When you want to day trade stocks, options, currencies, futures, or other financial instruments, you need a broker who will execute the trades in the market on your behalf.
The broker you choose is a very important decision. They will play a key role in helping you to trade in the market day in and day out.
We have prepared this stock broker guide to help both beginner and experienced traders to understand the role of brokers, what they are, how to choose them, what to look for, and the importance of choosing the right one for your trading.
We are also going to provide a list of the best brokers that you can rely on in your trading journey.
All About Brokers
A broker is an intermediary between buyers and sellers of financial instruments. Their role of is to facilitate the buying or selling of these instruments for a commission or fee.
There are many well-known brokerage firms in the U.S. through which you can use to trade in financial markets.
In addition to facilitating the purchase and sale of various instruments, some brokers also offer an array of services to their clients such as financial advisory services, portfolio management, retirement planning, depository services, and mutual funds services.
You have probably seen brokers showcased in movies as guys wearing suits, picking up their telephone and calling their clients to inform them about hot stock tips.
While these on-screen portrayals of brokers are accurate, the financial industry is transforming rapidly, and the traditional brokers as we know them are slowly becoming extinct.
With the advancement of technology, it is now easier for traders and investors alike to transact online, thanks to the emergence of online brokers.
Online brokers are convenient, as traders can place orders, make changes and check quotes from anywhere. These brokers also facilitate faster execution of trades, enabling traders to take advantage of market volatility in a better manner.
Importance Of Choosing The Right Broker For Your Trading
Choosing a day trading brokerage firm is the imperfect storm of science and art.
The art, of course, is the cosmic connection that has to be there between you and the broker you are counting on to execute your trades. The science is all the research that you put into it. You require both.
Your decision on whether to stick with the broker, though, should not be based on science or art — but on your individual priorities.
How To Choose Brokers
The basic things to remember when picking a broker are simple and few. Undoubtedly, your first priority should be to make sure that your funds are in safe hands.
The best way to take care of this by ensuring that you only use a brokerage firm based in and regulated by a financial regulator in a respected financial center.
Once you have taken this precaution, look at what the broker offers in terms of:
- Commissions, ECN fees, data fees, margin fees and fees for phone order executions.
- Speed of trade execution and platform stability.
- Range of available financial instruments to trade (stocks, options, commodities, OTC, forex, futures, and eve access to international markets).
- Customer service.
- Customer incentives for new traders.
It doesn’t really matter which broker you choose, so long as you feel like your hard earned money is safe and the broker provides the necessary tools for you trading style.
Using the above criteria, we have ranked the following brokers as the best online brokers that day traders can count on.
Remember, if you are searching for a broker for swing trading or investing, this list may not suit you. Here is our list of our favorite brokers:
Check out the rest of the guide for all the information you’ll need to make an informed decision on your next broker!
Credit: Warrior Trading