get a DAS Trader Pro subscription and link it to your TDA Account.

 

✓ Pros	✕ Cons
✓ Commission-free broker	✕ Slow executions using thinkorswim, not for day traders.
✓ Use DAS Trader Pro (fee) or thinkorswim platform (free)	✕ Direct market access only through thinkorswim platform
✓ For day trading, DAS Trader Pro offers the best execution	✕ Some stocks not available for shorting
✓ TDA Ameritrade and Thinkorswim mobile apps	✕ Orders may not fill at the open, this is rare
✓ Many assets offered (stocks, options, etc.)	✕ No fractional shares
✓ Educational content available in many formats