Hopefully you now have a much deeper understanding on the mechanics of day trading stocks and some of the critical jargon that you will encounter. The next piece of the puzzle we will cover is about choosing an online stock broker and other various platforms. Brokers are the links between you, the retail trader, and the stock market. They are indispensable to anyone who wants to trade from the comforts of their home. As a retail trader, you cannot buy and sell directly at the exchanges, and must therefore work with a broker to act as an intermediary. While brokers are not going to make or break your trading, it is still important to ensure that you pick the right one to serve your own trading needs and personality.
As a day trader, the basic characteristic of a decent broker includes:
1. Order fulfillment speed.
2. Trade execution success rate.
Without these two criteria, a broker should not even be in consideration for use. Of course given these, there are still a couple of other things that need to be taken into account. We will go through them in just a second.
A good broker can make your life easier and let you be more focused on the actual trading rather than worrying about things that are not as important. In other words, a good broker is one that complements your trading strategy. If you find that you have greater success trading stocks on the short side, you want to find brokers that have good borrows for shares to short, allowing you to short a greater variety of stocks. You may determine your style of trading from experiences in paper trading.
Commission based vs Per Trade based
If you prefer to trade large quantities, or greater than 10,000 of low-priced stocks, you will want to find a broker that charges commission on a per trade basis. A per share basis commission will be way too expensive to feed this style of trading. The key to this is to find the broker that suits your style of trading the most.
Good Customer Service
You also want to find brokers with excellent customer service because often during the trading hours, you need an answer to a problem fast and brokers with great customer attentiveness will go a long way in giving you a more successful trading experience with much less headache.
Many brokers also offer their own proprietary trading platform software that the traders can use for a fee. Choosing the proper platform is essential to a day trader because this is the software that you will be working on every single day the market is open. You have to find one that is stable and reliable. Here are some important characteristics of a good trading platform:
1. Good charting software
2. Extensive technical indicators to choose from
3. Relatively bug free and does not crash
4. Stable internet connectivity
Many of the trading platforms out there also offer web-based apps or native mobile applications which allow the trader to trade effectively even during commute or not in front of the desktop. While we do not advise doing it, it can still be beneficial to install the app on your devices just in case the computer might not be available for use for whatever reason.