Which brokers should you use to start day trading? Whether you are trading a small account,
larger account, long biased or short biased, or trying to avoid PDT restriction, I have
the answers for you in this video.
Contrary to what most people think, the deciding factor for which broker you should use, should
never be… whether they are commission free. You should be choosing a broker that gives
you the most optimized platform, at a reasonable cost, to trade your own trading style and
strategies, whether it’s buying breakouts, shorting parabolics, swing trading or options
trading.
Think of it this way, I don’t want to be saving $5 in commissions but actually getting
filled with 50 cents slippage. On even just 100 shares thats losing $50 dollars of potential
profit.s
At the same time, I don't want to be saving a couple dollars per trade, but never have
any stocks too short available when I see an amazing low float penny stock being pumped
400% and very extended on the day.
Broker commissions and fees are just the cost of doing business. If paying those fees means
you end up with better execution speed, fills, and a lot more profit. Then by all means that's
absolutely worth it.
In this video we’ll be going over the brokers I think are the best for day trading, in these
specific areas. I’ll leave all the time stamps and discount links below if you want
to check those out. As always, if you appreciate the research and time I put into videos like
these, plz rmb to drop a like.
Let’s start with the most basic brokers for most beginner traders to get started.
Going long. I personally started with learning long strategies and that's how I built my
small account that way. Interactive brokers is the first broker I got when I started day
trading six years ago.
At first glance, IB is indeed a lot cheaper than most other brokers out there. Basically
the cost for buying and selling US listed stocks is $0.005/ US per share, with a minimum
of $1USD per trade. So for newer traders with small accounts this is really affordable.
And their execution and fills are decent as well.
But keep in mind to trade on IB you will need to purchase additional market data subscriptions
on their platform Trader workstation tws. If you are day trading mostly the US Nasdaq
and NYSE stocks and options like myself , this is what the subscriptions would look like
and it adds up to about $30 us a month.
That includes things like Equities and Options quote for nasdaq exchanges, level ii etc etc.
But if you trade those true sub dollar penny stocks, you need to purchase additional OTC
or pink sheets data for I think $10 extra per month,
As for the ability to short, IB has generally good short locations for the large cap stocks,
basically anything but a low float runner on day one. They do not offer the function
of locating borrows but any short availability are free of any extra charge.
Interactive brokers is available in US, Canada, and most international countries. If you are
in the US, there is the option of IB Lite, which is free commission trading but I believe
you would only be able to trade on IB Lite on mobile or web, not on their TWS desktop
platform.
Next lets talk about Fidelity Active Trader Pro. I have not not used this broker myself
but I hear from many traders I trade with every day that they have great execution fills.
And for a broker that’s gone commission free, thats amazing.
Another thing to note is their customer service support line. They pick up the photne with
only one minute wait and this broker has good short availability for maintreaam large cap
stocks, such as the ROKU and TSLA, at no additional borrow cost. Basically they are around the
same level as interactive brokers.
But the cons of Fidelity Active trader pro, is their platform. The reviews from the traders
I know is generally the same. Their platform functions are outdated and clunky. So keep
that in mind. Fidelity is available outside of US as well so make sure to check their
international website for details.
For all you traders interested in trading automation and coding your own making it rain
lamborghini trading bots, you might be interested in Trade Station. Trade station is another
direct routing broker that offers good executions for traders.
Their shorting availability is on par with Fidelity and IB, where most general large
cap stocks are available to short for free. Their platform has this Matrix feature, which
is a more advanced but easy to follow L2 montage. The matrix offers lightning fast order entries
on all different kinds of orders like bracket, sell and buy stop orders.
And like I mentioned earlier, tradestation platform also allows you to build your own
automated trading strategies. And if you ever build a bot that will make it rain lambroghnis,
make sure to call me.
However, their fees are on the higher side in comparison to all the brokers we mentioned
before, but the direct routing executions and fills make it worth it.
Next lets talk about the exciting topic of, the best brokers for shorting. When it comes
to shorting these hard to borrow runner stocks on day one, at a extremely affordable price…
the winner has to be Cobra Trading.
