United States

Best Brokers For Day Trading

Day trading requires a broker that meets special criteria: fast and reliable execution, low costs for active traders, reliable charting software for technical analysis, and potentially automated trading tools. We’ve tested, rated and listed the best day trading platforms

Author Image Written By
Royston Wild
Fact Checker Image Fact Checked By
Tobias Robinson
Editor Image Edited By
James Barra
Brokers With:
Execution Speed
Showing 5 of 35 matching brokers
  1. 1
    Trust Platform Assets Fees Accounts Research Education Mobile Support 4.0
    Plus500US, a reputable broker since 2021, is authorized by the CFTC and NFA. It offers futures trading on forex, indices, commodities, cryptocurrencies, and interest rates. With a quick 10-minute signup, a $100 minimum deposit, and an easy-to-use web platform, Plus500 is enhancing its services for traders in the US.
    Demo Account
    Yes
    Minimum Deposit
    $100
    Minimum Trade
    Variable
    Leverage
    Variable
    Copy Trading
    No
    Regulator
    CFTC, NFA
    Instruments
    Futures on Cryptocurrencies, Metals, Agriculture, Forex, Interest rates, Energy, Equity Index future contracts
    Platforms
    WebTrader, App
    Account Currencies
    USD
    Automated Trading
    No
    AI
    No
    Guaranteed Stop Loss
    No
  2. 2
    Trust Platform Assets Fees Accounts Research Education Mobile Support 4.3

    From our tests, Interactive Brokers offered excellent execution speed, with most trades completed in under 40ms on major markets. Slippage was low, even during volatile periods. Direct market access and smart routing technology consistently secured the best prices, making it ideal for precision-focused, active traders.

    Demo Account
    Yes
    Minimum Deposit
    $0
    Minimum Trade
    $100
    Leverage
    1:50
    Copy Trading
    No
    Regulator
    FCA, SEC, FINRA, CFTC, CBI, CIRO, SFC, MAS, MNB, FINMA, AFM
    Instruments
    Stocks, Options, Futures, Forex, Funds, Bonds, ETFs, Mutual Funds, CFDs, Cryptocurrencies
    Platforms
    Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, TradingView, eSignal, TradingCentral, ProRealTime, Quantower
    Account Currencies
    USD, EUR, GBP, CAD, AUD, INR, JPY, SEK, NOK, DKK, CHF, AED, HUF
    Automated Trading
    Capitalise.ai, TWS API
    AI
    Yes
    Guaranteed Stop Loss
    No
  3. 3
    Trust Platform Assets Fees Accounts Research Education Mobile Support 4.5

    Execution in our NinjaTrader investigations was very fast, often under 50ms, especially for futures markets. Slippage was minimal, and there were no requotes. The platform’s advanced order routing and depth-of-market tools provided precise control, making it ideal for high-speed strategies and active traders.

    Demo Account
    Yes
    Minimum Deposit
    $0
    Minimum Trade
    0.01 Lots
    Leverage
    1:50
    Copy Trading
    No
    Regulator
    NFA, CFTC
    Instruments
    Forex, Stocks, Options, Commodities, Futures, Crypto
    Platforms
    NinjaTrader Desktop, Web & Mobile, eSignal
    Account Currencies
    USD
    Automated Trading
    NinjaScript or via Automated Trading Interface
    AI
    No
    Guaranteed Stop Loss
    No
  4. 4
    Trust Platform Assets Fees Accounts Research Education Mobile Support 3.4

    Our recent tests show eToro USA provides reliable execution for most assets, though a bit slower than ECN brokers. Market orders typically fill in 200–300ms, with minor slippage in volatile times. While not ideal for scalping, execution supports longer-term and copy trading strategies.

