Day Trading Tools and Platforms
This is a famous expression in the trading community. You can be the best trader, have the most proven strategies, but if you are in the wrong stock, you will lose money.
There are too many new traders who do not know what a good stock to day trade is nor how to find one, and they waste too many trading days mistakenly believing that the market is impossible to day trade in. One of the common challenges that new traders mention is not knowing what to trade. Thousands of stocks are moving in the market every single day, but finding a setup that is both consistent and a good fit is really hard. I use Trade Ideas software (www.trade-ideas.com) for scanning the market and finding good trades.
For day trading, you need a good direct broker. In fact, you don’t just need a good broker; you need an awesome broker. Your broker is your vehicle to trade. If you have a bad broker, you lose money, even if you are trading properly and accurately, because your broker eventually has to fill your order on time and at a good price. There are many brokers out there with various software and price structures. Many of them are great but expensive, some are terrible but cheap, and many of them are either terrible or expensive or both. I will share here what broker I am using and why.
I am currently using Interactive Brokers (also known as IB, www.interactivebrokers.com). IB is an inexpensive broker. It charges me less than $1 per trade (as low as 0.0015 cents per share). This is an astoundingly low fee, compared to the typical $4.95/trade charge of many other brokers. Another reason I am with this broker is because IB does not require people in Canada to have a minimum of $25,000 for day trading. If you are in the U.S., you will need a minimum of $25,000 in your account for day trading, unless you use non-U.S. based brokers such as SureTrader. You can read further about the “Pattern Day Trade” regulation here.
SureTrader (www.suretrader.com) is a popular broker among international traders and those who fall below the $25,000 Pattern Day Trade Rule for U.S. residents. Unfortunately, they charge a higher commission of $4.95 per trade. A complete trade with one buy and one sell order will cost you at least $9.90 [$4.95 x 2 = $9.90]. Due to its high commission structure, traders must be careful not to overtrade with SureTrader.
If you live in the U.S., have under $25,000 available for trading, and are looking for a good broker to start day trading with, SureTrader is one of your best choices. SureTrader opens accounts for as low as $500, but I would not recommend trading with less than $5,000.
Fast trade execution is the key for day traders to be successful. You need to be able to move in and out of trades quickly. If your broker doesn’t use a platform or software that has Hotkeys, you’re not going to get in and out of trades fast enough. I use DAS Trader (www.dastrader.com) as my trading platform. DAS platform is one of the most efficient execution platforms for online traders worldwide.
DAS servers are collocated with NASDAQ data centers so you cannot be any closer to the market for trading than this. DAS Trader is not a broker, but you can link your trading account to its platform for fast order execution. Some brokers, such as SureTrader and SpeedTrader, offer you the DAS platform when you open an account (with a monthly platform fee). My broker, IB, has its own platform (called Trader Workstation or TWS) that I do not recommend for day trading. I have a subscription to DAS directly and they have linked my IB account to the DAS platform.
Please note that DAS is both my charting and order execution platform but it is not my clearing firm. People often think DAS is also a broker, but it is not. DAS will send my orders to NASDAQ data centers and Interactive Brokers, as my clearing firm, will fill my orders. I pay my commissions to IB and not to DAS. DAS does not charge me any commission, only a monthly fee for using their platform and providing me with a real time data feed and Level 2.
Note: If you are planning to use a Mac for DAS, we recommend using CrossOver specifically designed to address DAS Trader Pro Mac/Windows issues. Please visit CrossOver Webasite below for more information.
I am always being asked for my recommendation for a trading station. There is no easy answer to this because it depends on your budget and many other factors. My trading PC is a custom-made +$3,000 system that supports 6 monitors. But you do not need to have such a station to start with in order to be successful in trading. However, a fast and reliable working station is important. I recommend new traders invest a small amount of their funds in an i5 or i7 CPU PC or laptop with at least 8 GB RAM and an SSD hard drive. I recommend this laptop from Acer. It is a very good and affordable ($579 at time of writing) laptop with the following criteria:
CPU (Intel i5-7200U)
RAM: 8GB DDR4 SDRAM
Hard Drive: 256GB SSD
Display Ports: 1 HDMI + 1 VGA
Of course, there is no upper limit for buying a PC and you can spend thousands and thousands of dollars on your PC, but I encourage new traders to keep the cost of their business down as much as possible at the beginning. You in particular need several screens for your trading laptop or PC because more screens give you more flexibility in watching the market, setting up your platform and scanners, and such.