They are a direct access broker that offers the function of reserving hard to borrow stocks
to short, at a mostly reasonable price. And sometimes they even offer their clients free
locates on these stocks. All these runners recently that everyone wants to short, such
as GNUS, PSTV, APDN. They were available at Cobra Trading.
And if you short any of these stocks overnight… guess what, while other brokers I’m going
to talk about charges 3x or 5x overnight fees… Cobra trading does not. 0 extra overnight
fees. You can link your Cobra account with Das Trader pro, its a platform that offers
the best execution fills, whether you are longing or shorting.
Cobra trading is available for US clients with an account over $30K, and International
clients with accounts over $50K. But sorry, at the moment they do not service Canadians,
but I have another option for you soon.
If you are interested in opening an account with Cobra trading, I have a link for you
to sign up below, and if you mention Humbled Trader at the time of account opening, you’ll
get 25% off your commissions. That's a pretty sweet deal.
The next broker is also amazing for shorting HTB stocks, and that is Centerpoint Securities.
They are a little bit more expensive in terms of short locate fees than Cobra Trading, and
there is also additional 3x overnight fees if you swing stocks short at Centerpoint.
However, they do offer amazing customer support service, direct access trading, and connection
with DAS Trader pro.
Centerpoint Securities is available for traders in US, Canada, and many other international
clients with an account over $30K. As for traders starting out with small accounts less
than 30K, I have more broker options for you… after you smash the like button for the YouTube
algorithm.
Ok lets talk about the top choice for shorting if you have less than $25K. And that is Trade
Zero. Trade zero is an offshore broker in the bahamas.
They have great short locates on these hard to borrow penny stocks just like Cobra trading
and centerpoint, and you can open an account with them $2500 minimum. However, their locate
fees are a lot higher.
Even though they claim to have free commission trades on limit orders, Trade zero loves to
ding traders for like, wire fees, statement fees, deposit fees, and everything like that
definitely adds up. Another thing to keep in mind is their platform Zero pro. The executions
and fills are extremely clunky and sometimes it freezes during times of volatility.
But TZ is definitely a great options for short sellers with a small account. Americans can
open an account with Trade zero america, but you’ll still have the PDT rule restriction
under 25K. Canadians and other international traderes can open account with TradeZero international.
Now what if you want to avoid trading under PDT restruction. PDT stands for pattern day
trader rule. basically it limits how many times you can trade if your account is under
$25,000. Under the PDT rule, the day trader can only place 3 day trades in a consecutive
5 day period.
PDT rule only applies to US traders with US based brokers, such all the ones we talked
about earlier, IB, Trade STtaion, fidelity, thinkorswim. Premium brokers like Cobra and
Centerpoint, they don’t even take clients under PDT.
But id you are in the US and want to avoid this restriction, you can open a cash account
with any of the brokers I mentioned earlier, or open an offshore trading account with CMEG.
CMEG is one of the few reputable offshore brokers I know many of my trader friends use.
They are based out of Trinidad and Tobago. They take clients from US and many international
clients but not Canadians, again Im sorry.
CMEG offers DAS trader pro connection as well, but their commission fees and borrow fees
are extremely high. Their short locate availability is not as good as Trade zero or Cobra Trading
either. So make sure you look into their details and fine prints before opening an account
with them. If you want to learn more about other ways to get around PDT, make sure to
check out this video.
Now let's talk through a few more popular brokers I know many traders use. Charles schwab
streetsmart edge is one platform I know to be very popular for options traders. And then
theres also thinkorswim, I love TD thinkorswim’s charting platform with all the customizations
and flexible grid and free market data.
But ever since they started with free commission trading, the platform executions have been
laggy and sometimes the market data even froze all together. Which seems to be the problem
with all the brokers that have gone commission free, such as ETrade, IB lite, and popular
free trading apps such as Webull and robinhood.
Again I think these free commission trading platforms are great for beginners to get started
and dipping their toes in with low upfront cost, or to practice free real time paper
trading.
But if you want to take trading seriously as a business down the road after six months
or a year, its very much worth it to switch to a premium direct access broker. The platform
speed, the executions fills, the routing options and the ability to short hard to borrow stocks
are worth the extra couple dollars of commissions, thats just the cost of doing business.