    Demo Account
    Yes
    Minimum Deposit
    $100
    Minimum Trade
    $10
    Leverage
    No
    Copy Trading
    Yes
    Regulator
    SEC, FINRA
    Instruments
    Stocks, Options, ETFs, Crypto
    Platforms
    eToro Trading Platform & CopyTrader
    Account Currencies
    USD
    Automated Trading
    No
    AI
    No
    Guaranteed Stop Loss
    No
  5. 5
    Trust Platform Assets Fees Accounts Research Education Mobile Support 4.5

    During our tests, FOREX.com consistently provided sub‑10ms fills to its New York and London servers, with average execution at 0.003s and 99% of trades completing in under one second. Slippage was rare, and there were no requotes, with effective price improvement on limits. Traders during the European session benefited from the proximity to London servers (~1‑4 ms).

    Demo Account
    Yes
    Minimum Deposit
    $100
    Minimum Trade
    0.01 Lots
    Leverage
    1:50
    Copy Trading
    No
    Regulator
    NFA, CFTC
    Instruments
    Forex, Stock CFDs, Futures, Futures OptionsForex, CFDs, Stock CFDs, Indices, Commodities, Futures, Options, Crypto
    Platforms
    WebTrader, Mobile, MT4, MT5, TradingView
    Account Currencies
    USD, EUR, GBP, CAD, AUD, JPY, CHF, PLN
    Automated Trading
    Expert Advisors (EAs) on MetaTrader
    AI
    Yes
    Guaranteed Stop Loss
    No

Compare Top Day Trading Brokers In Core Areas

Broker
United States
USD Account
Fast Execution Speed
Cost Rating
Automated Trading Tools
ECN Account
DMA Account
Plus500US
3.3
Interactive Brokers
4.3
Capitalise.ai, TWS API
NinjaTrader
4.3
NinjaScript or via Automated Trading Interface
eToro USA
3.4
FOREX.com
4.6
Expert Advisors (EAs) on MetaTrader
Broker
United States
USD Account
Fast Execution Speed
Cost Rating
Automated Trading Tools
ECN Account
DMA Account

Broker Details Comparison

Broker
Demo Account
Minimum Deposit
Minimum Trade
Leverage
Assets
Platforms
Plus500US $100 Variable Variable Futures on Cryptocurrencies, Metals, Agriculture, Forex, Interest rates, Energy, Equity Index future contracts WebTrader, App
Interactive Brokers $0 $100 1:50 Stocks, Options, Futures, Forex, Funds, Bonds, ETFs, Mutual Funds, CFDs, Cryptocurrencies Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, TradingView, eSignal, TradingCentral, ProRealTime, Quantower
NinjaTrader $0 0.01 Lots 1:50 Forex, Stocks, Options, Commodities, Futures, Crypto NinjaTrader Desktop, Web & Mobile, eSignal
eToro USA $100 $10 Stocks, Options, ETFs, Crypto eToro Trading Platform & CopyTrader
FOREX.com $100 0.01 Lots 1:50 Forex, Stock CFDs, Futures, Futures OptionsForex, CFDs, Stock CFDs, Indices, Commodities, Futures, Options, Crypto WebTrader, Mobile, MT4, MT5, TradingView
Broker
Demo Account
Minimum Deposit
Minimum Trade
Leverage
Assets
Platforms

Safety Comparison

Compare how safe the Best Brokers For Day Trading are.

Broker
Trust Rating
Guaranteed Stop Loss
Negative Balance Protection
Segregated Accounts
Plus500US
3.5
Interactive Brokers
4.5
NinjaTrader
4.3
eToro USA
3.3
FOREX.com
4.9
Broker
Trust Rating
Guaranteed Stop Loss
Negative Balance Protection
Segregated Accounts

Mobile Trading Comparison

Compare the mobile trading features of the Best Brokers For Day Trading.

Broker
Mobile Apps
iOS Rating
Android Rating
Smart Watch App
Plus500US iOS & Android
4.1
4.3
Interactive Brokers iOS & Android
4.3
4.5
NinjaTrader iOS & Android
3.0
3.2
eToro USA iOS & Android
4.3
4.0
FOREX.com iOS & Android
3.6
3.8
Broker
Mobile Apps
iOS Rating
Android Rating
Smart Watch App

Comparison for Beginners

Compare how suitable the Best Brokers For Day Trading are for beginners.

