Best Day Trading Brokers in 2021

Day trading is becoming more and more popular across all platforms, regions, and kinds of traders. Despite the well-known characteristics of day trading that make it highly risky, there are certain things that attract the traders the most. For instance, day traders have an opportunity to gain immense profits in short-term trades within the same trading day whereas some of the long-term trading styles would generate the same income in a few weeks or months. However, it comes at great risk, too. The day traders need a specific approach from the broker’s side. They need highly convenient platforms for day trading, a special trading environment, and the freedom to choose appropriate trading strategies.

Some of the best day trading brokers will establish separate trading account types, which will be suitable for the styles and strategies of the day traders. Furthermore, these brokers will provide fast execution trading platforms to satisfy the need for speed of light processing of the trade placing. Additionally, the brokers will either minimize the commissions on the trades or offer ultra-tight spreads. One of the advantages of day trading is the absence of rollover fees or swaps that apply to overnight positions. Since day traders do not leave their positions open for more than 24 hours, they are free from the overnight charges. However, some brokers might add these charges in commissions or spreads on specific trading account types.

Below we present you the detailed review of the day trading brokers’ online trading platforms and discuss which of them provide the best suitable conditions for day traders.

What are the best brokers for day trading

Day traders very much need optimizing for low costs. In contrast to longer-term traders who at least leave their positions open for more than 24 hours, day traders require accessing the market much more frequently. Hence, they need special tools that utilize trading platforms. Furthermore, they must be able to conduct fundamental research of the market. That is why not all brokers will be equipped with essential tools and software to provide the appropriate trading environment for the day traders. Below is the list of all the Forex brokers that make a great fit for day traders.

What to look for day trading?

First of all, we should start with the rules. Day trading comes with multiple regulations and even limitations in some cases. Depending on the geographic location and the country of residence of the traders, there might be certain requirements for day trading. We should start by defining who is considered to be a day trader. Any person who opens and closes his or her trading positions within the same trading day and does so at least three times within the 5 consecutive days is a day trader. So basically, if the day traders’ same-day accomplished trades take up more than 6% of the overall trading activity of the person in a five-day span it means that he or she is officially a day trader. This definition of a day trader comes from the Financial Industry Regulatory Authority (FINRA) and New York Stock Exchange (NYSE), however, it is recognized within multiple jurisdictions, as well.

Accordingly, those day traders might be required to comply with the day trading rules established by the FINRA and NYSE. Part of the regulations states that a day trader must maintain minimum equity of 25,000 US dollars on his or her trading account. This minimum equity law, however, does not apply to all jurisdictions and might vary from region to region. Some of the brokers in specific geographic locations might even manage to free the traders from any equity requirements. Therefore, it is always recommended to check the local regulations for day trading before diving into the trading immediately.

So, here is the list of what patterns do day traders look for in brokers:

• highly efficient trading platform
• reliability in trade execution
• the minimal commission rates
• dedicated customer support team
• freedom to choose the trading strategy
• advanced market data (such as Level II data)
• availability of highly liquid and volatile markets, including stocks and Forex
• tight spreads
• convenient charting platform
• Electronic Communication Network (ECN)

How to choose your broker?

Knowing what you are looking for might make it easier to find it. However, it will be very rare to find a single brokerage services provider which will satisfy all of your requirements ideally. Therefore, you have to prioritize certain features according to your trading goals, capital size, trading strategy, and risk tolerance. In a perfect world, you would prefer a broker that allows you to day trade without any commission charges, but its bid and ask prices, or spreads remain competitively tight. Most of the brokers operating commission-free would let you trade with market average spreads, so anything that is tighter than market average is your ideal choice.

Leaving aside the cost-efficiency of the broker, you would also need to pay attention to the trading software or platform provided by the firm. In general, if the broker offers customized trading platforms and you cannot find MetaTrader 4 or MetaTrader 5 you should forget about it. In most cases, the broker will not be able to deliver high-speed execution on the custom trading platforms and it will result in losses. Therefore, look for the brokers who support multiple modifications of the best Forex trading platforms, such as MT4 and MT5. The broker should also support WebTrader versions of the MetaTrader software and preferably the mobile trading apps since as a trader you would want to have access to your trading account as frequently as possible.

You would also have to make a choice between the Direct Access brokers and the brokers selling order flow. Most of the traders prefer DMA brokers for multiple reasons. First of all, they allow you to directly route your orders to ECNs or market makers. In this way, you get the fastest possible execution of your trades and much greater liquidity. But some of the ECN accounts provided by these brokers might come with the commission fees. If you go for another option, then the broker will stand as a middleman between you and the market and will route your orders on your behalf, which has quite a few disadvantages. First of all, you are basically on a waiting list. The broker decides which routes should be prioritized when they are selling your order flows. Furthermore, they usually combine the orders from multiple customers. It is much more inconvenient compared to DMA broker services.

Is day trading legal?

Day trading is absolutely legal. No one can keep you from exiting your trades at any time you want. However, it is estimated that more than 90% of day traders lose most of their trading capital. Therefore, it is restricted to some extent in certain regions, such as the United States, where the rules require minimum equity of 25,000 USD for day traders available on the trading balance. On the other hand, day trading can be highly risky and even unsafe if you register with the wrong forex day trading brokers. Make sure that your broker is licensed or regulated by the official regulatory authorities in your country of residence.

Day trading with unregulated brokers might come at a huge cost. First of all, these brokers can lure you into believing that they provide the best possible trading conditions for day traders. They might state that there are no commission charges and the EUR/USD currency pair is accessible with the spread of 0.6 pips, that the leverage can go up to 1:1000 and there is no requirement for minimum equity. But after all, you would not benefit from these conditions if you are not able to withdraw any profits that you generate! Most of these brokers will let you deposit the minimum deposit amount, maybe even 5 USD, allow you to trade with sky-high leverages and minimal costs, but as soon as you generate the profit their withdrawal methods will not work. Obviously, for some reason, their customer support will never be available, and so on.

Don’t fall into the trap set by the unregulated Forex brokers. Always double-check that the broker is indeed licensed and authorized and for guaranteeing your safety you can even check the broker within the database of the regulatory body. Day trading is in essence already a very risky way of trading, you don’t want to overcomplicate the trading experience even more by choosing the wrong brokerage firm.

Is day trading worth it?

It depends on various aspects, but first of all, on how much of the risk can you tolerate financially. If you are extremely tight on budget, then most probably day trading would not suit you and would most likely look much like gambling. The medium size capital holders can go for day trading but with already familiar products. Knowing your product is key to understanding market movements and if you manage to predict the certain flow of the market then you are good to go. However, depending on where you live, day trading might come with additional costs which are not necessarily determined by the trading itself.

As we have already mentioned, the minimum capital balance in the United States is 25,000 USD for day traders. The same applies today trading with US securities from different locations around the globe. On the other hand, it might still be expensive to find the appropriate, advanced trading software options and suitable strategies. You might be asked to pay for both of them. The premium strategies might cost as much as 5,000 USD, however, it depends on the broker, as well.

When it comes to day trading costs, quite a few day trading brokers without pdt rule will charge for the commission rates. The Direct Access Market brokers or DMA brokers can offer a smaller fee of 0.0002 US dollars per traded stock. The retail brokers on the other hand can ask you as much as 7 US dollars for the same volume. The Contracts for Differences or CFDs are traded with 0.25 US dollars commission rate with most of the brokers. Many of them furthermore allow you to start trading with a minimum deposit requirement of 5 USD, 25 USD, or 50-100 USD.