Day trading refers to the practice of buying and selling a security within the same trading day. This style of trading can be found in any market, but it’s more prevalent in the forex market. Day trading is also prevalent among futures traders.
Because of the fast-paced nature of day trading, the trading platform could be the difference between winning and losing. So, in this guide, we’ll discuss day trading platforms and offer our top picks for the best day trading platforms.
Our Picks for the Best Day Trading Platforms
Many trading platforms can be used for day trading depending on your needs. These trading platforms range from very simple platforms to complex ones that come with historical charts, quarterly reports, technical analysis, and pricing tools. We have compiled a list of the best day trading platforms using certain criteria, such as fees, speed of execution, the security of data, customer service, and user-friendly interface.
What is a Trading Platform?
A trading platform is an installable desktop application or a web-based terminal through which traders can place and monitor their trades remotely from anywhere in the world. It is a system through which the broker links the trader’s orders to the exchanges. While most brokers, especially stockbrokers, develop and offer their own trading platforms, there are independent platforms that traders can link to their brokers.
Most trading platforms come bundled with other features, such as charting tools, news feeds, real-time price quotes, and even premium research. In addition to all those features, day trading platforms should offer fast execution speeds. The best day trading platforms offer a mix of robust features and low or no subscription fees.
Many brokers offer their platforms for free or at a discount rate in exchange for maintaining a funded trading account and making a specified number of trades per month. However, there should also be low commission charges, since day traders make lots of trades, and commission charges can easily add up.
3 Ways You Can Benefit from a Day Trading Platform
They include the following:
- Speed in executing trades: Day trading platforms allow you to execute trades faster. This enables you to take advantage of trade setups that form intraday time frames.
- Ability to trade from any location: Day trading platforms allow you to place trades and manage your positions from your home or anywhere you trade from. It’s an electronic network; you don’t need to be on the trading floor.
- Greater control over transactions: Day trading platforms support different order types and offer various trade management tools. So, you have control over your transactions.
How Do Day Trading Platforms Work?
Although many think that day trading platforms execute trades directly at the exchanges in real-time, it is not that straightforward. When you place a trade (a buy order, for example) on your broker’s trading platform or any platform you linked to your broker, the order goes to the broker who then deducts the appropriate amount from your account to execute the trade, and then…
Your broker can decide to send the order to the exchange or a third-party market maker, but it can also choose to execute the order internally by matching your buy order with a sell order from another client. The order is then routed through a clearinghouse, which clears the trade after two business days to give room for settling any disputes. Meanwhile, the trader is allowed ownership of the stock because it has been paid for.
3 Steps to Using a Day Trading Platform?
Choose Your Preferred Day Trading Platform
You need to consider several factors, such as trade execution speed, subscription costs, security, user interface, trading tools, and educational resources. Find out whether the platform comes with historical market data (price and volume) and real-time quotes. Identify your trading needs and choose a day trading platform that addresses those needs.
Open a Trading Account
When you’ve found a trading platform that addresses your needs, open a trading account. If you are not familiar with the features, you can demo-trade to get a feel of the platform. Be sure to read the terms and conditions before signing up for live trading.
You will see a list of the available securities you can trade, and there may be a way to filter them based on your chosen criteria before choosing one and pressing the “buy” or “sell” button. US traders should note the “pattern day trading” regulations that may restrict your ability to make too many trades in quick succession in a margin account.
What Are the Advantages of Using a Day Trading Platform?
Some of the benefits of using a day trading platforms include:
- Superior analysis: Day trading platforms provide superior technical analysis tools. You can make precise analyses and identify trade setups in lower time frames. You can get access to online research tools.
- Intraday trading: You open and close all your trades before the market closes. So, you don’t get exposed to overnight risks such as prices spiking up or down.
- Greater flexibility: The platform allows you to trade at your convenience. You have more control and flexibility in trading.
- Multiple order types: There are different order types, including market, limit, stop, and stop-limit orders. You can place any order type you want.
- Trade management tools: There are many tools for managing open positions in real-time from anywhere you are, such as trailing stop orders.