Broker
Demo Account
Minimum Deposit
Minimum Trade
Education Rating
Support Rating
Fractional Shares
Demo Competitions
Plus500US $100 Variable
3.5
3.5
Interactive Brokers $0 $100
4.3
3.0
NinjaTrader $0 0.01 Lots
4.0
4.0
eToro USA $100 $10
3.0
3.0
FOREX.com $100 0.01 Lots
4.5
4.3
Broker
Demo Account
Minimum Deposit
Minimum Trade
Education Rating
Support Rating
Fractional Shares
Demo Competitions

Comparison for Advanced Traders

Compare how suitable the Best Brokers For Day Trading are for advanced or professional traders.

Broker
Automated Trading
VPS
API
AI
Pro Account
Leverage
Low Latency
Extended Hours
Plus500US Variable
Interactive Brokers Capitalise.ai, TWS API 1:50
NinjaTrader NinjaScript or via Automated Trading Interface 1:50
eToro USA
FOREX.com Expert Advisors (EAs) on MetaTrader 1:50
Broker
Automated Trading
VPS
API
AI
Pro Account
Leverage
Low Latency
Extended Hours

Accounts Comparison

Compare the trading accounts offered by Best Brokers For Day Trading.

Broker
Demo Account
Interest on Cash
Islamic Account
Joint Account
Managed Account
PAMM
MAM
LAMM
Pro Account
Plus500US
Interactive Brokers USD: 4.8%, GBP: 4.7%
NinjaTrader
eToro USA USD: 4.9%
FOREX.com
Broker
Demo Account
Interest on Cash
Islamic Account
Joint Account
Managed Account
PAMM
MAM
LAMM
Pro Account

Detailed Rating Comparison

Compare how we rated the Best Brokers For Day Trading in key areas.

Broker
Trust
Platforms
Assets
Mobile
Fees
Accounts
Research
Education
Support
Plus500US
3.5
3.3
3.5
4.2
3.3
3.7
2.8
3.5
3.5
Interactive Brokers
4.5
3.3
4.7
4.4
4.3
3.5
4.4
4.3
3.0
NinjaTrader
4.3
4.5
2.9
3.1
4.3
2.8
4.0
4.0
4.0
eToro USA
3.3
3.5
2.9
4.2
3.4
3.0
3.5
3.0
3.0
FOREX.com
4.9
4.6
4.3
3.7
4.6
4.0
4.8
4.5
4.3
Broker
Trust
Platforms
Assets
Mobile
Fees
Accounts
Research
Education
Support

Fee and Cost Comparison

Compare the cost of trading with the Best Brokers For Day Trading.

Broker
Cost Rating
Fixed Spreads
Inactivity Fee
CFD Stocks Spread
EUR/USD Spread
Crypto Spread
Plus500US
3.3
$0 0.75
Interactive Brokers
4.3
$0 0.003 0.08-0.20 bps x trade value 0.12%-0.18%
NinjaTrader
4.3
$25 1.3 Floating
eToro USA
3.4
$10 $0 BTC 0.75%
FOREX.com
4.6
$15 0.14 1.2 BTC 1.4%, ETH 2%
Broker
Cost Rating
Fixed Spreads
Inactivity Fee
CFD Stocks Spread
EUR/USD Spread
Crypto Spread

Broker Popularity

See how popular the Best Brokers For Day Trading are in terms of number of clients.

Broker Popularity
Interactive Brokers
3,500,000
eToro USA
3,200,000
NinjaTrader
1,800,000
FOREX.com
450,000

Why Trade With Plus500US?

Plus500US is an excellent choice for beginners, offering a user-friendly platform, low trading margins, and access to the Futures Academy to improve trading skills. Its powerful tools and reliable service earned it second place in DayTrading.com's annual 'Best US Broker' award.

Pros

  • Plus500 is a reputable publicly traded company with over 24 million traders and sponsors the Chicago Bulls.
  • The account setup, pricing structure, and web platform make futures trading simpler than competitors like NinjaTrader.
  • The Futures Academy is a useful resource for beginner traders due to its captivating videos and simple articles. Its unrestricted demo account is also beneficial for practicing trading strategies.

