What platform is best for day trading?
All of the trading platforms on this list impressed our editorial team of testers enough to be featured here — but the three that scored the highest for their trading platforms, order execution, user experience and access were Fidelity, Interactive Brokers and Charles Schwab. (Charles Schwab recently took on TD Ameritrade's widely respected thinkorswim platform following its acquisition of that broker.)
Does that mean they are the best for you? That depends on your specific needs and priorities. But these platforms, and the others on this list, will help you narrow down your search.
What should you look for in a trading platform?
A few things are nonnegotiable in trading platforms for day trading: First, you need low or no commissions. You might’ve gathered by now that day traders place a lot of trades. Pay close attention to a broker or day-trading platform’s fees and commissions. Many brokers will offer no commissions or volume pricing.
Then research and strategy tools are key. Day traders use data to make decisions: You want not only the latest market data, but you also need a trading platform that lets you quickly create charts, identify price trends and analyze potential trade opportunities.
Finally, prioritize speed. Time is literally money with day trading, so you want a broker and online trading system that is reliable and offers the fastest order execution. Many platforms will publish information about their execution speeds and how they route orders; we've included these details in our analysis and ratings as well.
Another feature we’d recommend is a broker or trading platform that offers paper, or virtual, trading, so you can practice with simulated trades before the real thing.
What's the best trading platform for beginner or new investors?
We have a separate list of best brokers for beginners, which includes our analysis of not just the brokerage firm's trading platform, but also how well they score on other factors that appeal to beginners, such as educational resources about how to use those platform. But you'll notice there is some overlap between the two lists —that's because we heavily test how user-friendly a trading platform is, so most of the brokers on this list are also approachable choices for new investors, too.
What is pattern day trading?
Pattern day trader is a designation under FINRA rules that is defined as someone who day trades four or more times within 5 business days. Those day trades must also account for more than 6% of the trader's total trades within the same period. Your brokerage can help you determine if you're a pattern day trader. If you are, you're subject to additional regulations, including the requirement to have at least $25,000 in equity in your margin account.
What stocks are good for day trading?
No one can predict individual stock performance to answer this question accurately, but there are a few things that make a stock at least a good candidate for a day trader to consider. Generally, those are stocks that are highly liquid, with large trade volume; relatively volatile, so you can buy low and sell high; and known to you (an understanding of the stock’s price history, and how it reacts to various events — earnings reports, economic shifts — is key). Here’s some detailed guidance on how to research stocks.
You can use your online broker or trading platform’s stock screener to look for stocks that seem ripe for day trading. We also have a list of the best stocks right now, based on performance.
What is trading platform margin?
Margin is essentially a loan from your broker. When you open a brokerage account, you’ll be asked if you want a cash account or a margin account.
A margin account allows you to place trades on borrowed money. Often called leverage, trading on margin can magnify your gains — and, in the worst-case scenario, your losses. To read more about margin, how to use it and the risks involved, read our guide to margin trading.
How much money do you need to use these trading platforms?
This is a loaded question. The trading platforms on our list don't have minimum account requirements, but as noted above, you're required to maintain a minimum of $25,000 in equity to engage in pattern day trading. That equity can be in cash and eligible securities. That’s the minimum amount you need to maintain in your account; on top of that, you also need the money you’ll use to day trade.
But just as important is setting a limit for how much money you dedicate to day trading. Those dipping into this kind of active trading may want to risk only a small portion of their account balance — 5% to 10% of your investable assets, at most.
Is it risky to use a trading platform?
Using a trading platform isn't risky —many investors invest through trading platforms. But day trading can be risky. In short: You could lose money, potentially lots of it. Day trading is exactly what it sounds like: Buying and selling — trading — a stock, or many stocks, inside of a day. It’s all about making predictions and timing the market, with the goal of making a small profit on each trade. In an ideal world, those small profits add up to a big return.
But research has shown that only 1% of day traders consistently earn money; many, many lose it. It’s essentially a full-time job, because you need to constantly be watching — and timing — the market, waiting for your next move. It isn’t for beginner, or casual, investors.
To limit the risks, you can keep the majority of your investment portfolio in long-term, diversified investments like low-cost index funds, and day trade with a small portion.