What Are the Disadvantages of Using a Day Trading Platform?
The disadvantages include the following:
- Overtrading: You have easy access to the market. So, it’s easy to overtrade.
- No expert guidance: Executing trades on your own without professional guidance means you have to make a separate arrangement for research.
- Addiction: Trading can be addictive. You may find yourself trading just to feel the excitement that comes with winning.
- Internet dependency: You depend on your internet connection to gain access to your broker. A slow internet connection can ruin everything.
Expert Tip for Choosing a Day Trading Platform“ Choose a day trading platform that offers ultra-fast trade execution speed, a simple user interface, and optimal security. Consider subscription costs and whether the platform comes with historical market data (price and volume), real-time quotes, and educational resources. It is important to demo-trade first to get a feel of the platform before signing up. ”- Emmanuel Ekwomadu
How to Choose the Best Day Trading Platform?
You must consider certain factors if you want to choose the best day trading platform, so ask yourself the following questions:
Is the Trading Platform Regulated?
Find out whether the broker that offers the day trading platform is regulated by the right regulatory authority. If the broker is based in the UK, it should be regulated by the Financial Conduct Authority (FCA). A US-based broker must be regulated by the Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FINRA) if it’s a stockbroker/broker-dealer, or the Commodity Trading and Futures Commission (CTFC) if it is a futures broker.
What Fees and Charges Apply?
Always find out what fees and commissions you would incur as a user. As a day trader, you will be posting a high volume of trades, so you need to pay attention to fees and commissions. Choose a broker with the lowest fees.
What Payment Methods are Accepted?
Choose a platform that has a plethora of payment options, as this gives you flexibility in funding and withdrawing from your account.
What Are the Available Assets to Trade?
As much as you can, try to find out the assets you can trade on the platform. Some day trading platforms do not allow options trading, while others omit certain ETFs and penny stocks from their stock list. This could reduce the number of securities available for trading, which may limit your chances to make money.
Is There a Demo Account?
Every good day trading platform should offer a demo trading option. This will allow you to familiarize yourself with features on the platform before transitioning to live trading.
What is the Account Minimum?
Day trading platforms have different minimum balance requirements. Verify the minimum deposit and minimum balance requirements before signing up. If it is a US stock day trading platform, the pattern day trading rule will apply, and you won’t be able to trade as frequently as you would like unless you have $25,000 in your account.
What Educational Resources are Available?
Some day trading platforms provide educational resources to help users understand how to trade with the platform. There may also be resources that teach about trading and how the market works.
Is There Help and Support Available?
There may be trading glitches from time to time. An order may not be executed on time, or there are delays in depositing funds. So, be sure that there is a reliable customer team that can quickly resolve issues when they arise.
Is There a Mobile Platform or App?
A good day trading platform should also have a mobile app version. This ensures flexibility in accessing the market and gives you more options.
Frequently Asked Questions
Robinhood started the commission-free trading revolution. But TD Ameritrade, Interactive Brokers, E*TRADE, and others have also started offering commission-free stock trading.
It depends on the beginner’s preference and what they consider important. However, a good day trading platform must offer ultra-fast execution speed and also have an easy-to-use interface. Robinhood, TD Ameritrade, and E*TRADE platforms are good for beginners.
In the USA, The pattern day trading rule requires you to maintain a minimum of $25,000 in your account to be able to make up to four trades in five consecutive trading days. So, you will need to have more than that to day-trade stocks with a margin account. To circumvent this rule, you will have to trade stock options instead of direct equity.
Some day trading apps are overly simplistic with minimal trading tools. But some are loaded with useful trading tools, such as multiple charts in different timeframes, many technical indicators, numerous drawing tools, historical data, real-time price quotes, market analysis, and premium research.
You can open a trading account in less than 30 minutes, provided you have all the necessary requirements, including your identity documents. However, it may take several hours or days to verify your identity documents.
Day trading platforms make money through various means, such as interest on deposits, commissions on rebates, and payments of order flow from brokers. Some platforms may ask customers to pay for premium accounts to gain access to exclusive research.