Cons

  • Testing showed fast response times for support, but phone aid is not available.
  • Plus500US is expanding its investment options, but it currently only offers around 50+ futures and no stocks.
  • Plus500US lacks social trading features, unlike competitors such as eToro US, which might enhance its appeal to aspiring traders.
Go to Plus500US
Trading in futures and options involves the risk of loss and is not suitable for everyone.

Why Trade With Interactive Brokers?

Interactive Brokers is ideal for seasoned traders due to its robust charting platforms, updated data, and adaptability, especially with the IBKR Desktop application. Its exceptional pricing and advanced order features appeal to traders, and its variety of stocks remains unmatched in the market.
Christian Harris
Review Author

Pros

  • There's a large selection of free or paid research subscriptions available to all traders. If you subscribe to Toggle AI, you will also receive commission refunds from IBKR.
  • IBKR provides a cost-effective platform for traders by offering low fees, narrow spreads, and clear pricing.
  • IBKR, primarily designed for skilled traders, has expanded its appeal recently by eliminating its initial $10,000 deposit requirement.

Cons

  • Only one active session per account is allowed, which means you can't run the desktop version and mobile app at the same time. This can sometimes lead to a frustrating trading experience.
  • TWS's platform may be difficult for beginners to grasp because of its complexity - we were overwhelmed during our initial tests by the sheer volume of tools, features and widgets.
  • Customer service may take time to respond, and there may be delays in fixing problems based on tests. It could be difficult to reach the customer service promptly.

Why Trade With NinjaTrader?

NinjaTrader consistently satisfies active futures traders with its low-cost service and high-quality analysis tools. It offers superior charting features, including hundreds of indicators and over 10 chart types.

Pros

  • NinjaTrader is a well-regarded and acclaimed futures broker, approved by the NFA and CFTC.
  • You can access thousands of applications and add-ons from developers worldwide for trading.
  • Low costs, with $50 trading margins and commissions starting at $.09 per micro contract.

Cons

  • The advanced trading tools require an additional fee.
  • Some payment methods require a withdrawal fee.
  • You need to register with partner brokers to trade in securities other than forex and futures.

Why Trade With eToro USA?

eToro is a top choice for traders due to its top-notch social investing and copy trading services. The broker caters well to new traders with its low deposit requirement, commission-free trading, and user-friendly platform.

Pros

  • eToro USA Securities is a reliable broker that's regulated by the SEC, part of FINRA, and a member of SIPC.
  • The low minimum deposit and simple account setup allow beginners to start trading quickly.
  • The broker's Academy provides extensive educational resources for traders, ranging from beginners to advanced levels.

Cons

  • Traders used to third-party charting tools won't find MetaTrader 4 platform integration.
  • The exclusive terminal does not accommodate trading bots and lacks extra equity market analysis tools.
  • Average fees can reduce the profits of traders.
Go to eToro USA
Securities trading offered by eToro USA Securities, Inc. (“the BD”), member of FINRA and SIPC. Cryptocurrency offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk. https://www.daytrading.com/ is not an affiliate and may be compensated if you access certain products or services offered by the MSB and/or the BD.

Why Trade With FOREX.com?

FOREX.com is a top-tier brokerage suitable for forex traders of all skill levels. It offers more than 80 currency pairs, has small spreads starting from 0.0 pips, and features low fees. The platform provides powerful charting tools that include over 100 technical indicators and multiple research aids.
Christian Harris
Review Author

Pros

  • FOREX.com provides top-tier forex pricing beginning at 0.0 pips. They also offer competitive cashback rebates up to 15% for dedicated traders.
  • Numerous educational materials such as tutorials, webinars, and a comprehensive YouTube channel are available to assist you in learning about the financial markets.
  • FOREX.com has over 20 years of experience with strong regulatory oversight, and has received multiple awards, including second place in our 'Best Forex Broker' awards. As such, FOREX.com is globally reputed as a reliable trading brokerage.

Cons

  • The funding options are not as extensive as those of top competitors such as IC Markets and lack several widely-used e-wallets, particularly UnionPay and POLi.
  • Demo accounts have a limited time duration of 90 days, which may not be sufficient for thoroughly testing trading strategies.
  • FOREX.com's MT4 platform provides around 600 instruments for trading, which is considerably less than the 5,500+ options accessible on its other platforms.
Go to FOREX.com
74-76% of retail accounts lose money with this provider.
Top Rated Broker
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How To Choose A Day Trading Broker

Selecting the right brokerage can have a significant impact on your success as a day trader. Key things to consider when choosing a service provider include:

Trustworthiness

This should be top of anyone’s list when choosing a broker. You’ll want to know that your money and your personal information is well protected, and that you’ll be able to trade without any headaches.

The first thing to check is whether the broker you’re looking at is licensed by a respected global regulator. There are plenty of watchdogs out there, but some offer stronger safeguards than others. Check BrokerListings.com’s Regulator Ranking System to ensure said operator is approved by a regulator with teeth.

Using a regulator-approved broker should guarantee a minimum level of service and protect traders from fraudulent operators. Many watchdogs also operate investor compensation schemes, offering an additional layer of protection if a firm fails.

Top broker for trustworthiness: Eightcap is licensed by some of the world’s most respected regulators, including the UK’s Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC) and the Cyprus Securities and Exchange Commission (CySEC).

 

Eightcap's regulatory profile with ASIC

Source: ASIC

Trading Platform

A lot of day traders prefer to use a third-party platform like MetaTrader 4 (MT4), MetaTrader 5 (MT5), cTrader or TradingView. However, it’s definitely worth checking out the proprietary trading systems that many brokerages currently offer.

It’s also worth remembering some brokerages won’t allow traders to plug in and use the platform of one of these external service providers.

Brokerages have invested heavily to create their own slick, easy-to-use platforms. Many of these are popular with new and experienced traders alike. What’s more, they can save you the extra expense of employing a third party platform.

Some of the things you might want to consider include:

  • System stability, especially during busy trading periods.
  • Quality and breadth of the broker’s charting tools for technical analysis.
  • Ease-of-navigation and platform customization – for example, can you rearrange charts, move order entry panels, and configure menus to show specific data?
  • Access to real-time and Level 2 (order book) data, alongside news feeds, economic calendars, analyst notes and other trading resources.
  • The availability of kotkeys to execute transactions more quickly and manage positions – for instance, can you assign keys to buy or sell securities, change order size, or to put orders through a particular exchange?
  • Support for algorithmic trading strategies and automated trading bots.
  • Availability and responsiveness of customer support in case you experience issues.
  • Access to mobile and smartwatch apps for trading ‘on the go.’

Pro tip: Day traders should also consider whether or not the platform offers trading alerts. These powerful tools help individuals identify trading opportunities and manage risk by notifying them of:

  • Price movements
  • Volume changes
  • Technical indicators
  • Market-moving news

Top broker for trading platform: IG offers one of the best trading experiences out there thanks to its quick, responsive and flexible platform. Individuals also have access to excellent charting tools, a raft of educational resources and trading alerts. Alternatively, it also allows customers to use around half a dozen third-party platforms to trade.

Importantly for day traders, IG also offers an excellent demo account. Dealing financial securities is risky business, so getting up to speed with markets and testing your trading strategy in a simulated environment is a good idea.

IG's in-house trading platform

Source: IG

Execution Speed And Order Fulfilment

Day traders seek to make a profit by exploiting small changes in an asset’s value. These price movements can happen over a period of minutes or even seconds. The problem is that financial markets move quickly, so capitalizing on an opportunity before it disappears requires lightning-fast execution speeds.

It’s therefore critical to find a broker offering rapid transaction execution and order fulfilment. Service providers aren’t required by regulators to publish information on their execution rates, but the best tend to give out this information as a badge of honour. Even a fraction-of-a-second trading delay can turn a profitable trade into a losing one. Brokers that provide Electronic Communication Network (ECN) accounts, which send trades directly to liquidity providers, can improve the chances of an order being filled quickly.

Traders should also consider how the brokerage handles the problem of slippage — this is where orders are executed at a different price than quoted. This can spring up even if a broker offers fast execution speeds. Factors like price volatility, market liquidity and order size can all increase the possibility of slippage.

Pro tip: Like ECN accounts, Direct Market Access (DMA) accounts can give traders the edge when it comes to execution speeds and quality. These place orders straight into an exchange’s order book, reducing the involvement of intermediaries and minimizing slippage by directly accessing the best available prices.

The greater liquidity that DMA accounts enjoy have other benefits for day traders. Having access to a higher number of buyers and sellers can lead to narrower bid-ask spreads, and therefore reduced trading costs. Market transparency is also improved, as it’s possible to see any extra costs and markups, along with supply and demand. Better transparency also means a trader can alter their bid and ask prices according to others in the order book.

Top broker for execution speed and order fulfilment: Through its Razor ECN account, Pepperstone offers ultra-low execution speeds of 30ms on average. Multiple top-level liquidity providers minimize the problem of slippage, while its Equinix servers close to major trading venues (New York and London), boosting order fulfilment times. Traders can also select DMA accounts with Pepperstone.

Advanced And Conditional Orders

Day traders can gain a huge advantage with brokers that offer advanced or conditional orders. These tools offer greater opportunity for individuals to capture trading opportunities and manage risk, by executing trades automatically in response to market movements far quicker than a human can.

What’s more, these automated devices save traders from having to watch the markets every second for price changes. As a consequence, individuals can spend their time on higher-value tasks, such as analyzing the markets to improve their trading strategies. Automation has another major perk: it helps reduce the emotional side of trading, which can otherwise lead to mistakes like impulsive buying and selling.

Types of advanced orders include:

  • Stop-loss orders, where trades automatically close when an asset price falls to a pre-selected level, thus minimizing losses.
  • Take-profit orders, which locks in profit by exiting a position when the price rises to a pre-set target.
  • Trailing stop-loss orders, where the stop price moves automatically if the market moves in a favourable direction, thus allowing traders to maximise their profit-making potential without comprimising on risk management.
  • Bracket orders, which easily blend stop loss and take-profit orders when an order is placed.

Conditional orders, meanwhile only execute when particular market criteria are met. These include limit orders, which allow traders to purchase or offload a security at a specific price or better. There are two versions of the limit order:

  • a buy limit order, where the asset is purchased at a pre-selected level or lower.
  • a sell limit order, where the security is sold at a pre-set level of higher.

Top broker for advanced and conditional orders: Interactive Brokers offers a range of different order types. including bracket orders and Good Till Triggered (GTT) orders, which stay in the system until the specified price is reached or the trader cancels the instruction.

Trading Costs

Day traders especially face a raft of fees and charges when they’re doing business. due to the typically large volume of orders placed. Transaction charges, account management fees, deposit and fund withdrawal costs, inactivity fees… They can all add up, so it’s critical to try and keep these to a minimum.

Having said that, some brokers will charge higher fees in exchange for a better service. This may include a more sophisticated trading platform, better customer service or a greater range of educational resources. You may wish to pay more if you’re getting a superior experience, which in turn can improve your chances of making a juicy profit.

Pro tip: High-frequency day traders should be particularly aware of transaction charges as well as how wide the broker’s bid (buy) and ask (sell) prices (known as the spread) tend to be. These can rub out a big chunk of a trader’s profits. Regulated brokers are required to publish a comprehensive list of the fees and charges traders can expect.

Top broker for trading costs: FXCC is well-known for its ultra-tight spreads across asset classes and no commission charges, making it a strong contender for frequent day traders. These may more than offset the broker’s withdrawal charges and inactivity fees, depending on your investing strategy.

Extended Trading Hours

Choosing a broker with extended trading hours beyond traditional market opening times offers the opportunity to get more flexible with your working hours. But that’s only half the story – having access to markets outside normal hours may provides additional opportunities to turn a profit, depending on your strategy.

Searching for brokers that offer extended hours involves more than simply considering who offers the earliest opening hours. Platform stability, execution speed, order fulfilment and market liquidity can take a big dip during extended trading periods. These can all significantly impact trader profitability, so bear this in mind when selecting a service provider.

Top broker for extended trading hours: CMC Markets offers longer trading hours for US stocks. Traders can deal between 09:00 and 01:00 GMT. On the downside, bid and ask spreads widen during these extended periods, though they typically increase by a smaller margin than those of many competitors, according to our testing. Advanced and conditional order types also went through without a hitch.

Financial Markets

All of the major brokerages offer popular financial securities like equities and forex. There’s also been an explosion in the number of companies offering cryptocurrency trading in recent years.

However, beyond these asset classes there can be significant differences in what’s on offer. If you want to trade certain derivatives like futures, you might have to do some extra legwork to find a broker.

It’s not a bad idea to find a service provider that offers an extensive range of markets, even if you initially plan to just trade one or two. Most day traders flit between different asset classes to capitalize on trading opportunities as they arise.

Top broker for financial markets: Interactive Brokers offers customers the chance to trade:

  • Stocks
  • Forex
  • Bonds
  • Cryptocurrencies
  • Exchange-traded funds (ETFs)
  • Mutual funds
  • Options
  • Futures
  • Contracts for difference (CFDs)
Trading Amazon shares using an InteractiveBrokers demo account

Source: InteractiveBrokers

What Is Day Trading?

Day trading – as the name implies – is the strategy of buying and selling financial assets on the same day. Participation has exploded in recent years, driven by improving trading technology and internet accessibility across the globe.

Traders seek to capitalize on small, short-term price fluctuations, often relying heavily on technical analysis to inform their trading decisions. By closing out their positions before the day’s end, they protect themselves from overnight risk, where news released outside trading hours can trigger sharp price moves when the market reopens.

Day trading can be profitable with the right strategy, though traders need to be focused and disciplined. The risk of losing money is high, so it’s important to have robust risk management policies in place.

What Do Day Traders Buy And Sell?

Traders focus on markets with high liquidity and the potential for price volatility – the choppier the market, the greater the potential is to make a profit.

Liquidity is key for traders. It allows them to enter and exit positions swiftly and easily. Furthermore, bid and ask spreads tend to be narrower in highly liquid markets, bringing down trading costs.

Pro tip: Liquidity is especially important for high-frequency traders, as wide bid-ask spreads can significantly erode profits.

For this reason, day traders tend to focus on markets where strong participation from retail and institutional investors ensures deep liquidity. These include stocks, forex, cryptocurrencies, commodities and some derivatives (such as futures and options).

What Are The Pros And Cons Of Day Trading?

Individuals should carefully consider the advantages and disadvantages of day trading before putting any cash on the line. Key things to think about include:

Pros

  • It’s possible to make a profit extremely quickly, and especially around the time of major economic announcements when price action is more volatile.
  • Some financial markets (like forex and cryptocurrencies) are open for most of the day, giving traders flexibility over when they want to work.
  • Trades can quickly pivot between different markets to capitalize on trading opportunities as they arise.
  • Focusing on intra-day price movements gives traders the chance to make money in rising and falling markets, even if the longer-term trend is up or down.

Cons

  • Financial markets move extremely quickly, leaving traders who lack proper risk management strategies at risk of large losses.
  • The fast-paced, high-risk nature of day trading can be emotionally demanding and stressful for many individuals.
  • Wide bid-ask spreads, large dealing costs and slippage can take a huge bite out of earnings.

Pro tip: An important feature of day trading is the wide-scale availability of leverage. These are funds borrowed from the broker, and they enable individuals to control larger positions than if they simply used their own cash.

This offers a significant advantage for traders with more aggressive dealing strategies. However, the use of leverage can also create a huge unintended disadvantage – while the use of borrowed funds can amplify profits, it can also prompt whopping losses if the market moves in the ‘wrong’ direction.

The levels of leverage on offer can differ substantially from broker to broker. The amount you can borrow will also differ across asset classes, so check this as well if you wish to trade ‘on margin.’

Bottom Line

Day traders have a vast selection of brokers to choose from today, so take time to find the one that best suits your investing style and trading needs. Always ensure that the company you’re considering is licensed by a respected global regulator to protect yourself and your cash.